中国：在2018-2020年的机遇和风险（英文版）.pdf

ResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdbChina: Opportunities and Risks in 2018-2020January 2018Zhiwei Zhang, PhDChief China Economist(+852 ) 2203 8308 | zhiwei.zhangdbDeutsche BankResearchDISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI(P) 083/04/2017China Economist(+852 ) 2203 6139 | yi.xiongdbYi Xiong, PhDDistributed on: 17/01/2018 13:00:00 GMT7T2se3r0Ot6kwoPaDistributed on: 17/01/2018 12:31:18 GMTResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb1. Tightening of fiscal policy is the most underestimated risk in 2018 Fiscal spending is a key driving force behind the economic cycle. Its growth is set to slow in 2018.2. Unprecedented wealth effect from housing market Value of residential housing went up by RMB 49trn (60% of GDP) in 2017. It offers big opportunities as well as risks, for China and the world.3. We are more worried about inflation than consensus Consensus failed to forecast high inflation in the past. 4. Automation may be the next “disruptive innovation” in China Government support will likely pick up in the next five years.Key messages from this presentation:1ResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb567891011121356789101112132013Q1 2014Q1 2015Q1 2016Q1 2017Q1%What caused the big swing in Chinas economy? Nominal GDP growth2 “China hard landing” was a topical risk two years ago. Few people talk about it now Big cyclical move in nominal GDP growth, from 10% in 2013, to 7% in 2015, and to 10% again in 2017. Micro-level volatility is even higher What caused the downturn in 2014/15 and rebound in 2016/17? Exports recovery, supply side reform, the new economy, property market?Data source: Deutsche Bank, WINDResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb-3-2-1012345678-3-2-10123456782013Q32013Q42014Q12014Q22014Q32014Q42015Q12015Q22015Q32015Q42016Q12016Q22016Q32016Q42017Q12017Q22017Q3Budgetary spendingGovernment funds spendingTotal government spending% %The property-fiscal cycle is the key driving forceContribution to nominal GDP growth from fiscal spending3 We believe the fiscal spending is the key. Its contribution to GDP growth ranges from +7 to -2 ppts on quarterly basis Budgetary spending is relatively stable, while government funds spending (not included in the budget) is much more volatile 80% of government fund spending is funded by land sales.Data source: Deutsche Bank, WINDResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb-505101520 Range of government spending growth rate, 2012-16%China has large fiscal spending swings compared to other major economies4 The range of Chinas fiscal spending growth (8 - 17%) is larger than those in other major economies, including India (10 - 14.5%) and the US (0 - 4%) This wide range is NOT due to inflation. In fact CPI inflation in China has been lower and less volatile than that in IndiaData source: Deutsche Bank, IMF World Economic Outlook October 2017ResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb-80-60-40-2002040608010012001002003004005006002011 2012 2013 2014 2015 2016 2017land sales valueLand sales growth, rhsRMBbn3mmayoy%Big swing in land sales led to large fiscal shocksLand sales value and growth5 Fiscal shocks are largely driven by property cycles, which are in turn driven by property market policies Growth of land sale dropped to -60% yoy in H2 2014, then rebounded to close to 100% in mid 2016 The strong property market in 2017 was the biggest surprise that changed the growth outlook for the yearData source: Deutsche Bank, CREISResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb01020304050602012 2013 2014 2015 2016 2017Tier 1 Tier 2 Tier 3Trillionyuan3749Unprecedented wealth effect from property boomChange in the total value of residential properties6 Massive wealth effect from the property market boom in 2017 (RMB 49 trn) The majority of wealth gains in 2017 were in tier 3 cities. In the past it was mostly about tier 1 and 2 citiesData source: Deutsche Bank, CEIC, WIND, websites on secondary property pricesResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb595729341290%20%40%60%80%100%GDP Urban populationTier 3 Tier 2 Tier 1Tier 3 cities account for large shares of population and GDP7 Tier 3 cities account for close to 60% of output and population in China Usually investors focus on tier 1 but they dont matter much on a macro level Property wealth effect in tier 3 cities has a large impact at the macro levelData source: Deutsche Bank, CEIC, WIND.ResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb-10-505101520253035-10-5051015202530352012 2013 2014 2015 2016 2017Tier 1 Tier 2 Tier 3yoy%yoy%Property prices boom spread to tier 2-3 cities in 2016-17 Property price inflation8 The property boom was mostly a tier 1 city phenomenon before 2016. It spread to tier 2 cities in 2016 and tier 3 in 2017Data source: Deutsche Bank, WIND, websites on secondary property pricesResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb-1001020304050607080201220132014201520162017201220132014201520162017Wealth effectDisposable incomeThousandRMBTier 2 Tier 3Unprecedented wealth effect from property boomDisposable income and change of property value per person 9 In 2017, wealth gain from rising property prices in tier 2 and 3 cities exceeded household annual income Wealth effect on such a scale only happened in tier 1 cities before 2016. It is a new phenomenon in tier 2 and 3 cities This changes household consumption behavior on the macro levelData source: Deutsche Bank, CEIC, WIND, websites on secondary property pricesResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdbChange of total market value: residential properties10Data source: Deutsche Bank, CEIC, FRB, Haver Analytics, WIND, websites on secondary property prices-20-10010203040506070-20-1001020304050602012 2013 2014 2015 2016 2017Value in RMB% of GDPTrillionRMB% of GDPChina The wealth effect from housing prices is larger in China than it was in the US a decade ago When Chinas property prices stopped rising in 2014/15, the economy slowed How to manage the property cycle going forward is a key challenge for the authorities-20-10010203040506070-3-2-10123456782000 2001 2002 2003 2004 2005 2006Value in USD% of GDPTrillionUSD% of GDPUSResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb010020030040050060001002003004005006002013 2014 2015 2016 2017 2018Moutai Tsingtao4 Jan 2013 = Wealth effect helps luxury good consumptionStock prices for Moutai and Tsingtao11 Wealth effect from housing prices help the rich in China to become richer. People with only one apartment may not feel significant boost to their purchasing power Luxury goods outperformed in many sectors. Meanwhile the consumption by the low income group may be negatively affected due to higher rent and need to save more for downpaymentData source: Deutsche Bank, WINDResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdbGlobal implications: spillover of wealth effectChange of imports12 Chinas imports increased more than the US in 2017 This is NOT due to higher commodity prices. We tried to take out commodity imports and found the same pattern Data source: Deutsche Bank, Haver Analytics, WIND-300-200-10001002003004002010 2011 2012 2013 2014 2015 2016 2017Nov ytdChina, excluding processing importsUSBillion USDResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb9.99.14.83.91.82.51.52.63.01.81.30.80.6024681012200720082009201020112012201320142015201620172018F2019F% of GDPChinas current account surplus is on a downward trend13 Strong consumption and imports also mean that Chinas current account surplus will shrink further This will put pressure on Chinas balance of payments, reserves and RMB exchange rate Data source: Deutsche Bank, WINDNote: 2017 Q3 YTD data for the 2017 point.ResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb1988505212755120601020304050607080901002 4 4 6 6 8 8 10 102015 year end 2017 year endNumber ofcitiesHow risky are properties in tier 3 cities?House price to income ratio in tier 3 cities14 For most of tier 3 cities housing is affordable. There is no clear sign of a price bubble The risk is oversupply and high vacancy, but the quality of housing data is poor in tier 3 cities, hence the lack of evidence to make judgment Some tier 3 cities are tightening policies to prevent prices to boom further. See reference list at the end for our reportsData source: Deutsche Bank, WIND, websites on secondary property pricesNote: Housing affordability is defined as the number of years needed for a household to buy a 90-sq.m apartment. ResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdbConstrained land supply supported property prices15 The gap between land sales value and volume suggests that land supply is constrained Can tier 3 cities sustain property prices by cutting land supply? A big question mark on our mind for 2018Data source: Deutsche Bank, CREIS-80-4004080120-80-40040801202014 2015 2016 2017Residential land sales value, 3mma, yoy%Residential land sales volume, 3mma, yoy% %ResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdbGDP growth rose before export reboundExports helped but not the major driverExport growth contribution to GDP growth is relatively small16-2024681012142014Q1 2015Q1 2016Q1 2017Q1contribution: exportsNominal GDP growth%Data source: Deutsche Bank, WIND-10-50510152024681012142014-01 2015-01 2016-01 2017-01Nominal GDP growthExports growth, rhs%3mma%ResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdbSSR share in GDPSupply side reform (SSR) is not broad-basedContribution to NGDP growth17024681012141618202013 2014 2015 2016Supply-side reform sectors% of GDPData source: Deutsche Bank, WIND. Supply-side reform sectors include coal, steel, non-ferrous metal, and non-metal mining.-2024681012142014Q1 2015Q1 2016Q1 2017Q1contribution: SSR sectors%ResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb5.6%8.0%10.6%12.6%14.8%16.0%0%2%4%6%8%10%12%14%16%18%012345672012 2013 2014 2015 2016 2017ERMB trillionOnline shopping scaleNew economy is doing well but not a strong cyclical forceOnline shopping growth18 We are bullish on the new economy and continue to expect it to perform well in 2018 It has not been a big swing factor for the economy, hence cannot explain the economic cycle since 2013Data source: Deutsche Bank Asia TMT ResearchResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb-202468101214-2024681012142013Q3 2014Q3 2015Q3 2016Q3 2017Q3Fiscal spendingExportsSupply side reform sectorsNominal GDP growth%Comparing the size of contributions from different forces 19 Fiscal spending plays a bigger role in economic cycle than other factorsData source: Deutsche Bank, WINDResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb2017 2018FExports growth 8.3 7.0Supply side reformPPI 6.3 2.0Total fiscal spendinggrowth13.4(f) 4.9What will happen in 2018?20 The contributions from export and supply side reform will remain positive but likely weaken on the margin Total fiscal spending growth is where we see the more downside riskData source: Deutsche Bank, WINDResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb-80-4004080120-200204060802011 2012 2013 2014 2015 2016 2017Property sales valueLand sales value, rhs3mmayoy%3mmayoy%A fiscal tightening cycle is coming: land salesDevelopers may become more cautious in land market21 Land and property sales were no longer synchronized in 2017 Continued weaker property sales may put pressure on real estate developers, reducing resources available for land purchasesData source: Deutsche Bank, WINDResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb-80-60-40-200204060801000501001502002503003502011 2012 2013 2014 2015 2016 2017Tier 1 Tier 2 Tier 3 Land sales value, yoy%, rhsCasesA fiscal tightening cycle is coming: land salesNumber of failed land auctions rose in Q422 Recent increase in the number of failed land auctions suggest that land market may cool down in 2018Data source: Deutsche Bank, CREISResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 2018Yi Xiong, PhD | (+852 ) 2203 6139 | yi.xiongdb051015202530354045051015202530352007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017H1LGFV debt % of GDP, rhsTrillionRMB%A fiscal tightening cycle is coming: containing debt riskLGFV debt stock increases23 Local government financing platforms (LGFVs) are important vehicles for the financing and execution of public investment projects Our estimate based on firm-level data of 1844 LGFVs suggest their debt continued to grow in value and as percent of GDP The reference list at the end of the presentation has the link to our LGFV reportData source: Deutsche Bank, WIND, CBRC, NAOResearchDeutsche Bank Zhiwei Zhang, PhD | (+852 ) 2203 8308 | zhiwei.zhangdbJanuary 20