"National ledger" released: experts say that net assets have surpassed the United States

Before the release of economic data for half a year, Premier Li Keqiang spoke more than once about the issue of “de-leverage” at the economic forum. What is the national debt ratio?

Recently, the Chinese Academy of Social Sciences released the "China National Balance Sheet 2015" report that from 2007 to 2013, the country's total assets increased from 284.7 trillion yuan to 691.3 trillion yuan, an increase of 406.6 trillion yuan, an average annual growth of 67.8 trillion yuan. In the same period, the total national debt increased from 118.9 trillion yuan to 339.1 trillion yuan, an increase of 220.2 trillion yuan, an average annual increase of 36.7 trillion yuan. According to this data, the national debt ratio increased from 41.8% to 49%, an increase of 7.2 percentage points, an average annual increase of 1.2 percentage points. But this is still a solid "national book." Zhang Xiaojing, deputy director of the National Finance and Development Laboratory of the Chinese Academy of Social Sciences, said at the press conference that assuming a financial crisis caused GDP to fall by 30%, China's 352.2 trillion yuan of net assets can cope with 1.5 financial crises.

The probability of a sovereign debt crisis is small
The country's total assets are non-financial assets such as housing, land, and enterprises plus external net assets (foreign investment). In China's 352.2 trillion yuan of net assets, the net assets of the land accounted for 20%, the net assets of the residents accounted for 30%, the net assets of the enterprises accounted for 40%, and the net assets of the foreign accounted for 5%.

According to the report, in 2013 China's total national assets were 691.3 trillion yuan, total liabilities were 339.1 trillion yuan, and the corresponding net assets were 352.2 trillion yuan, of which net financial assets were 16 trillion yuan. From 2007 to 2013, the national debt ratio increased from 41.8% to 49%, and the overall debt ratio increased rapidly, with an increase in 2009, 2012 and 2013. Li Wenhai, a finance and tax expert, told reporters that the country's total assets are one of the main indicators for measuring a country's overall national strength, but it is less instructive about the economic status quo and future policy recommendations because it does not clearly reflect structural problems. Different types of balance sheets make more sense for economic operations monitoring and regulation.

Among the sub-projects, the first thing worth paying attention to is undoubtedly the state sovereign debt situation. Sovereign assets in sovereignty balance sheets refer to assets owned or controlled by the government, including other available resources; sovereign debts are direct liabilities of the government and contingent liabilities arising from implicit guarantees. According to the report, from 2000 to 2014, China's sovereign assets increased from 35.9 trillion yuan to 227.3 trillion yuan, an increase of 191.4 trillion yuan, an average annual increase of 13.7 trillion yuan.

During these 14 years, the assets of state-owned enterprises, especially non-financial state-owned enterprises, and land and resources assets grew the fastest. Among them, the assets of state-owned enterprises increased by 126.4 trillion yuan, with an average annual growth of 9 trillion yuan, and the contribution rate to the growth of sovereign assets was 66%. In the same period, China’s sovereign debt increased from 21.4 trillion yuan to 124 trillion yuan, an increase of 102.6 trillion yuan, an average annual increase of 7.3 trillion yuan. Among them, state-owned enterprise debt increased by 55.2 trillion yuan, with an average annual growth of 3.9 trillion yuan; local government debt increased by 26.4 trillion yuan, with an average annual growth of 1.9 trillion yuan. The contribution rates of state-owned enterprise debt and local government debt to sovereign debt growth were 53.8% and 25.7%, respectively.

The report pointed out that whether it is based on wide caliber or based on narrow caliber, China's net sovereign assets are positive, indicating that the Chinese government has sufficient sovereign assets to cover its sovereign debt. Therefore, in a relatively long period of time, China’s sovereign debt crisis should be a small probability event.

In addition, on the basis of estimating the leverage ratio of the four sub-sectors of residents, non-financial enterprises, government and financial institutions, the report has obtained the total leverage ratio of the whole society. At the end of 2014, the debt scale of the Chinese entity (excluding financial institutions) was 138.33 trillion yuan, and the leverage ratio of the physical sector was 217.3%. At the end of 2014, the overall debt of China's economy (including financial institutions) was 150.03 trillion yuan, and the leverage ratio of the whole society was 235.7%.

Local government net assets of 78 trillion
Among government debts, local debt risks are still the most concerned. As of the end of 2014, the local government had total assets of 108.2 trillion yuan, total liabilities of 30.28 trillion yuan, and net assets of 77.92 trillion yuan. Among them, the two most indebted parties are borrowing money and bond financing, and bank loans, urban investment bonds and infrastructure trusts related to local financing platforms still account for a large proportion.

Chang Xin, director of the National Balance Sheet Research Center, believes that local debt risks are generally controllable, and local governments basically have no solvency risk of insolvency. “But the risk points that need attention at the same time are: local government debt growth is still high; financing structure tends to be complicated; liquidity risk of debt concentration due to payment cannot be ignored; regional and departmental local risks are worthy of attention; existing debt service The foundation has certain unsustainability; the risk exposure of contingent liabilities is expanding.” Chang Xin said.

At the 2015 NetEase Economist Annual Meeting Summer Forum, former Chairman of the Export-Import Bank of China, Li Ruogu said that the issue of local debt and shadow banking was too much hype. However, in terms of the total amount, the entire government of China, including the government platform, is far less than the developed countries. "From the perspective of operational mode, China's shadow banking and local platforms mainly use infrastructure construction and the real economy, and do not use social welfare." Li Ruogu said that in the long run, it will increase economic growth. The stamina should be beneficial. The specific situation should be analyzed in detail. The local debt is indeed a problem and needs to be resolved, but it should not be hyped.

In March and June of this year, the financial sector issued two batches of local government bonds to replace the stock of debts of 1 trillion yuan each. The replacement purposes are: repayment of the debts of the debts due in 2015 as of June 30, 2013, which are due to the government's repayment obligations, totaling 1.86 trillion yuan. Premier Li Keqiang also supported this practice. He clearly pointed out: "In China, local government debt has not been used to directly distribute welfare, but mainly to invest in infrastructure, there is a return. Every debt we replace It is all issued by the central government. It can be said that behind the central government's credit and ability." "Local debt replacement is of great benefit to solving the short-term local government's economic and financial burden. It is an 'emergency chapter' and also shows the country's financial strength." Li Wenhai said that debt swaps have delayed the local government's short-term repayment pressure and reduced the interest burden on local governments. The term of local bonds issued for replacement is generally 3, 5, 7 and 10 years, and the issue rate is mostly equivalent to the yield of government bonds in the same period, far lower than banks and trust loans.

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In 2013, China’s net assets were 352 trillion. According to relevant experts, China’s net assets have exceeded the United States, but the statistical calibers are different.

["Comparatively, our net worth has exceeded the United States!" Relevant experts said at the "balance sheet 2015" seminar that the US assets before 2013 were $55 trillion, which was 340 trillion yuan according to the conversion; China’s net assets in 2013 were 352 trillion] As China’s second largest GDP, what is the “home” of the country and the government? How much debt pressure can you afford? Is our balance sheet healthy? These issues determine the sustainable development of a country. At the same time, when the local financing platform debt problems surfaced, people began to worry about China's sovereign debt risks, and some people sang China. However, the latest report of the Chinese Academy of Social Sciences' Finance and Development Laboratory believes that whether it is based on wide or narrow caliber, China's net sovereign assets are positive, indicating that the Chinese government has sufficient sovereign assets to cover its sovereign debt. .

"Any speech that sings China is untenable." Li Yang, chairman of the Financial and Development Laboratory, introduced the state balance sheet and said that in the longer term, China’s sovereign debt crisis was a small probability event. However, Li Yang also hinted that the level of leverage in China's non-financial corporate sector is the highest among the countries compared, and the implied risks are worthy of attention.

China's net assets exceed the United States
Recently, a China National Balance Sheet 2015: Leverage Adjustment and Risk Management (hereinafter referred to as “balance sheet 2015”) from the National Institute of Finance and Development of the Chinese Academy of Social Sciences shows that in 2013, China’s total national assets were 6.913 million. 100 million yuan, net assets of 352.2 trillion yuan. According to the Balance Sheet 2015, from the total assets of China: from 2007 to 2013, the total assets of the state increased from 284.7 trillion yuan to 691.3 trillion yuan, an increase of 406.6 trillion yuan, an average annual increase of 67.8 trillion yuan.

From the perspective of net asset value, from 2007 to 2013, China’s net assets increased from 165.8 trillion yuan to 352.2 trillion yuan, an increase of 186.4 trillion yuan, an average annual growth rate of 31.1 trillion yuan; net financial assets increased from 7.4 trillion yuan. To 16 trillion yuan, an increase of 8.6 trillion yuan, an average annual increase of 1.4 trillion yuan. “Comparatively, our net worth has exceeded the United States!” Relevant experts said at the “Loss Sheet 2015” seminar that the US assets before 2015 were 55 trillion US dollars, according to the conversion of 340 trillion yuan; The net assets in 2013 were 352 trillion. Does this figure indicate that China’s net assets are the number one in the world? The expert said that this simple comparison is not advisable because the total assets of the United States are different from those of China. For example, in the United States, residents' cars are not counted in the total assets.

Zhang Xiaojing, deputy director of the National Finance and Development Laboratory, told reporters that when the "balance sheet 2015" was compiled, the infrastructure in local assets was not put into the statistical caliber. Many assets were based on the current cost price, "based on the current market price. It has been turned many times and we are very low estimates."

Sovereign assets are sufficient to cover sovereign debt
In terms of wide-caliber calculations, China’s sovereign assets totaled 227.3 trillion yuan in 2014, sovereign debts were 124 trillion yuan, and net assets were 103.3 trillion yuan. "Either based on wide caliber or narrow caliber, China's net sovereign assets are positive, indicating that the Chinese government has sufficient sovereign assets to cover its sovereign debt. Therefore, in a longer period of time, China occurs. The sovereign debt crisis should be a small probability event," Li Yang said. However, Li Yang suggested that the risk of contingent liabilities, including pension gaps and bank explicit and hidden non-performing assets, is worthy of attention. Once the economic growth rate continues to decline for a long time, the “continuous” liabilities are constantly “real”. The growth dynamics of China’s sovereign net assets are likely to reverse, and the debt risks we face must not be taken lightly.

Since the new century, the proportion of assets of state-owned enterprises and industrial enterprises in non-financial enterprises has continued to decline. The ratio of total assets of state-owned enterprises to total assets of non-financial enterprises decreased from 43.8% in 2000 to 30.2% in 2014. The proportion of total assets of industrial enterprises to total assets of non-financial enterprises rose from 34.5% in 2000 to 2004. 38.5%, after which it dropped to 27.4% in 2014.

"The proportion of state-owned enterprises' total assets has increased slightly while the proportion has continued to decline, reflecting the strong rise of the private and non-public economy with the deepening of reforms, and the industrial structure has been continuously optimized and upgraded," Li Yang said.

According to the Balance Sheet 2015, since the financial crisis, the total debt-to-GDP ratio of each department measured by the research method has increased from 170% in 2008 to 235.7% in 2014, and 65.7 in six years. Percentage points. Among them, Li Yang suggested that it is worth noting that the total debt of the non-financial enterprise sector increased from 98% to 123.1%, an increase of 25.1%. "Liability Sheet 2015" shows that China's asset-liability ratio shows a trend of increasing from 2007 to 2013, from 41.8% to 49%, up 7.2 percentage points, and an average annual increase of 1.2 percentage points. In particular, the increase in 2009, 2012 and 2013 was more obvious, rising by 2, 3.2 and 1.5 percentage points respectively. “This shows that the rise in the country’s debt ratio is closely related to the global crisis and the domestic economic downturn,” Li Yang said.

Li Yang proposed that by comparing China with the United States, Britain, Germany and Japan, the ratio of debt-to-asset ratio and debt-to-GDP ratio of non-financial enterprises is one that differs with the characteristics of the national economy and financial system and the stage of economic development. Large differences in economic phenomena. “Through international comparison, we found that the level of leverage in China's non-financial corporate sector is the highest among the countries compared, and the hidden risks are worthy of attention.”

Four different government balance sheets
Since 2012, four research teams in China have attempted to prepare national balance sheets, especially government balance sheets. In addition to the National Financial and Development Laboratory of the Chinese Academy of Social Sciences mentioned above, the remaining three research teams are: the Chinese government's asset-liability accounting theory and policy research group; Ma Jun (current central bank organized and funded by the Boyuan Foundation) [microblogging] chief economist of the Research Bureau, former chief economist of Deutsche Bank Greater China) led the research team led by Fudan University; led by Cao Yuanzheng, chief economist of Bank of China (5.01, 0.00, 0.00%) Bank of China team.

Four copies of the same report, the government's net assets data is significantly different. According to the report of the National Finance and Development Laboratory, the total assets of the general government in 2012 and 2013 were 24.4 trillion and 25.4 trillion yuan respectively, and the total liabilities were 8.6 trillion and 10.2 trillion yuan respectively; the net assets were 15.9 trillion and 15.1 trillion yuan. According to the report of the Chinese Government's Assets and Liabilities Accounting Theory and Policy Research Group, based on the “2012-2013 China Government Balance Sheet” compiled by the People's Bank of China Financial Research Institute, the net assets of China's public sector in 2013 was 106.9 trillion yuan. The general government net assets were 92.3 trillion yuan, of which the narrow government net assets were 6.4 trillion yuan. In 2012, China’s public sector net assets were 92.1 trillion yuan, and the general government was 81.6 trillion yuan. The narrow government’s net assets were 6.4 trillion yuan. Cao Yuanzheng’s report pointed out that according to the 1998 national balance sheet data and the statistics of the flow of funds in the past years, the government debt and asset data from 1998 to 2008 were obtained. The size of government assets increased from 6.5 trillion yuan in 1998 to 17.21 trillion yuan in 2008; the scale of government debt increased from 1.58 trillion yuan in 1998 to 7.52 trillion yuan in 2008. In 2008, the government's net assets were 5.94 trillion yuan. Ma Jun’s report estimates that by the end of 2010, the government’s net assets will be 38 trillion, the central government’s net assets will be about 17 trillion, and the local government’s net assets will be about 18 trillion. The central government’s net financial assets (financial assets and financial liabilities) The difference is about 6 trillion.

According to the "China National Balance Sheet Study" by Ma Jun et al., the summary of China's national balance sheet from 2002 to 2010 shows that in 2010 China's total national assets were 421.4 trillion, and the country's total liabilities were 202.5 trillion. Net assets reached 218.9 trillion. The same is the search for the Chinese government's balance sheet, and the four reports give completely different answers. What are the main reasons for the different balance sheet data?

"There are some differences in statistics and data." In this regard, Zhang Xiaojing analyzed the reasons for the "First Financial Daily". "In the balance sheet 2015, the infrastructure of local assets was not put into the statistical caliber. Many assets are based on the current cost price, such as the assets of state-owned enterprises, the assets of administrative institutions, especially the factory buildings, owned office buildings and other very low prices. According to the current market price has been turned many times, our market is very Low estimate." "We estimated the national balance sheet, we estimated the central government, local government and sub-sectors, and they did not make such a distinction," and relying on the People's Bank of China [microblogging] financial research institute "2012-2013 China Government Balance Sheet" comparison, Zhang Xiaojing told this reporter, "On the one hand, the People's Bank has research, they use survey data; on the other hand, they do not have detailed departmental structure data, and we are Very comprehensive." "The scope of accounting for institutional departments, the scope of assets and liabilities accounting tools, and accounting methods such as pricing The same.” Previously, the relevant person in charge of the Chinese government’s Assets and Liabilities Accounting Theory and Policy Research Group explained to the “First Financial Daily” that “we are based on internationally accepted standards, and the definitions and classifications of institutional departments and tools follow international standards. Standards and accounting methods adopt internationally accepted rules. On this basis, with reference to the practices compiled by other countries, combined with the actual situation in China.” Ma Jun said in the “China National Balance Sheet Study” that the government of its research group estimates The main reason why the net assets are higher than the version of Cao Yuanzheng and the narrow-caliber version of Li Yang is that the assets include the market value of the shares of the listed company held by the government of more than 10 trillion. The reason why Ma Jun’s estimated government net assets are much lower than the Li Yang wide-caliber version is that it basically does not include “land resources assets (undeveloped minerals and unsold land)”.

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