freevideopokernodownload| Li Yang, Chairman of the National Finance and Development Laboratory, talks about ultra-long-term special treasury bonds: China needs to prepare for increased debt

Economic Observer Network reporter Zhang Rui May 19freevideopokernodownloadLi Yang, former vice president of the Chinese Academy of Social Sciences and chairman of the National Finance and Development Laboratory, talked about China's debt management issues at the first Shenzhen Financial Forum of Renmin University of China and the founding ceremony of the Shenzhen Institute of Advanced Financial Studies. He believes that the current round of issuance of ultra-long-term special treasury bonds is a signal, but China also needs more short-term bonds that can be accepted by financial institutions and can set standards for financial markets.

"With this long-term debt, my experience is that short-term debt will not be too far away, so we need to prepare for the increase in China's debt." Li Yang said.

On the same day, Li Yang elaborated on the key points of debt management in three aspects: why bonds were issued, the structure of debt buyers and debt sustainability.

Li Yang said that people often argue endlessly about the debt issue and always feel that borrowing money is not a good thing. From the perspective of macroeconomic operation, issuing bonds is to increase government spending. The reason behind this is that microeconomic entities do not spend, enterprises do not spend, and residents do not spend. This creates a huge demand gap in the balance of the national economy.

"If the private sector's demand is insufficient, it is the government that can fill the gap at this time, and the government is running out of money at this time." Li Yang said. He believes that issuing bonds is an inevitable choice, although there are many doubts and concerns about this.

Li Yang continued that this round of issuance of ultra-long-term special treasury bonds is only the beginning, and there are still many things that need to be balanced in the future. Research data from the National Finance and Development Laboratory shows that the leverage ratio of Chinese government departments has passively increased in the past two years, giving everyone the feeling that the risks have increased because the denominator representing the national economy has dropped too fast. This also reminds everyone to be particularly cautious when using debt instruments in an economic downturn.

Regarding the sustainability of debt, Li Yang said that the debt problem has been a concern of the whole world since this century. He said: "Everyone is saying that the U.S. debt is going to collapse every day, but it doesn't seem to collapse. It has its own rules of operation. The question we need to discuss now is, to what extent (debt) will be issued."

Li Yang explained that the sustainability of debt management has micro and macro definitions. From a micro perspective, if you borrow money to produce and create wealth, and the amount of new wealth you create exceeds the amount of debt repayment, it will be sustainable. From a macro perspective, one is that as long as the interest rate on debt payment is lower than the economic growth rate, so that the cash flow generated by using debt can support interest repayment, debt will be sustainable; the other is the ratio of national savings to debt balance. Its basic meaning is that for a country, the assets that can be used to pay interest come from the country's national savings, so this ratio can effectively measure the sustainability of the country's debt.

Li Yang also said that two years ago, they calculated an account based on the data of the national balance sheet and found that since 2012, the total social interest payment has exceeded the savings of that year. He believes that the so-called "working for a bank" in society has certain truth.

Tags：

Article Copyright Statement: Unless otherwise specified, all articles are jiliasia16 com original. Reproduction or reproduction should be in the form of hyperlinks and indicate the source.