标题: [转帖] 2014.05.02 中国信贷——无功，不受禄 By 邹斌 [打印本页] 作者: showcraft 时间: 2014-5-10 17:27 标题: 2014.05.02 中国信贷——无功，不受禄 By 邹斌
http://www.ecocn.org/thread-197934-1-1.html
Free exchange
自由交易
Taking credit for nothing
无功，不受禄
China’s credit boom has got people worried. Should they be?
中国信贷蓬勃发展，人们却开始担心？杞人忧天？
Jun 15th 2013 | From the print edition
IN HIS work on China’s economy, Zhang Zhiwei observes what he calls the “5:30 rule”. That is not the time he clocks off each day: he is a hard-working economist for Nomura, a Japanese bank. But the rule does refer to a time of reckoning of sorts. Mr Zhang points out that several economies have suffered financial crises after their stock of credit grew by about 30% of GDP in a span of five years or less. Japan fell foul of this rule in the latter half of the 1980s; America broke the limit in the years before 2007.
Now Mr Zhang is worried about China. At the end of 2008 total credit to firms and households (and to non-profit organisations) amounted to less than 118% of GDP, according to a new measure calculated by the Bank for International Settlements (BIS). By September 2012 the total stood at over 167%.
It is natural for credit to deepen over time in a developing country. But when credit departs too far from its underlying trend, trouble often ensues. Mathias Drehmann of the BIS calculates that when the deviation exceeds 10% of GDP, it serves as a reliable early warning of a crisis within the next three years. According to our calculations, China’s credit ratio now exceeds its trend by 14 percentage points (see left-hand chart).
Mr Zhang is hardly the only one perturbed by this gap. It was a big reason why Fitch, a ratings agency, downgraded China in April. China’s policymakers have also taken note. In March the bank regulator urged banks to tidy up their off-balance-sheet investments. Last month China’s foreign-exchange regulator cracked down on illicit capital inflows. And earlier this month China’s central bank stood by as interbank lending rates spiked in advance of the Dragon Boat holiday (reportedly prompting one mid-sized bank to default on another). The authorities seem keen to set a slower, steadier paddle-speed, hoping for less splash and froth. In May the central bank’s broad measure of “total social financing” (TSF) at last slowed a little (see right-hand chart).
The other side of China’s surging credit ratio is the surprisingly slow growth of nominal GDP. In the first quarter record amounts were added to total social financing, but growth was weak and inflation subdued. This wrongfooted both optimists (who thought lashings of credit would fuel a strong recovery) and pessimists (who expected it to fuel rapid inflation).
Ting Lu of Bank of America thinks this decoupling of credit, growth and prices is partly a statistical illusion. The official measure of financing, he argues, is marred by double counting. If a big firm borrows cheaply on the bond market, then lends less cheaply to another company, the same money will appear twice in the central bank’s measure of TSF (an eclectic mix of loans, bonds, bills and even some equity financing).
A deeper explanation, argues Richard Werner of Southampton University, lies in flawed theory, not bad measurement. He revisited the link between credit, growth and prices after moving to Tokyo in 1990, just as its bubble was bursting. The years of overborrowing had many ill consequences. High consumer-price inflation was not among them. Based partly on this experience, he advocates a narrower view of credit’s origins and a more discriminating view of its purposes. Only banks can lend money into existence, he emphasises: their loans create deposits that can then be used to pay for things. Other financial institutions and instruments just transfer existing purchasing power between parties. His definition of credit creation would exclude the non-bank loans that have contributed so much to growth in TSF.
Mr Werner’s second observation is that credit also serves different purposes. Some is spent on consumer goods; some on creating new factories, buildings and other physical assets; and some on assets that already exist. The first two kinds of spending contribute directly to GDP, which measures outlays on freshly produced output. But the third kind does not. Since these assets already exist, their purchase does not add directly to production or inflationary pressure. The economy does not grow or strain at its limits when an existing tower block changes hands.
In bubble-era Japan a lot of credit was of this third kind. It was ploughed into existing land and property, bidding up their prices to unsustainable heights. In China this kind of lending is not easy to distinguish in the data. But China does provide two different measures of investment. The first (gross fixed capital formation) measures investment in new physical assets, which contributes to GDP. The second (fixed-asset investment) adds in spending on already existing assets, including land. In 2008 both measures of investment were about equal. But spending on newly produced assets now amounts to only about 70% of fixed-asset investment, says M.K. Tang of Goldman Sachs. This suggests that existing assets are changing hands at a quickening pace and a rising price.
How big a worry is that? Japan’s bubble left a lasting legacy. Savers discovered they were not as wealthy as their overpriced assets suggested. Debtors found they were not as wealthy as their outstanding liabilities required them to be. Banks retreated; animal spirits flagged. But credit booms do not always end so badly, as China’s own history shows. From 2001 to early 2004 total credit rose swiftly, violating the 5:30 rule. Towards the end of this period the central government had to inject $45 billion into two of China’s biggest banks to help them weather their past lending mistakes. But no crisis ensued. On the contrary, growth averaged more than 12% over the next three years.
One difference between Japan and China’s earlier boom is that China’s state stood behind the banks and many of their borrowers, whereas Japan allowed bad debts to weigh on its banks and firms. China’s less developed economy also had more room to grow. Misguided loans and investments in the past did not inhibit fresh loans and investment in the future. China has changed radically in the past ten years. The hope is that even now it resembles Japan in the 1990s less than itself a decade ago.
