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The last two decades of rapid growth–A brief analysis of some trends in China’s economy in 2018

Not long ago, I saw an article in a public account. The author of this article is an elite who has been in the financial world for many years. He did not return to China in 1987, and now returns to China.

The article wrote about the experience after returning to China. His friend in Shanghai spent eight million to buy an apartment, and a down payment of three million loans of five million, with more than 20,000 per month.

In his article, he commented that he would never do this because it is all about concentrating all assets on the property. The risk is too high. He believes that there is a general lack of risk awareness in the country, so he will return to China to develop investment education.

Indeed, more than 20,000 monthly payments per month require that no one of the two husbands and wives can lose their jobs. If they are unfortunately unemployed and cannot find a good job, the house prices will fall again. This family will not only suffer heavy losses, but may even be like Asian Finance. The Hong Kong family during the crisis was completely bankrupt.

Therefore, his statement is not without reason.

However, he also overlooked a point that he could not experience personally in the long-term life in the United States. It is difficult to form an intuitive impression without personal experience.

That is, the Chinese economy is in a strong growth background, and the risk of unemployment and housing prices falling off is actually very low.

Economic growth can not only ensure employment and housing prices are stable.

At the same time, it will bring about a rapid increase in income, making the monthly burden on families more and more light.

About a decade ago, a colleague around me complained that his monthly supply pressure of more than 2,000 a month was too great.

We all nodded and said that we were plucking our sympathy at the same time. We said that your pressure is really big. Of course, at that time, it was three or four thousand yuan a month. Is the pressure small?

Now that ten years have passed, it is not too stressful to supply more than two thousand months. I think everyone knows very well.

Many elites in the United States have lived in the West for a long time. In addition to occasionally returning to China for a few days, they have lacked experience in China for the past ten years, and they have not experienced the changes brought about by the miracle of China’s rapid economic development.

Therefore, it is accustomed to use the social thinking mode in which the West has developed to stagnate to make decisions in Chinese society, which is actually very problematic.

Pay attention to the risks, but over-emphasize the risks will become conservative, miss many opportunities because of low risks, and miss the most difficult period of rapid economic growth in Chinese history.

China’s rapid growth period, which has lasted for 40 years since the reform and opening up in 1978, will gradually end in the next decade or two.

This is expected to last for more than half a century of long-term high-speed growth, not only unprecedented in Chinese history, but also difficult to estimate in the future.

In a generation, the face of the entire country has changed radically.

There are a lot of people who are rural children who have never seen a plane train when they were young. When they were 30 or 40 years old, they had a house and a car in a big city.

Liu Qiangdong was the first time in the fourth grade of elementary school to see the electric light. Now it is already the Jingdong boss.

It’s a shame to miss such a huge change and opportunity.

Today we look at some of the changes and trends in the current Chinese economy from the 2018 government work report and data.

There are many different ways to look at China’s economic growth. The most common is the troika theory, which means that economic development comes from three major

demands

: investment, exports and consumption.

The main investment is that the government and enterprises invest money to form fixed assets.

Export is to sell things to foreigners,

Consumption is selling things to the Chinese.

We also clearly see that the core and main body of the three major demands of investment, export and consumption are people.

Consumption is for Chinese to buy things, exports for foreigners to buy things, and investment for government and businesses to buy things.

According to the 2017 Statistical Bulletin, the contribution rate of final consumption expenditure to GDP growth is 58.8%, the contribution rate of total capital formation is 32.1%, and the net export contribution rate of goods and services is 9.1%.

Although it is a troika, the power of the three horses is totally different.

The overall situation is 6:3:1, and the power of domestic consumption is more than six times that of exports.

Therefore, the contribution of exports to economic growth has been relatively small.

Since the Chinese economy joined the WTO in 2001, the surge in exports has driven economic development.

China’s export value soared from US$266.1 billion in 2001 to US$12.20 billion in 2007, an increase of 4.585 times in six years.

Therefore, the first decade of the 21st century is the absolute main engine of China’s economic growth.

From 2007 to 2017, exports only increased from 1.22 trillion US dollars to about 2.27 trillion US dollars (15.33 trillion yuan), and the growth rate in the decade was less than doubled. This is also the case of RMB appreciation.

It is difficult to say that economic growth will be stimulated by exports in the future. In 2017, the contribution rate of net exports to economic growth was only 9.1%.

Therefore, this year, unless the export plummets and the surplus is greatly reduced, the impact on China’s economic growth will not be too great.

In addition, after all, exports are mainly related to external demand and are not controllable.

In the case of external demand, the economic growth of major countries in the world in 2017 was 2.3% in the US, 2.3% in the Eurozone, and 1.7% in Japan.

I will continue to ridicule Japan. From the peak of 1995 to the 22nd year of 2017, the economy is still the case. The third decade that Japan lost is already on the road.

The economic recovery in Europe and the United States is still quite obvious, especially when humans want the United States,

Standard & Poor’s expects the US economy to grow by 2.8% in February 2018,

The annual economic report submitted by the White House to Congress on February 21st is expected to increase by 3.1% in 2018.

Europe and the United States are China’s two largest export markets

, and the economy is recovering strongly.

Therefore, China’s export situation is expected to be good in 2018. In fact, China’s exports increased by 6% in January 2018, and in February it increased by 17.2%. Even considering the Spring Festival, this is a good result.

To put it more, we are not only going further and further away from Japan, but the total economic gap between China and white countries in 2017 is also shrinking.

In 2017, the total economic output of the 19 countries in the euro zone was about 12.5 trillion US dollars, and the total economic volume of the United States was about 19.387 trillion US dollars, a total of 31.89 trillion US dollars.

The total economic volume of China in 2017 (according to the exchange rate of 6.75) is 12.254 trillion US dollars, which is 38.43% of the euro zone + the United States.

China’s economic growth rate last year was 6.9%, equivalent to a 2.65% increase in the euro zone + the United States, while the euro zone + US total growth rate was 2.3%.

That is, we exceeded them in actual increments.

In 2018, China’s total economic output will exceed the sum of the 19 countries in the euro zone.

The biggest change in exports in 2018 is the US trade war, but it will not affect too much.

Both China and the United States are huge powers. China has joined the WTO for 17 years. The trade war has become accustomed. You have a card and I have a card. China and the United States are both powerful and rational civilized countries, and Russia, Germany, and Japan. North Korea, these easily excited people are different.

If China and the United States fight a trade war, they may fight a trade war at some time. They may fight a trade war in an industry, but they will never fight trade in all industries at all times. The final result is definitely neither. Willing to lose both sides, each one has one step.

All trade wars are inseparable from objective power comparisons. The United States today does not have the ability to contain China.

In general, this year, as the economies of various countries generally recover, the demand for exports is not a big problem, which will also stimulate domestic enterprises to expand investment.

But overall, it is estimated that the contribution of net exports to China’s economic growth will basically fluctuate by about one percentage point.

To be fair, China’s high-growth era of exports has ended. It is now an era of “seeing the sky to eat”, which is greatly affected by changes in external demand.

Exporting this engine of economic growth, the force that drives economic growth has become weaker, and it is also in an unstable state that is susceptible to external conditions.

Let’s talk about consumption again. At present, China’s economic growth, Chinese consumption is the most important core driving force. Simply put, if you spend no money, it actually determines whether the national economy will grow.

Compared with China, which was just under reform and opening up, it is a world of difference.

At present, the income of Chinese people is not low on a global scale. In the world’s major developed countries, the per capita annual income is generally more than 200,000 yuan.

China’s annual income can reach more than 200,000 people, in fact, it has already been a lot.

I dare say that each of you has more than 200,000 people around you. If you don’t believe it, you can open your WeChat friends address book to see if there are a large number of people with income levels in developed countries.

In the 2017 Statistical Bulletin, the median per capita disposable income of the national residents was 22,408 yuan, an increase of 7.3%.

This growth rate was 1 percentage point higher than that of 2016.

This disposable income is not just wages, but the sum of all income including deposit interest, opening stores, renting houses, etc., 22,408 yuan is equivalent to an average of 1867.3 yuan per month, is 50% of Chinese people entering monthly income of 1867.3 yuan The following?

of course not.

First of all, this is the income after deducting taxes, social security and provident fund.

Secondly, this is to calculate the per capita of 1.39 billion people in the country. Your family of four people and two children are averaged with you.

So your income can be ranked in the top 50% of the Chinese, and you can know the sum of your family members’ income.

A family of four earns more than 2.24*4=89,600 yuan to reach the top 50%.

Another data can be mutually confirmed. In 2017, the monthly income of peasant workers nationwide was 3,485 yuan, and the annual income was 41,800 yuan, an increase of 6.4% over the previous year.

In my previous article, some people said that many Chinese young people earned more than two thousand monthly income.

I have to say that such people are indeed everywhere in the country.

But if you are a healthy young man, you still have more than 2,000 in a month in 2018, and you are already behind.

A monthly income of 3,000 yuan is the most basic requirement for healthy young people in China, otherwise you are basically the last 50% in China.

The monthly income of 3,000 is not high for a healthy young Chinese. After all, migrant workers have an annual income of 41,800 yuan.

I have previously published an article called “The Last Ten Years to Develop a Country”.

It is said that China’s per capita income will enter the minimum threshold of developed countries around 2025.

Let’s compare China’s per capita disposable income in 2017 with the United States.

The US Wall Street Journal website reported on September 12, 2017 that the US Census Bureau released data on the 12th that the median annual income of American households last year was $59,039.

According to the average exchange rate of 6.75 in 2017, the median income of the US family of US$59,000 is actually RMB39,850.

The average number of Chinese households is 3.1, so the disposable income of Chinese households in 2017 is 2.24*3.1=69.44 million yuan. Considering that this is the income after tax, social security and provident fund, even if the total deduction is 10%, China The pre-tax income of the family is about 6.944/0.9=77.16 million, which is 19.36% of the American family.

According to China’s growth rate of 7.3% in 2017 and the appreciation of the renminbi, the median household income in China has reached 40%-50% in the US within ten years. There is no big problem, and it can enter the threshold of developed countries.

The rapid growth of Chinese income in 2017 laid the foundation for the continued increase in consumption in 2018. In fact, according to the Washington Post report in January 2018, the amount of physical goods consumed by Chinese people this year is estimated to be 5.8 trillion US dollars. Will exceed the United States.

Generally speaking, when the economic situation is not good, the Chinese government will find ways to stimulate consumption, mainly through real estate and automobile, and of course, home appliances, such as home appliances that have been implemented for more than five years in 2007-2013. Subsidies have greatly stimulated the consumption of rural household appliances.

As the first big industrial consumer goods, the car is a big killer for China to stimulate consumption.

In 2015, the economy was not good. At that time, a policy was introduced to reduce the vehicle purchase tax by purchasing passengers with a displacement of 1.6 liters or less from October 1, 2015 to December 31, 2016. 10% dropped to 5%.

That is, a 100,000 yuan car is 5,000 yuan cheaper.

As a result, passenger car sales in China soared by 14.9% in 2016, compared with 7.3% in the previous year.

Obviously, lowering taxes has a good effect on stimulating car consumption.

From January 1st to December 31st, 2017, the car purchase tax was raised from 5% to 7.5%.

From January 1, 2018, the car has returned to the 10% purchase tax rate.

In 2018, the car purchase tax rebounded to a normal level of 10%.

It can be seen that the central government judges that the current problem is not big and does not need to be stimulated by cars.

Why do you say this? Remember the year before 2015, when was China reducing the automobile purchase tax?

On January 14, 2009, the State Council made a decision to reduce the vehicle purchase tax by 5% for passenger cars of 1.6 liters and below from January 20 to December 31, 2009. As a result, the sales volume of passenger cars was large. Up 52.9%

Why is it the policy of halving the purchase tax in 2009 and 2015?

To put it bluntly, the economy is not good and needs to stimulate consumption.

So when is the next time the Chinese economy is not good, I will probably know about the car purchase tax reduction policy.

In 2018, the car purchase tax returned to the normal 10%, indicating that consumption upgrades and economic growth are now good.

In addition, China’s tool for stimulating the consumption of third- and fourth-tier cities, shantytowns, will continue in 2018.

This year, 5.8 million units will be rebuilt, down from 6.09 million units last year.

We have seen the sheds and cars together, the number of sheds that stimulate consumption in third- and fourth-tier cities has decreased, and the purchase tax easing to stimulate automobile consumption has also been abolished. Both the real estate and automobile stimulating consumption policies are retreating, indicating the central government. I think that there is not much problem with current consumption growth.

China’s current shed reforms are all mainly to promote monetization, that is, to directly give money to the relocated households.

This is actually a major reform of our country in recent years. It used to be mainly for houses.

After the monetary resettlement, after the money for the relocated households, they are encouraged to purchase commercial housing instead of renting the house for two years and then moving back.

The government unified the price of the developer and the group purchase, which can also help the relocated households to get discounts, which has a good effect on the developer’s commercial housing destocking.

At the same time, the relocated households bought commercial housing, and they had to spend money to decorate and purchase new furniture, so consumption was stimulated.

This year, 5.8 million households have been converted, which means that there are 5.8 million relocated households in China this year. In theory, every relocated household will get cash of hundreds of thousands to hundreds of thousands of yuan.

The transformation of shanty towns in China is mainly aimed at key resource-exhausted cities, independent industrial and mining areas and concentrated areas of third-tier enterprises. Of course, large cities also have sheds, and sheds have become a tool to stimulate the economic development of these areas.

Sometimes when we look at the news, we have to understand the story behind it. In 2015-2017, China has built 18 million shantytowns, which means that 18 million Chinese families have become relocated households in the past three years, and they have received large sums of cash. I can say that most of the 18 million demolition families have never received so much money in their lifetime.

Get cash, and you will continue to spend after purchasing a commercial house.

The renovation of shanty towns will continue in 2018, at least to stabilize consumption.

I have been thinking that 18 million families, plus 5.8 million this year, are 23.8 million families. From 2015-2018, I got a huge sum of money. Will this count as disposable income?

It can be seen from the shed reform and the automobile purchase tax that the Chinese government does not currently have a policy of stimulating consumption, indicating that the current trend of consumption growth is still possible.

In fact, in January-February 2018, excluding the seasonal factors, the total retail sales of consumer goods in China accelerated by 0.2 percentage points over the same period of the previous year. The reason behind this was that the unit price of automobile sales increased, resulting in a 9.7% increase in automobile consumption.

However, from this year’s government work report, in order to ensure the continued growth of China’s consumption, China is focusing on one thing, which is to reduce the income gap, which is crucial to support consumption growth.

The more people have money, the more money they can save. In other words, the more people have money, the more money they are not spent.

The same is an annual income of one billion, so that a rich man earns. He bought a car this year. This one hundred thousand people earned a thousand, and one thousand cars will be bought a year. The demand is completely driven. Not the same, so I want to narrow the income gap.

There are actually two income gaps in China.

One is the gap between regions, and the development between the provinces is uneven. This can be adjusted by transfer payments.

The other is the gap in per capita income.

In 2017, the per capita disposable income of Chinese residents showed such a trend. The average number increased by 9%, while the median only increased by 7.3%.

What does this mean?

It shows that 50% of Chinese people’s income growth in 2017 is faster than the latter 50% of Chinese people, which is not very harmonious.

In 2016, the average and median growth was 8.4% and 8.3%, both of which were similar.

Therefore, in the Prime Minister’s 2018 government work report, all the income-related parts are to adjust the income gap.

1: Continue to raise basic pensions for retirees and basic pensions for urban and rural residents,

—-

This is to increase the income of the elderly. The pension for the elderly in China is generally around 2,000 yuan, and the rural elderly are generally around 70 to 80 yuan. Simply put, it is more money for the elderly.

2: Reasonably adjust the social minimum wage standard,

—– The

minimum wage standard is still to continue to increase, that is to say, more to the bottom of the money.

Although the minimum wage is increased by one or two hundred yuan each time, the basic salary given by many factories in China is given according to the minimum wage. The base salary is calculated according to the basic salary. The basic salary increases with the minimum wage, and overtime pay and the like increase. You can earn thousands of dollars a year.

3: Improve the wages and subsidy system of government institutions and institutions, and tilt to hard areas and special positions;

—-

In fact, encourage cadres and staff to work in poor places and raise wages in hardship areas.

That is to send more money to units in hardship areas.

4: Raise the threshold for personal income tax, increase the special expenses deduction for children’s education and major medical care, and reduce the burden reasonably.

—-

This article is also very clear, reducing the burden on the middle class and stimulating consumption.

Give more money to the “bottom middle class”, give more money to sick people, and give more money to children.

The so-called bottom middle class refers to the people whose income exceeds the threshold. The increase of the threshold can completely waive their tax, reduce their burden and increase their spending power.

why?

In 2013, the country received 653.1 billion yuan in taxes, and by 2017, the country received 116.6 billion yuan in taxes.

From 2013-2017, almost doubled in four years, an increase of 83.2%

In 2013, the median per capita disposable income of urban residents in China was 24,200 yuan, and the median in 2017 was 33,834 yuan, a year-on-year increase of 39.8%.

One growth is about 40%, and the other is about 80%. That is to say, in the past four years, the growth rate of China’s tax payment is twice as fast as the per capita disposable income of residents

.

This shows a problem: more and more people pay taxes, and these new tax groups are mainly used as “bottom middle class” wage earners.

Therefore, raising the tax threshold can well reduce the burden on the wage earners and increase the potential consumption capacity.

5: Encourage the people to increase their income and become rich through labor.

This specific measure did not say, but in fact the orientation is very clear,

The four categories of income per capita disposable income of Chinese residents are wages, operating income (such as farmhouses, shopside self-employed households), property income and transfer payment income (that is, pensions).

Take Guangdong Province, the largest economic province in China, as an example. In 2017, the per capita disposable income of Guangdong residents was 33,003.29 yuan, an increase of 7.3%, of which the net income per capita was 3602.02 yuan, an increase of 16.3% over the previous year.

This property income growth ranks first in the four categories of income, and the growth rate is the fastest.

What is property income?

For urban residents, it is mainly rent, savings insurance income, dividends, and interest income.

In 2017, the net income per capita of urban residents in Guangdong was 5,072.21 yuan, an increase of 16.1% over the previous year.

The per capita rental income and the virtual rental income of self-owned housing increased by 18.6%.

We can see very clearly,

As the country’s largest economy, Guangdong,

The fastest-growing portion of the per capita disposable income of urban residents in 2017 is property income.

The fastest-growing part of property income growth is the rise in rents, which is a bit embarrassing…….

In general, renting a house is the lower-income side, and renting a house is a party with a higher income. This rent is growing too fast, which is widening the income gap.

Therefore, in our government work report, we must encourage ordinary people to increase their income through labor.

That is to say, more work and wages work together, transfer income (pension) countries will arrange to increase pensions, the people do not care.

The property income countries do not say that they encourage income increase. Of course, the rural residents of property income can still encourage the increase, because it is too low. Even the rural people in Guangdong are more than 400 yuan a year.

In 2017, the net income per capita of rural residents in Guangdong was 414.81 yuan, an increase of 13.4%.

There is no reason to encourage the growth of property income. There is also a reason for the proliferation of various wealth management products in the market, especially various treasures and P2P investment channels. Various borrowing and running events have occurred all over the country, and personal investment has been deceived.

In order to pursue a 10% interest rate, many people invest large sums of money in order to increase their property income. This financial chaos and risk need to be managed.

The growth of property income is actually a good thing, but it is too fast and bad. After all, the wealth of a society is mainly created by labor.

In the 2018 government work, the five items on income are all measures to narrow the income gap.

In fact, in addition to these five, there is another real estate tax that is being enacted.

This real estate tax is actually more of a regulation tax

.

Mainly used to adjust the income gap, according to the general expectation, mainly to the rich in the multi-suite, and ordinary people will basically be within the scope of exemption.

To put it bluntly, it is still the main difference between the rich and the poor

The five methods and real estate taxes are all focused on narrowing the income gap and can promote the long-term development of the Chinese economy.

After talking about exports and consumption, the last one is investment.

In the early days of reform and opening up, China was still a poor country. Not only did the Chinese people have no money to spend, but the Chinese government and banks did not save money, so it was difficult to invest money.

In the 1980s, China’s research and development transported ten civil aviation passenger planes, with a total investment of 537.7 million yuan. Later, it was dismissed. The investment is too important. The country has no money to afford too much high-tech. More than 500 million is not a thing at present. It was a high price at the time.

In 1986, China launched the 863 Program, which specializes in the development of high-tech projects. It was a joint proposal by scientists such as Wang Yichang and Wang Dayian. At that time, scientists only dared to ask the country for two billion yuan, which showed the degree of embarrassment of state funds at that time. In the end, Deng Xiaoping not only agreed, but also approved a billion yuan, which made scientists happy.

Today’s China has entered an era of rich capital and even surplus from the era of capital shortages 30 years ago.

I have written some articles on industrial development. There are many readers who believe that I can invest together and say that I have millions of funds in the secondary market, tens of millions or even hundreds of millions.

I want to say that readers of private letters, you have more money than me, I should ask you how to make money, not the other way around.

The Chinese economy needs constant investment, but the benefits of relying on investment growth are getting lower and lower.

China’s investment is entering a period of transition from quantity to quality.

Investing in this economic engine is also gradually turning off.

The following picture is from the National Bureau of Statistics. It can be seen that in the three years from 2008 to 2010, China has formed a peak of investment to stimulate economic growth. The contribution rate of investment to the economy was 53.2% in 2008 and 86.5% in 2009. In 2010, it was 66.3%.

The high level in 2009 is due to the negative contribution of net exports to economic growth.

After that, the overall situation showed a downward trend. In 2016, investment slowed down to 42.2%, and by 2017, investment was only 32.1%.

Why is it increasingly difficult for investment to drive economic growth?

Because the age of China’s expansion has ended, the era of qualitative improvement is coming.

The era of investing in more houses, more infrastructure, and more factories to get economic growth has passed.

Because China is no longer a shortage of infrastructure, housing shortages, and a shortage of products in China, but a China that has begun to show excess. If you continue to invest in expansion, it will only exacerbate excess.

What is really needed is high quality service and products.

Looking at the picture below, the investment is divided into four parts: manufacturing, real estate, infrastructure, and tertiary industry.

The first is real estate. In 2017, the real estate development investment for the whole year was 1,097.9 billion yuan, an increase of 7.0% over the previous year.

First of all, we need to know a logic. With the gradual reduction of the total number of young people, the demand for new houses is declining. In theory, the people entering the society in 2018 should be young people from 1996 to 2000, compared with 80 in China. After that, there was a sharp decline.

There are fewer young people, and the demand for the house is a problem, especially in the third- and fourth-tier cities and county towns. The challenge is very big. Preventing blind investment and forming new stocks will be a long-term task.

The following figure is the sample survey data of the National Bureau of Statistics in 2016. There are 106.6 million people aged 25-29.

There are only 79.10 million people aged 20-24, and only 61.56 million people aged 15-19.

China’s new homes are mainly second-tier cities and below

First-tier cities, such as Beijing and Shenzhen, have already entered the era of stocks, and most of the houses traded on the market are second-hand houses.

Second-tier cities are also rapidly moving toward this step.

Third- and fourth-tier cities are mainly based on new houses, but due to population outflows, anti-inventory is the main task.

We must have a deep understanding of the changing trends of the Chinese population.

That is, the population of a large number of areas in China has now declined, and the newly added population is mainly concentrated in a few large cities.

For a province, the population is concentrated in the provincial capital.

In 2017, China’s population increased by 7.37 million, of which the newly added population of Guangzhou and Shenzhen was 1.07 million, and the two cities accounted for 14.5% of the country’s new population.

What does it mean?

The total population of Guangdong in 2017 is 1.7 million, and 1.07 million are concentrated in Guangshen. If you count Zhuhai, Dongguan, Zhongshan and other Pearl River Delta cities, Guangdong Province, Guangdong, Guangdong, and Guangdong A steady or declining situation.

The same is true in the country. If we count dozens of first- and second-tier cities,

Basically, it can be seen that the total population below the national third- and fourth-tier cities is tending to decrease.

Therefore, the role of the new real estate investment in the economy is also weakening.

As a shantytown renovation for the renovation of old houses, 6.09 million units were started in 2017, with an investment of 1.84 trillion yuan, accounting for 16.76% of the real estate investment of 10.98 trillion yuan in 2017.

The target for shed improvement in 2018 fell to 5.8 million units, a decrease of 4.76%.

Therefore, the contribution of the shed to the core of the old house renovation investment is also declining.

The renovation of old houses is not like new houses. New houses can be built every year as long as they are in need, and old houses can be rebuilt for at least three or forty years.

Therefore, it is normal for the number of sheds to be reduced as an indicator of the renovation of old houses. The shanty towns in the country can be rebuilt in a few years.

In 2017, after vigorous destocking, by the end of December 2017, the national commercial housing sales area was 589.23 million square meters, down 15.3% from the end of the previous year, and the residential sales area dropped by 25.1%. This destocking is quite powerful.

In the future, with the reduction of young people’s mouth, in order to avoid once again destocking, real estate investment must be in a state of being controlled. The golden age of relying on real estate investment to drive economic growth has passed. Once the golden age has passed, it will begin to enter the industry consolidation. The era when big fish eat small fish,

In 2017, the sales of three large-scale housing enterprises, Country Garden, Vanke and Evergrande, exceeded 500 billion.

Country Garden sales increased by 73.4% to 550.8 billion yuan, becoming the first;

Vanke’s sales in 2017 were 529.88 billion yuan, an increase of 45%

Evergrande 2017’s sales amount was approximately RMB 500.96 billion, a year-on-year increase of 34.2%.

The sales growth of the three real estate enterprises was significantly faster than the industry average, and the concentration was increasing.

So what about infrastructure?

In 2016 and 2017, China stimulated economic development by increasing infrastructure investment in a large amount, in exchange for stable economic growth.

China’s infrastructure investment increased by 17.4% in 2016, and infrastructure investment increased by 19% in 2017.

However, the growth of high-speed investment growth is actually getting weaker.

Take the railway as an example, China’s investment in railways,

In the four years from 2014 to 2017, the railway construction investment entered a stable period of 800 billion yuan.

In 2014, it was 808.8 billion yuan, in 2015 it was 823.8 billion yuan, in 2016 it was 801.5 billion yuan, and in 2017 it was 801 billion yuan.

In 2018, this number will become 732 billion yuan, the first decline from the 800 billion level.

China’s railways, the most valuable road section has actually been completed, Beijing-Shanghai high-speed rail is the most valuable line in the country. At present, the major large and medium-sized cities are basically connected to the high-speed railway network. The more they are repaired, the more they are supplemented and the economic value is increasing. Small, the lower the role of the economy.

For example, the Sichuan-Tibet Railway, which is currently under repair, is mainly strategically more important than economic.

The road is the same, China is still repairing highways, but which big and medium-sized cities in China do not have highways now? Basically, do not say the coastal provinces, now even Henan, Jiangxi, Guizhou, counties and county highways.

Since China has 100% coverage of the national infrastructure, it is a kind of complex that is different from other ethnic groups. It is typical of various villages and villages. Every village must have Internet, highway, electricity, radio and television, and the standards are not low. Therefore, large-scale infrastructure construction will continue in the future. Of course, diminishing economic benefits are inevitable.

China has significantly increased its infrastructure investment in the past two years to stabilize economic growth.

Often concerned about Sany Heavy Industry, Zoomlion, Xugong Machinery and other companies know that the performance of these construction machinery companies has recovered on a large scale, and the market has begun to prosper.

However, infrastructure investment cannot be used as a long-term investment means to promote economic growth, because the more complete the infrastructure, the marginal benefits are gradually decreasing.

China’s

ultra-high-speed growth of 17-19% of infrastructure investment in

2016 and 2017

is unsustainable.

Of course, infrastructure has a good opportunity for us to come. It is a 5G network as a communication infrastructure. In the year of 2018, 5G networks will not start large-scale construction, but the benefits brought by 5G infrastructure will be huge. .

Another one is manufacturing,

Manufacturing China invested 19.36 trillion yuan in 2017, only an increase of 4.8%. Why is the growth so slow? The main investment in the six high-energy-consuming industries is 644.3 billion yuan, down 1.8%.

For example, in our steel industry, the main theme is to go to production capacity.

At the same time, the investment in the two core industries of automobiles and electronics is growing at a high speed.

One is that the automobile manufacturing industry completed 1,310 billion yuan, an increase of 10.2%.

The other is the computer, communications and electronic equipment manufacturing industry completed an investment of 129.14 billion yuan, an increase of 25.3%.

If you look at all the high-tech industries (including six major high-tech manufacturing industries such as pharmaceutical manufacturing, aerospace equipment and equipment manufacturing), the investment is 429.12 billion yuan, an increase of 15.9% over the previous year.

What can we see from the data?

Manufacturing has seen significant differentiation,

Traditional industrial investment with high energy consumption and overcapacity is difficult to grow because of overcapacity.

At the same time, high-tech manufacturing investment growth is very fast, showing that the market needs high-tech products.

Therefore, for manufacturing investment, it has now passed the stage of pursuing quantity, but to improve quality.

Once from the stage of pursuing quantity to the stage of improving quality,

The pulling effect of investment on the economy will be greatly reduced.

why?

When the market is in the growth stage, all companies’ investments can make money, just earn more and earn less.

For example, people in this street need to eat 200 buns for breakfast. The total capacity of the two buns shop is 100. Of course, 100 are enough to sell and make money.

When the output is sufficient and the market is saturated, it will enter the zero-sum game stage, that is, only companies with higher quality and technology will win and make profits, and other companies will lose money, thus reducing the overall investment efficiency.

Are there any shortages in our lives now?

Can be said no.

The same is true for the tertiary industry, which is also the stage of entering the pursuit of quality.

China’s future investment is more structural adjustment, the same one trillion, invested in high-tech manufacturing and emerging service industries, especially China is still relatively backward, there is a huge domestically replaced space industry, the growth of the economy Pulling will be even bigger.

In general, as the era of quantity is over, the role of investment in the Chinese economy will continue to weaken.

A simple summary, the conclusion is very simple,

1: The demand for the troika has been extinguished two times. The era of consumption as the absolute main force to drive the economy is coming. China’s economic development is gradually becoming characterized by developed countries.

From 2007 to 2017, Chinese exports only increased from 1.22 trillion US dollars to about 2.27 trillion US dollars (15.33 trillion yuan).

Ten years of growth has not even doubled, so after the 2008 financial crisis, the era of high export growth has ended.

Investment has become the absolute main force driving China’s economic growth, especially in the three years from 2008 to 2010, investment has become the core force driving China’s economic development.

Exceeded consumption and net exports.

Of course, if we look at the data, we will find that the contribution of these three years of investment to China’s economic growth is extremely high. The positive factor is to stimulate economic development and save China from the financial crisis.

The negative factor is that more is the expansion of the volume, investing a large amount of repetitive capacity, directly leading to large losses in the back.

The most seriously affected is that China’s construction machinery, steel, machine tools, petrochemical and other industries have been in a bleak business situation in the past five or six years, and now it is gradually slowing down.

Up to now, we can no longer take the old road of 2009, the total marginal effect of investment is gradually decreasing, and the era of consumption-led economic development has arrived.

Domestic demand has become the main driving force for economic development, which is characteristic of the economic development of mature developed countries.

Our competitor, the United States, its economic development is mainly driven by domestic demand and driven by domestic consumption in the United States.

2: Why should China engage in the Belt and Road?

Pulling investment and exports to achieve long-term rapid development of the Chinese economy.

Why are the troikas exporting and investing two horses getting weaker and weaker?

China is already the world’s largest exporter. In fact, the world’s largest trading partner of more than 100 countries is China. China’s share of the world’s exports has reached a certain level, and it is more difficult to think of substantial growth.

So if you want to continue to increase exports,

That is to help the countries of the world achieve economic development and engage in a community of human destiny.

In our world, the annual economic aggregate, China’s 15%, the EU and the United States are 20%-25%, Japan is about 6%, in addition to South Korea, Australia, New Zealand, Canada and so on.

What does that mean?

China + developed countries account for about 70% of the world’s demand.

Therefore, helping the remaining 30% of developing countries to develop their economies and improve their infrastructure construction can effectively stimulate their economic development, make bigger cakes, and expand the demand for Chinese manufacturing. This is to do the Belt and Road.

On the other hand, investment,

It is very obvious that the backbone of China’s domestic infrastructure has been completed. China’s territory is almost the same as that of the United States, but the number of base stations in the communication network, the length of the grid line, the length of the highway, and the high-speed rail have exceeded the United States.

Although there are opportunities for 5G networks and airport construction, overall, the ability to rely on infrastructure to drive economic growth is weak.

Real estate is also the same. China’s urbanization in the past few decades, a large influx of people into the city, increased the demand for home purchases, and greatly promoted the prosperity of real estate.

Now, with the urbanization gradually entering the final stage, the young people’s mouth is decreasing, and the pulling effect of real estate is also decreasing.

Local infrastructure and real estate tend to be saturated, so go to the countries around the Belt and Road to find opportunities, these countries are in a shortage of infrastructure and real estate market, so the construction of infrastructure and real estate can bring huge benefits.

Don’t talk about the Belt and Road countries, China’s two provinces that have developed rapidly in recent years: Guizhou and Chongqing, the growth rate is in the top three in the country. In fact, a closer look at

the growth of fixed assets investment in these two provinces accounted for high economic growth. The main part

.

Especially in Guizhou, the traffic was very poor, and now the county is connected to the expressway.

The rapid development experience of Chongqing and Guizhou shows that

For underdeveloped regions, the role of investment in economic growth is very large.

In October 2016, the Aji Railway, which was opened to traffic in Ethiopia, was 752.7 km long from the capital of Addis Ababa to the port of Djibouti.

The railway is built and operated by China and costs up to four billion dollars.

More than 90% of Ethiopia’s import and export materials are built through Djibouti and the Aji Railway. The transit time from Addis Ababa to Djibouti has been reduced from 7 days of road transport to 10 hours.

This will be a leap for the economic development of Ethiopia.

Since this railway is operated by Chinese enterprises, China can not only obtain large investment income, but also greatly increase the demand for Chinese manufacturing and stimulate the export of China’s products and services.

Of course, the Belt and Road China must also pay attention to risks.

There are a few common sayings in China that “the dead wood can’t be carved” and “the mud can’t help the wall”.

These countries on the Belt and Road have poverty and backwardness, and there are internal reasons.

Although we must be politically correct and say that all nations of the world are equal, in fact, we must know clearly that the difference between the nation and the nation and between the state and the country is enormous.

Some countries and nations, how to help, will not develop,

On the contrary, it is possible that the economic exchanges between the Belt and Road and China will expand, so that the number of students studying in China and the number of businessmen will gradually increase, bringing immigration problems.

This is a matter of caution.

3:

China has entered the stage of hard work in developed countries

Investment and exports are weakening the economy, so we must ensure that the economy continues to develop rapidly.

It is necessary to ensure that the domestic industry can meet the needs of domestic consumption upgrades very well

.

China’s current industrial and industrial capabilities to meet the low-end consumer demand is no problem. In the low-end and mid-end industries, the problem of insufficient production that has long plagued China has been solved. In the era of overcapacity, it is now full. It is time to overcome the high-end industries to meet domestic consumer demand.

If China’s high-end industries cannot meet domestic consumption needs, then this demand will be occupied by foreign products and services and will not be able to stimulate China’s economic development.

To put it simply, Chinese consumers spend 100 yuan, 70 yuan to buy domestic goods, 30 yuan to buy foreign goods, so although the consumer demand of Chinese consumers is 100 yuan, but for domestic industries, actually only Can meet 70% of the demand, in order to expand the demand for domestic goods, to stimulate economic development, the only way is to go to the high end.

To go to the high end, only strong independent innovation, increase investment in research and development, protect intellectual property rights, and direct competition with developed countries, the bayonet sees hard and hard.

At present, China’s investment in R&D in 2017 is doing a good job. R&D expenses have reached 1.75 trillion yuan, a growth rate of 11.6%, second only to the United States.

R&D expenditures accounted for 2.12% of total GDP.

Patents are also skyrocketing.

So which high-end manufacturing industries and developed countries will we hit hard?

This year’s Prime Minister’s government work report mentioned “

integrated circuits, fifth-generation mobile communications, aircraft engines, new energy vehicles, new materials

” and so on, which fully demonstrates China’s determination to continue to promote economic development through the development of high-end manufacturing.

These five major industries, our competitors are all developed countries, and both are the lifeline industries of developed countries. This is the game of the strong, and other developing countries are basically unable to participate.

In fact, China’s five major industries are developing rapidly, which is why the so-called “total income trap” is a false proposition for China.

These five major industries are actually the “fine choices” that China has chosen from high-tech manufacturing and industrial strategic emerging industries.

There are six high-tech manufacturing industries: pharmaceutical manufacturing, aviation, spacecraft and equipment manufacturing, electronics and communication equipment manufacturing, computer and office equipment manufacturing, medical equipment and instrumentation manufacturing, and information chemicals manufacturing.

There are seven industrial strategic emerging industries: (energy-saving and environmental protection industry, new-generation information technology industry, biological industry, high-end equipment manufacturing industry, new energy industry, new material industry, new energy automobile industry, industrial-related industries in seven industries)

The government work report specifically lists the five major industries separately, and our future investment opportunities are among the five.

The head companies of the above five industries will inevitably have extraordinary high-speed development in the future.

We will know when we look at a set of numbers.

In 2017, the added value of industrial strategic emerging industries above designated size increased by 11.0% over the previous year.

The added value of high-tech manufacturing increased by 13.4%, accounting for 12.7% of the added value of industrial enterprises above designated size.

These “quality” parts are maintaining rapid growth.

4: Cherish China’s last prosperity for 20 years.

This 20-year period is an estimate. In fact, according to the goal of building a socialist modernization power in 2035, there are actually 17 years.

Why is it the last prosperity for 20 years?

The reason why China has been able to develop at a high speed in the past few decades is that China’s technology and development level and developed countries have a large gap.

Therefore, we learn advanced technology, introduce foreign capital, introduce advanced management methods, and achieve a large number of exports.

At the same time, using the profits earned to invest heavily in domestically underdeveloped infrastructure and real estate, high-speed growth can be achieved.

But now we can also see that in China, where manufacturing is getting stronger and stronger, the export share is getting saturated, and the infrastructure is getting better and better, the era of growth through output expansion is over, and China’s economic growth rate has been A step into the new normal of 6-7%.

In 2017, exports increased by 10.8%, but even with such a good export growth rate, the final net export contribution to the Chinese economy was only 0.63 percentage points.

Exports and investments have become increasingly difficult to drive economic development, and domestic demand has become an absolute main force.

To meet domestic demand, we can only work hard on high-end manufacturing. China’s current low-end product technology level has already caught up with the Western level, and localization has been replaced. It is difficult to achieve economic growth by expanding the output of low-end and mid-range products. After that, it will form inventory and surplus.

China’s future economic growth rate is increasingly dependent on the speed of China’s industry to high-end.

The high-end products represented by “new energy vehicles, integrated circuits, new materials, aerospace, mobile communication technologies” and other high-end products are expected to gradually catch up with the Western level in a decade or two, and gradually achieve localization instead.

Twenty years later, the technical level of China and the West has been generally in line, and when it began to become a parallel leader, the era of rapid economic growth is over.

In fact, this is a very good understanding. Someone walked by that road and left you a street sign. You walk naturally naturally. If the road ahead of you has never passed, it will naturally be slower to walk.

So how do we solve China’s development problems after the disappearance of technology generation in 20 years?

This will increase the intensity of basic scientific research.

In 2017, China’s basic research funding was 92 billion yuan, an increase of 11.8% over the previous year. The overall momentum is still good.

Later, I will write about the trend of science and technology development in the world in 2018. After a lot of data comes out, it will be completely unexpected.

The last two years of rapid growth are worth cherishing, so that after half a century of rapid economic development and prosperity, it will be hard to come again. Chinese society will change from a fast-changing society with a growth rate of 7%. Into a 2%, 3% growth rate of slow-paced, slow-changing society, into a social form similar to today’s US.

The fast-paced life of the anxiety we formed in the process of chasing after us today will end at that time.

The same chance of a surge in wealth will be greatly reduced. At that time, we recalled that now, maybe we will say,

The year of China was really a fast-changing era of “striving for three days.”