Monetary Expansion May Buy Time But Can Not Replace Structural Reform.

At the beginning of this year, economists once had high expectations of China's economic recovery.

Policy banks will pour large amounts of capital into local investment projects, and commercial banks will also open large water pipes (as far as the central bank has to send people to conduct window guidance).

PPP infrastructure investment has been launched in large numbers, new projects of real estate have springing up everywhere, the PMI index has gone up, the number of orders has improved, and the prices of raw materials have been rising rapidly.

Some economists claim that a new rising cycle has arrived.

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The amount and investment in local infrastructure projects do see that this investment is one or even more exaggerated than the "four trillion" in 2010.

However, 2017 is not 2010.

The government's fiscal and monetary expansion did not bring the initiative of private enterprises.

The lever of China's economy has been exerting its strength. Housing prices are also increasing in advance. Banks are in urgent need of leveraged security and the expansion cycle of monetary policy is unsustainable.

After entering the second quarter, product orders began to decline, the growth rate of new housing starts slowed down, and the cost of capital rose further.

More importantly, under strict supervision and financial anti-corruption, commercial banks began to shrink their balance sheets, and off balance sheet business has obviously shrunk, while off balance sheet credit expansion is the main source of capital in recent years.

The rebound in China's economic growth has ended. Although the growth of GDP is unlikely to decline significantly, its own organic upward momentum has dissipated.

The so-called "new economic cycle" is nothing but a policy noise that money is piled up.

In fact, the growth of GDP is a little slower. It is not a big event. As long as social stability and financial security are not a problem, there is no need to stick to the numbers.

Even if the growth rate is no longer good, it is among the best in the world. Besides, the volume of China's economy has already been very large, and the Chinese economy has entered the post industrial era.

The economy has cycles, there is a rise cycle, there will be a downward cycle, we are now in a downward cycle.

It is worth asking why the government's policy has not been heard.

Rising from the start? At this moment, private entrepreneurs' investment confidence is not good, because the investment environment is not ideal, because the profit prospects in the field of private entry are not attractive enough.

There is no need to debate whether Cao Dewang is talking about the exact tax rate in China and whether capital is voting with feet.

Monetary expansion may buy time, but it can not replace structural reform.

Lack

Support and productivity increase. The growth rate of money is just a monetary illusion, which is difficult to sustain.

Planning to spend money on a growth boom is like trying to crawl out of the pit with its own hair.

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