Last week, China's leadership—including President Xi Jinping, the Politburo, the CSRC, and thePBoC—clearly 1) announced a reflationary barrage offiscal and monetary policies and 2) made statements in support of free marketsas a big step to end the deflationary deleveraging and to stimulate creativeproductivity. That happened at the same time as 3) Chinese assets were (andstill are) very cheap, so it was a combustible combination of influences thatset the markets on fire. It was a big week. In fact, I think that it was such abig week that it could go down in the market-economic history books ascomparable to the week Mario Draghi said that he and the ECB would "dowhatever it takes,” if China’spolicymakers, in fact, do what it takes, which will require a lot more thanwhat was announced.
I will now be more specific What a Beautiful Deleveraging Looks Like.
In my 55 years as a global macro investor,I have seen, traded through, and studied many big debt crises (48 are coveredin my book, “Principles for Navigating Big Debt Crises.”) It is that perspective that leads me to believe that China is at afork in the road and can either:
a)deal with its debt crisis well by engineering "a beautifuldeleveraging," which acceptably reduces debt burdens or spreads them outso China won't have a debt crisis and will be energized to be productive.
or,
b)deal with the debt crisis in a way that causes it to drag on, leading toan economic and psychological malaise like Japan experienced (until Abe andKuroda shifted policies).
In a nutshell, it all depends on whetherChinese policymakers do or don't simultaneously a) restructure bad debts (thuseliminating zombie conditions of their institutions) and b) lower interestrates below inflation and nominal growth rates, or, if that proves impossible,monetize debt to get the rates below the inflation and nominal growth rateswhile weakening the currency to devalue the debt.
More specifically, for China's policymakersto engineer a "beautiful deleveraging," they have to lower debtburdens by simultaneously
a)doing debt restructurings that clean the bad debts out of the system(which is deflationary) while also
b)creating money and credit (which is stimulative and inflationary) in abalanced way so that debt service burdens are reduced and there is neitherunacceptable deflation nor unacceptable inflation.
This beautiful deleveraging can only bedone in countries that have most of their bad debts denominated in their owncurrencies and have most of the debtors and creditors as their own citizens,which is the case for China. Doing a deleveraging in this way not only reducesdebts without triggering either unacceptable deflation or unacceptableinflation, but it also allows viable businesses to get back to businessunencumbered by their old debts and it eliminates the "pushing on astring" problem of having scared people, companies, and other entitiesholding cash in safe banks and government debt assets. It does this by makingcash a poorly performing asset class relative to the major alternative assetclasses that are doing well because of the reflation. Doing these things startsto rekindle "bottom fishing" and “animalspirits.” We are clearly seeing that happen now.
Also, pro-market and pro-entrepreneurialpolicies are stimulative and, in this case, especially good because there issuch enormous power in President Xi’s policy-indicatingstatements. In this case, supportive comments came from the highest levels(from President Xi Jinping, the Politburo, the CSRC, and the PBoC) encouragingofficials and people to adopt innovative and bold approaches to support theeconomy, and included President Xi reassuring officials that they would not bepunished for well-intentioned mistakes made in the process of implementing newpolicies. These statements matter a lot.
While there’s nodoubt that all of this is bullish for the markets, as part of the beautifuldeleveraging there will have to be difficult and painful changes in thefollowing areas:
Thedebt restructurings will be especially difficult both because they are complexand because they are politically charged because they will have huge effects onpeople’s wealth. Debts at the local government levels—especially between local governments which paid for their spendingthrough land sales and by borrowings from companies and people in theirprovinces—are especially difficult situations tohandle. Imagine the situation of a perfectly good company that lent to thelocal government and/or is dependent on local government spending facing thecurrent situation. Who should do what in what amounts to deal with thissituation? Who will determine such things and how? These things are not clear.Because similar problems have been faced and dealt with throughout history(including the 1990s in China with Zhu Rongji and many people helping him whoare still alive and lucid) in ways that are both effective and painful, thiscan be done if the courage and capabilities are mustered, but it will be verydifficult.
Thetax system for collecting money to spend on shared expenditures and neededremediations and social programs is deeply in need of reform. As things stand,getting and distributing money is highly ineffective at the national,provincial, and local government levels. More specifically there are noteffective income taxes, real estate taxes, inheritance taxes, or most othertaxes (other than VATs, especially at the production level). This set ofconditions makes the last problem I mentioned - the local government debt andfinancial problem - more challenging.
Thoughthere was a recent minor change in policy, the demographic problem—especially the early retirement age (on average 53) and relativelylate death age (the average 53-year-old dies at 83)—leavesmany people with a long time with little income and one child to take care ofthem. At the same time, the working population is declining rapidly.
So, while last week we saw great actionsand words that I am sure will be followed by highly stimulative policies thatwill help a lot and will support asset prices, I think that there are severalimportant other things to keep an eye on to see how well China’s domestic debt-money-economy challenges will be handled.
Of course, these observations are aboutjust one of the five big forces (the debt-money-economy force) in one of thebig countries (China), and it’s important to rememberthat the other big forces (the internal political conflict force, the externalgeopolitics conflict force, the acts of nature force, and the technology force)are also affecting China, other nations, and the entire world. Last week wasfilled with comparably important developments pertaining to all of thesethings, and these developments seem, to me, to be broadly tracking the bigcycle that will have big impacts on what the changing world order will looklike. I will keep you posted with my thinking about them.
These views are my own and not necessarily Bridgewater's.
上周，中国领导人包括中央政治局、中国证监会和中国人民银行——明确地 1） 宣布了一系列通货再膨胀的财政和货币政策；2） 发表声明支持自由市场，认为这是结束通货紧缩的去杠杆化和刺激创造性生产力的重要一步；3） 中国的资产过去（现在仍然）非常便宜。因此，这是爆炸性的组合，点燃了中国股市。这是重要的一周。事实上，我认为这是非常重要的一周。它可能会像马里奥·德拉吉（Mario Draghi）声明欧洲央行将“不惜一切代价”一样被载入市场经济史册。如果中国决策层能够兑现“远超”承诺的举措，本轮刺激经济举措将成为历史性转折点。
我现在将更具体地说明完美的去杠杆化是什么样子的。
在我作为全球宏观投资者的 55 年里，我目睹、交易并研究了许多重大债务危机（我的书《应对重大债务危机的原则》中介绍了 48 场危机。）正是这种观点让我相信中国正处于一个岔路口，可以：
a） 通过设计“完美的去杠杆化”来妥善应对债务危机，从而在可接受的范围内减轻债务负担或分散债务负担，从而使中国不会陷入债务危机，并充满活力地提高生产力。
b） 以导致债务危机拖延的方式处理债务危机，导致像日本那样的经济和心理不适（直到安倍和黑田东彦改变政策）。
简而言之，这完全取决于中国政策制定者是否同时a）重组坏账（从而消除其机构的僵尸状况）和b）将利率降低到低于通货膨胀率和名义增长率，或者，如果这被证明是不可能的，将债务货币化，使利率低于通货膨胀率和名义增长率，同时削弱货币以使债务贬值。
更具体地说，中国决策者要实现“完美的去杠杆化”，就必须同时降低债务负担。
a）进行债务重组，将坏账从系统中清除（这是通货紧缩的），同时也
b） 以平衡的方式创造货币和信贷（具有刺激性和通货膨胀性），从而减轻偿债负担，并且既不会出现不可接受的通货紧缩，也不会出现不可接受的通货膨胀。
这种完美的去杠杆化只能在大部分坏账以本国货币计价、且大部分债务人和债权人都是本国公民的国家才能实现，中国就是这种情况。以这种方式进行去杠杆化，不仅可以减少债务，而不会引发不可接受的通货紧缩或不可接受的通货膨胀，而且还可以让有生存能力的企业不受旧债的阻碍地恢复业务，消除了让人们、公司和其他在安全银行和政府债务资产中持有现金的实体感到恐惧的“拉绳子”问题。它通过使现金成为相对于因通货再膨胀而表现良好的主要另类资产类别而言表现不佳的资产类别来实现这一点。做这些事情开始重新点燃“抄底”和“动物精神”。我们现在清楚地看到这种情况正在发生。
此外，支持市场和支持创业的政策具有刺激性，在这种情况下，效果尤其好，因为政策指示声明具有如此巨大的力量。在这种情况下，最高层发表了支持性评论，鼓励官员和人民采取创新、大胆的方式支持经济，其中包括官员保证，他们将采取措施支持经济发展。不会因为在实施新政策的过程中犯下善意的错误而受到惩罚。这些陈述非常重要。
毫无疑问，所有这些都对市场有利，但作为完美去杠杆化的一部分，以下领域必须经历困难和痛苦的变化：
债务重组将特别困难，因为它们很复杂，也因为它们具有政治色彩，因为它们将对人们的财富产生巨大影响。地方政府一级的债务，特别是地方政府之间的债务，通过出售土地和向各省公司和人民借款来支付支出，是特别难以处理的情况。想象一下，在当前形势下，一家向当地政府贷款和/或依赖当地政府支出的非常好的公司的情况。谁应该做什么来应对这种情况？谁将决定这些事情，以及如何决定？这些事情都不清楚。因为历史上（包括 20 世纪 90 年代的中国，朱镕基和许多仍然活着、清醒的人帮助他）都以既有效又痛苦的方式面对和处理了类似的问题。只要鼓起勇气和能力，就可以以既有效又痛苦的方式做到这一点，但这将非常困难。
征收资金用于共同支出和所需补救措施以及社会项目的税收制度亟待改革。就目前情况而言，在国家、省和地方政府层面获取和分配资金的效率非常低。更具体地说，没有有效的所得税、房地产税、遗产税或大多数其他税（增值税除外，尤其是在生产层面）。这一系列条件使我提到的最后一个问题——地方政府债务和财政问题——更具挑战性。
尽管最近政策发生了微小的变化，但人口问题——特别是提前退休年龄（平均53岁）和相对较晚的死亡年龄（平均53岁的人在83岁去世）——让许多人在很长一段时间内都没有退休金。收入微薄，只有一个孩子需要照顾。与此同时，劳动人口正在迅速减少。
因此，虽然上周我们看到了伟大的行动和言论，我相信这些行动和言论之后将出台强刺激政策，这将有很大帮助，并将支撑资产价格，但我认为还有其他几件重要的事情需要关注，以了解中国国内债务货币经济挑战将如何得到妥善处理。
当然，这些观察只是针对一个大国（中国）的五股力量（债务-货币-经济力量）之一，重要的是要记住其他力量（内部政治冲突力量，外部地缘政治冲突力量、自然力量、科技力量）也在影响着中国、其他国家乃至整个世界。上周充满了与所有这些事情相关的相对重要的进展，在我看来，这些进展符合全球康波周期，这将对不断变化的世界秩序产生重大影响。我会及时更新我的观点。
这些观点是我个人的观点，并不代表桥水基金的观点。