To sell the cow and drink the milk: How could China harmonize its growth and risk?
针对中国新常态下“降速降杠杆”的主流建议，本文提出“稳增长降杠杆”的替代方案，利用2014-2018年31个地区数据，发现若社会融资增量效率充分，短期产出增速可稳定在10%左右，同时杠杆和债务比率趋于温和。
Abstract Facing the challenge of the new normal, mainstream public opinion advises China to adopt a conservative strategy of “slowing down the growth and lowering the leverage.” This paper proposes an alternative compatible idea of “stabilizing the growth and lowering the leverage.” For this purpose, the study first describes the investment and credit‐led mode as well as the dilemma confronted by China with an identity equation to deliberate the harmonic role played by the efficiency of aggregate social financing increments. The empirical work uses data from 31 regions in China from the first quarter of 2014 to the first quarter of 2018 as observations. The outcome shows that, if the aggregate social financing increment reaches full efficiency, the rate of output growth could provide a chance to stabilize in the short term up to around 10%, while the surging leverage and debt ratio could become moderate. There should also be an opportunity to eliminate the threat of financial risks in the medium term if combined with the deployment and implementation of ongoing supporting measures. This paper recommends a three‐step strategy of promoting efficiency, easing the risks and optimizing the structure. The expectation of “stabilizing the growth and lowering the leverage” would not be unachievable.