On November 29th, Adair Lord Turner, Former Chairman of the UK Financial Services Authority, Senior Fellow at Tsinghua University National Institute of Financial Research, and Chairman of Governing Board at Institute for New Economic Thinking, visited PBCSF and joined an in-depth discussion on Chinese macroeconomic with WANG Jun, Deputy Director of General Statistics Department of the National Economy at State Statistics Bureau, Professor ZHOU Hao, Professor ZHANG Hong, Assistant Professor JIN Tao, and BAI Jinhui, Visiting Professor and Associate Professor at Faculty of Economics, Washington State University.

Professor ZHOU Hao started the discussion by introducing his recent research on Chinese financial institutions’ systemic risk. He calculated the risk index of Chinses financial institutions which are of systemic importance. The results showed that the risk index reached its peak in the latter half of 2015, but fell in the year 2016. ZHOU also stated that the financial risk index itself does not explain all the problems, but should be analyzed in accordance to macro-economic data. The discussion was then extended to the Chinese financial system, the development of Chinese macro-economics, risk difference between different regions in the Chinese real estate industry ( coastal cities, second tier cities and third tier cities), and the policy of Credit Expansion, and other topics.

Through the comparison of the United States, Europe and Japan, Turner analyzed the advantages of Chinese economy and the challenges it is facing. According to his research, he believes that the credit loan has greatly contributed to the economic growth. While the IncGDP/IncDebt is decreasing, it will become a “soft constraint” to resource distribution, and prevent the entity to reach the equilibrium.

WANG Jun also shared his insights on the subject. He explained the Chinese debt problem in the statistic point of view, stating that the definitions of debt are different under different measuring diameter. There is also double counting in China’s debt calculation. In regard to IncGDP/IncDebt ratio, and comparing to European and American countries, China’s economy is at a relatively healthy level.    

Professor ZHOU, also made additional remarks on the issue. He believes that China’s total debt is still at a manageable level. The priority is to solve the problem of the low efficiency of state owned enterprises’ loan towards the economic growth, and also the maturity mismatch.     

Discussions over other areas were also carried out in the meeting.    

Adair LORD Turner is a Senior Fellow at Tsinghua PBCSF National Institute of Financial Research (NIFR). He once presented a keynote speech at Tsinghua PBCSF Global Finance Forum 2015.