Li Daokui: the next 1-2 years most need to be vigilant about the outbreak of debt crisis

Li Daokui: My view is that the world is actually divided into three parts: poor countries, rich countries and China. I've been talking about this point of view for more than a decade, and I've been talking about this point of view in class, and I do think it's really a more pragmatic point of view.

Because whether it is from the overall size of the economy, or from the power of growth, or from the performance of the individual economies of the law, these three worlds are relatively different, but are interrelated. Each has its own laws, each has its own cycle, but they are interrelated, then the developed countries I call rich countries. The developed countries are the United States and Europe, and they have their own cycles. For example, after the outbreak of the epidemic this time, they had the same initial shock, but now their vaccination rates are relatively high, over 50%, and in some cases up to 75%, for example, in the United Kingdom. Their economic cycles are recovering, including the US economy, which is currently on the upswing, so their monetary policy is going to contract.

Then the poor countries are the emerging markets, where vaccination rates are generally below 30%, with Brazil at 55%, an exception. Russia 32%, India, South Africa are all under 20%, around 17%, Afghanistan 0.5%. We're seeing that the recovery in these countries is lagging, and what's most worrisome is that these emerging market countries, by the year after, they may have a debt crisis. Why? Because by the year after, monetary policy in the U.S. and Europe will have contracted, their economies are recovering, and they're going to raise interest rates. These emerging market countries during the epidemic, they enjoy the dividends of loose monetary policy in developed countries, interest rates are relatively low, is the lack of high return bonds in the capital market, they issued a lot of treasury bonds, to two years later, the developed countries policy a contraction, the debt of these countries will come to the fore.

China is another logic altogether. This fight against the epidemic in the global context, from the point of view of the protection of life, life as the top, life first, we are the most successful, there is no dispute. From the number of deaths to the percentage of deaths to the total number of individual cases of the epidemic, in every country in the world, we are the best, there is no dispute.

But we have our own cycles. At this moment in time our economy is under downward pressure, so at this moment in time I personally think there will be some policies to stabilize growth. What to look for next year and the year after? It depends on whether our new growth drivers can keep up? Can some of our new infrastructure projects, new regional development projects, such as the development projects in the Greater Bay Area, get off the ground? Can they be converted into engines of growth?

So we have a completely different cycle, these three worlds are completely different. That's why I've emphasized over and over again that the three worlds are the new three worlds, the poor countries, the rich countries, and China each have their own logic, but they have to **** together and cooperate and solve **** together.

Panorama Finance ,

#Panorama has material # Tsinghua University Li Daokui: poor countries, rich countries and China have their own logic of development, but they must *** with the cooperation of Tsinghua University, China Institute of Economic Thought and Practice, Director of Li Daokui, told Panorama when he took part in the Bund Finance Summit, that the poor, rich countries and China have their own logic of development, but must *** with the cooperation of *** with the problem. The logic of development is different, but must *** with cooperation to solve *** the same problem.

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World Economy Faces Three Major Recessions

Panorama-Excellence: In today's world economic situation. Including the risk points in it.

Li Daokui: Three things are most worthy of attention, from near to far let's sort them out one by one. The most recent is the issue of debt, because global debt levels rose during the epidemic. It went up 12% compared to the debt's own base. So what was the total amount that it went up? 12% rise in debt is equivalent to about 48% of global GDP, which is very high.

So the year after that, 2023, is a critical year, so why is that not a big problem next year? Next year is still a year of resumption of growth in many countries, and in the year after that there will be a debt problem. Because the developed countries in the year after, especially the United States, monetary policy may contract, which the first problem is more recent debt problems, I call it a possible debt recession.

The second is the supply chain problem. During the epidemic, many developed countries believe that the industrial chain, including the supply chain and production chain should be moved back to their own countries, and can not be so dependent on other countries as it is now. So after 2023, these countries will probably force their big companies to move some of their production back, and once they do, it will have a negative impact on the emerging market countries, and it will also have a negative impact on the developed countries themselves because of the inflation and the increase in the cost of production, and that's why I call it a decline in the industrial chain.

After 2023 and then look forward, 2024, 2025, there will be another problem, I call it a carbon recession. Carbon is low carbon carbon. Why do you say carbon recession? Because the developed countries have shifted their focus of concern to carbon reduction, and they are in a hurry to get it done, that is, they are in a hurry to reduce carbon. But low-carbon or zero-carbon production technology is still immature, the cost is very high, we probably calculated that basically zero-carbon production technology than the production cost of fossil energy is twice as high, is twice as high, so it is very difficult to come down within three or four years.

So there is a prospect that after three or four years, developed countries will rush to use new energy sources, zero-carbon energy sources, old energy sources it does not use, and that all of a sudden increased the cost of production of the global enterprise, and once it comes up, it will lead to inflation, and the price of industrial production will go up.

Secondly, producers and consumers will feel the pressure of taxes, this market will do small. Any market you raise taxes, the market shrinks, so the market for traditional energy will shrink, and this shrinking production will fall, which will also bring a recession.

So in turn it's a debt recession, a chain recession and a carbon recession. But I'm just a man of warning and I hope none of these happen. I hope that our policies, global policies, respond in advance, and none of them happen if they are responded to properly. I hope I'm wrong in my prediction, but I think the concern is still, I'm afraid, worth being vigilant about today.

Panorama Finance ,

# Panorama has material # Tsinghua University Li Daokui : the future to pay attention to the debt recession, industrial chain recession, carbon recession three things Tsinghua University, director of the Institute of Chinese Economic Thought and Practice, Li Daokui, in the participation of the Bund Finance Summit, told Panorama that the future, from the near to the far to pay attention to the debt recession, the industrial chain recession, The hope is that global policy can respond in advance.

Video No.

Be alert to the outbreak of debt crisis in traditional industries

Panorama - Zhuozhi: How will China's economy go in the future in the next three to five years or even longer? What are your expectations and outlook?

Li Daokui: My basic view of China's economy is this, is that we from now on may need to spend 1 to 2 years or even a little longer, we need to have a period of adjustment or shift period, like the engine shifting gears, that is, some of our traditional industries, the impetus of its growth It brings with it a series of adjustment costs, such as debt. For example, like certain real estate companies, it is based on the transition, it is too fast expansion, it knows that it can not, it knows that it has to transition, it is too fast expansion, improper transition, triggered the problem of debt. The traditional industry growth momentum in the process of decline, it will bring a lot of negative impact, especially the impact of debt. This is the most need for us to be vigilant.

At the same time, new industries, such as low-carbon industries, photovoltaic, power generation, new energy vehicles, new infrastructure, and new regional development, these need time to cultivate, it is impossible to put in place. So the next two or three years belong to such a delicate shift period.

So the policy for this period I expect will be twofold. On the one hand, it is to stabilize, stabilize these traditional industries, it's power to reduce the pressure of debt restructuring; on the other hand, it is to cultivate new growth points, including new urbanization, rural revitalization, new energy industry, new high-tech industry, so the next two or three years of China's macroeconomy will be more subtle. But I would like to urge everyone to stick to the long term, stick to long term investments. Look at four or five years from now, look at the success of our transition.

China's economic growth rate, my judgment is that after a few years of adjustment, should also be able to come back, still able to rise, we are only a stage of decline. I think after two or three years of adjustment, we should be able to go back to more than 5% growth, to 5.5% should still be possible, this may be a little bit slower in the past few years, these years may be 5.1%, 5.2% such a relatively low growth.

Panorama Finance ,

# China's economy is now in a gear-shifting period after two or three years of adjustment growth rate or to 5.5% Tsinghua University, the Institute of Chinese Economic Thought and Practice, President of # Li Daokui said, # China's economy may need to spend 1 to 2 years or even a little bit longer period of adjustment or gear-shifting period, that is, the engine gear shift The same. On the one hand, to stabilize the pressure of debt restructuring brought about by the declining power of traditional industries, and on the other hand, to cultivate, to cultivate new growth points, including new urbanization, rural revitalization, new energy industry, and high-tech industries. He called on everyone to be sure to stick to long-term investments. The growth rate of China's economy should be able to return to more than 5 percent growth, or even 5.5 percent, after two or three years of adjustment. #PanoramaHaveSomething

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Low-carbon asset prices will rise The upward process is non-linear

Panorama-Highlight: To promote the green economy and sustainable development, what kind of role should the capital market and green finance play?

Li Daokui: The capital market actually plays a commanding role in our energy transition, our green development and low-carbon development. Because the capital market it is the direct deployment of financial resources, and financial resources is a necessary element of the development of any industry. It is a commander that will tell which industries will grow in the future and which industries will shrink relatively in the future.

So in our energy transition in the process of green development, the capital market I believe that in the general direction, will be towards these low-carbon industries to continue to allocate resources, related to some of the assets it price its market value will go up, but this process I want to emphasize that it is not linear, there must be a high and low, there must be fluctuations, and also to be prepared for the thought.

Now many investors are optimistic about some of the enterprises may not necessarily be successful in the future, now we have not been optimistic about, just emerging from the first signs of the enterprise may be in the future will grow, this is the nature of the capital market. This is why the capital market so let us anxious or, fascinated or, let us pay attention to or, this is the essence of it. So we must be firm in the direction of development, but for the short-term fluctuations to be prepared