Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is...
Transcript of Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is...
![Page 1: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/1.jpg)
Markus Rodlauer
IMF Asia and Pacific Department
![Page 2: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/2.jpg)
2
Economy is slowing …but no hard-landing
reform over stimulus Outlook
Vulnerabilities are rising…though still manageable
reform to contain risk Risks
Plan is comprehensive…some progress, more needed
reform good for China and World Reform
![Page 3: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/3.jpg)
0
2
4
6
8
10
12
14
16
-5
-3
-1
1
3
5
7
9
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Consumption
GCF
Net exports
Real GDP growth (y/y, percent, RHS)
Contribution to Growth(In percentage points)
Sources: CEIC; and IMF staff calculations.
![Page 4: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/4.jpg)
6.6
7.1
7.6
8.1
8.6
7.8
8.8
9.8
10.8
11.8
2012 2013 2014
Real GDP and Industrial Value Added(In percent, year-on-year growth)
VAI (LHS)
Real GDP
Scenario 1:
7.2 Q3 growth
(2014M9 VAI = 9.05)
Scenario 2:
7.0 Q3 growth
(2014M9 VAI = 7.8)
Q3
Estimate over 2008Q1-2014Q2:
GDP = 3.35 + 0.46*VAI
R2 = 0.93
![Page 5: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/5.jpg)
0
5
10
15
20
25
30
2010 2011 2012 2013 2014
Real FAI
Real retail sales
China: Real FAI and Retail Sales (In percent, year-on-year growth)
Aug-14
![Page 6: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/6.jpg)
-50
-25
0
25
50
-50
-25
0
25
50
2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1
Beijing
Shanghai
Tianjin
Guangzhou
Shenzhen
Residential Property Price1: Deviation from Benchmark(In percent)
2
Sources:CEIC; WIND Info; Ahuja et al. (2010); and IMF staff calculations1 Secondhand residential housing price. 2 2014:Q1 price for Tianjin based on January-February average.
0
0.5
1
1.5
2
2.5
3
3.5
4
0
5
10
15
20
25
30
35
40
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Tier I
Tier II
Tier III or IV
Total (CeIC)
Residential Building: Unsold Floor Space(In months of floor space sales, by tier)
Sources: CEIC; Housing Administration Bureau; and IMF staff estimates and calculations.
Growing signs of overvaluation Oversupply in smaller cities
6
![Page 7: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/7.jpg)
7
GBR
BELDNK
ITA
NOR
SWE
SWE
FIN
GRC
IRL
PRT
ESP
ARG
BRA
URY
URYMYS
PHL
THA
0
10
20
30
40
50
60
70
80
-10 -8 -6 -4 -2 0 2 4
Cre
dit
-to
-GD
P rati
o c
han
ge in
fiv
e y
ears
GDP growth change
Followed by banking crisis
Credit Booms and Change in GDP Growth Rates(In percentage points)
Source: IMF staff estimates and calculations.
![Page 8: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/8.jpg)
-5
0
5
10
15
20
25
30
35
-0.5
0
0.5
1
1.5
2
2.5
3
2011 2012 2013 2014
Nonfin. enterprise equity and other
Entrustred loans, trust loans, bank acceptance, net corporate bond financing
Bank loans
Total social financing stock growth (percent, year-on-year, RHS)
Social Financing Flow(In RMB trillion)
Aug-14
![Page 9: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/9.jpg)
-15
-10
-5
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Consolidated general government balance
Augmented net lending/borrowing
Augmented balance
China: General Government Balance(In percent of GDP; including state-administered SOE funds and social security)
Sources: CEIC; and IMF staff estimates.
Net land sale revenues
Estimate of local
government off-budget
spending through LGFVs
-7.4
-10.1
-0.9
9
0
10
20
30
40
50
60
70
80
2003 2005 2007 2009 2011 2013 2015 2017 2019
Central government debt
Local government total liabilities
Revised augmented estimates
NAO estimates 1/
Adjusted augmented estimate
NAO audit result 2013
Fiscal Augmented Debt and NAO Audit(In percent of GDP)
Sources: NAO; and IMF staff estimates.
1/ including explicit government debt, government guaranteed debt, and the liabilities that the
government may incur obligations.
![Page 10: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/10.jpg)
0
2
4
6
8
10
12
30
40
50
60
70
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Private consumption Investment Total consumption Net exports (RHS)
GDP Expenditure Components(In percent of GDP1)
1 Expenditure-based GDP.
30
32
34
36
38
40
42
44
46
48
0
2
4
6
8
10
12
14
16
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
China: Investment, Credit, and Growth(In percent of GDP)
Growth (percent) ICOR 1/ Investment/GDP, right axis
1/ the ICOR ratio is a proxy of the inverse marginal product of capital. The higher the index, theless productive capital is.
![Page 11: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/11.jpg)
0
10
20
30
40
50
1 4 7 10 13 16 19 22 25 28 31 34 37 40
Germany (1955-1994) Japan (1955-1982)
Korea (1963-2002) China (1979-2012)
Share of Investment in GDP(In percent, index beginning period=1)
* Gross Fixed Capital Formation.
10
20
30
40
50
30 40 50 60 70 80 90
Gro
ss f
ixed
cap
ital fo
rmati
on
(p
erc
en
t o
f G
DP)
Private consumption (percent of GDP)
Private Consumption and Investment(Industrial Countries and Emerging Markets; average, 2006-12)
China (2007)
China (2007-13 average)
China (2013)
Private Consumption and Investment(Industrial Countries and Emerging Markets; average, 2006-13)
![Page 12: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/12.jpg)
-20
0
20
40
60
2007 2008 2009 2010 2011 2012 2013 2014
Real Fixed Asset Investment(In percent, year-on-year)
Aug-14
Infrastructure FAI
Total FAI
Infrastructure FAI
(contribution to total, real)
![Page 13: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/13.jpg)
Policy buffers:
Govt. debt still low, large public sector assets
High domestic savings, low external debt
Government control, state-owned banks
Adjustment has started
Low probability of near-term crisis or sharp slowdown
13
Risk factors:
Real estate, credit & shadow banking, LGs, investment
Vulnerabilities interlinked & still growing
Continued reliance on investment and credit to support growth
Financial reforms complex, moral hazard
Without reforms, growing
medium-term risk
![Page 14: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/14.jpg)
Third-Plenum Blueprint: More balanced, sustainable growth, address vulnerabilities
14
Financial Fiscal External Structural
Better pricing of
risks
More social
spending and less
investment
Greater exchange
rate flexibility
Competition and
hard budget
constraints
Improved access to
financing
More efficient and
progressive tax
system
Gradual capital
account
liberalization
Faster urbanization
↓
More productivity growth, consumer-based, inclusive, environment-friendly
![Page 15: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/15.jpg)
15
Financial (tightened rules for shadow banking; capital market reform (new IPO rules, ‘guiding principles); a few cases of defaults) …deposit insurance, interest liberalization, implicit guarantees, supervision Fiscal (LG officials incentives; pilot LG bonds; new budget law) …re-order LG finances (revenues/spending,borrowing), tax reform, social security (coverage, benefits level, portability) Monetary and exchange rate (band +/- 2 percent) …new monetary policy framework, exchange rate flexibility, capital account
SOE reforms (SASAC pilots, local initiatives) …level playing field with private sector; exit of nonviable firms Household registration (‘houkou’), land reform, resource pricing …rebalance capital to household income
![Page 16: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/16.jpg)
16
Design and implementation challenge o Complex, interlinked reforms o Central guidance, decentralized implementation o Balancing adjustment and near-term growth
Some key questions
o What can we expect on fiscal and SOE reform? o How much tolerance for lower growth? o Shape of stimulus if needed? o How to tackle moral hazard and implicit guarantees?
![Page 17: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/17.jpg)
17
![Page 18: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/18.jpg)
18
-0.4
-0.2
0.0
0.2
0.4
-0.4
-0.2
0.0
0.2
0.4
Arg
en
tin
a
Au
stra
lia
Bra
zil
Can
ad
a
Fra
nce
Germ
an
y
Ind
ia
Ind
on
esi
a
Italy
Jap
an
Ko
rea
Mexi
co
Ru
ssia
Sau
di A
rab
ia
So
uth
Afr
ica
Turk
ey
Un
ited
Kin
gd
om
Un
ited
Sta
tes
Oth
er
Eu
ro A
rea
Oth
er
Eu
rop
ean
Un
ion
Long-term spillover impact from fast reform implementation in China
Near-term impact from fast reform implementation in China
Average short-term adverse impact
Average gains from China's reform
Simulated Global Spillovers from China's Reform Blueprint(In percentage points)1
Source: Preliminary staff simulation results based on FSGM-G20 model.1Adjusted for a one percentage change in China's GDP growth.
![Page 19: Markus Rodlauer - Advantage Austria...Markus Rodlauer IMF Asia and Pacific Department . 2 Economy is slowing …but no hard-landing ... Household registration (‘houkou’), land](https://reader034.fdocuments.us/reader034/viewer/2022042212/5eb4929999eb116926786cfd/html5/thumbnails/19.jpg)
19
Moderate slowdown welcome… ‘hard landing’ unlikely
reform over stimulus Outlook
Vulnerabilities rising…but still manageable
reform to contain risk Risks
Plan comprehensive…some progress, more needed
reform good for China and World Reform