Frankly stating that Shanghai’s economy is a stagnant water, “How miserable is Shanghai’s economy?” becomes popular again – The Epoch Times

[The Epoch Times, December 04, 2023]Recently, Xi Jinping, leader of the Communist Party of China, visited Shanghai for inspection and visited financial institutions and other places. During this period, foreign media revealed that Chinese investment bank CICC strictly prohibited its analysts from short-selling the market, but they were also not allowed to show off their wealth. Not long ago, an article published by a financial expert, “How Disastrous Is Shanghai’s Economy?” became popular again. The article believes that Shanghai’s economy is a stagnant water.

From November 28 to December 2, the leader of the Communist Party of China, accompanied by Shanghai Municipal Party Committee Secretary Chen Jining and Mayor Gong Zheng, visited the Shanghai Futures Exchange, the Science and Technology Innovation Park, and affordable rental housing projects to conduct research.

Bloomberg reported on November 30 that CICC, China’s first Sino-foreign joint venture investment bank, issued an internal document to the research department, requiring CICC analysts to avoid sharing negative comments whether discussing China’s economy or market situation in formal or informal settings. .

CICC employees are also expected to avoid wearing luxury goods or disclosing their salaries, according to the document.

During Xi’s inspection tour in Shanghai, foreign media broke the news that China International Capital Corporation (CICC) strictly prohibited analysts from singing down China’s economy, making the outside world doubt whether Xi has a sufficient sense of reality about the current economic situation in Shanghai and China as a whole.

Lao Man, a well-known financial analyst in China Finance, published an article titled “How Disastrous is Shanghai’s Economy” at the end of November, which once again went viral on the Internet.

The above-mentioned article analyzes the current situation of China’s economy and believes that Shanghai’s economy is a stagnant water. The following is part of the article.

There is a financial data indicator that deserves attention this year: the deposits of non-bank financial companies have completely lost their growth potential. Non-bank finance includes insurance, securities, trusts, etc. At the end of 2022, the deposit scale of non-bank financial enterprises nationwide was 24.04 trillion, and by September this year it was 24.23 trillion, an increase of only 0.8%; this weak increase is comparable to the stock market crash.

In 2023, the funds in the hands of non-bank financial companies will no longer grow. This is precisely a sign that the liquidity of the financial market is shrinking sharply. There is only one reason why the liquidity of the financial market is shrinking. All liquidity in the market is shrinking. It was wiped out by the local government debt reduction project. As a result, the Shanghai Stock Exchange Index has been struggling at the 3,000-point level. The repayment pressure on local government debt has drained the financial market of liquidity this year, and it may be even worse next year. The cash reserves in the hands of non-bank financial institutions will definitely shrink significantly, so there will be no long opportunities in the financial market.

Against this background, Shanghai, as the country’s financial center, is the first to bear the brunt. In terms of key financial data, the growth in deposits of non-bank financial enterprises is only 0.1%, which is not even comparable to the country’s weak growth of 0.8%. a step far. Taking into account the debt repayment pressure of local debt in November and December, it is expected that the growth rate of Shanghai’s non-bank financial corporate deposits will definitely turn negative, and as long as it turns negative, it means that the liquidity of Shanghai’s financial market has been drained.

According to data from the Shanghai Municipal Taxation Bureau, in the first three quarters of this year, the total tax revenue generated by Shanghai was 1,497.2 billion, a year-on-year increase of only 2.84%. The national tax revenue growth in the first three quarters was as high as 11.9%. Shanghai’s tax revenue growth has lagged far behind the national average. As funds are escaping crazily through Hong Kong, Guangdong’s full-scale tax revenue growth in the first three quarters was only 3.9%. , and Shanghai’s tax revenue growth lags significantly behind that of Guangdong, which shows how weak Shanghai’s economy has been this year.

Colliers International released a Shanghai office market report for the third quarter of this year, which showed that the vacancy rate of Shanghai office buildings is expected to rise to 21.6% throughout the year. With more than 20% of Shanghai’s office buildings vacant, it looks like a third-tier city. Behind this unprecedented phenomenon is the fact that overseas financial institutions that once rented half a building in Shanghai are collectively shrinking or even directly shutting down their business in China. Overseas financial institutions that have closed their Shanghai offices in the past two years include: ABN AMRO, Citi Private Banking, Norway’s Sovereign Wealth Fund, Morgan Stanley, Canadian Funds, BlackRock, Moody’s, Vanguard, etc. The Shanghai government has no way to deal with this phenomenon and does not even dare to try to retain them. With the financial industry in such decline and the office vacancy rate rising sharply, Shanghai’s economy is of course in stagnant water.

According to data from the Shanghai Municipal Bureau of Statistics, in the first three quarters of this year, profits in Shanghai’s wholesale and retail industry fell by 10.0% year-on-year. However, in order to make up for the tax gap, Shanghai merchants still struggled to pay an additional 9.1% tax. This situation of draining money from the bottom of the cauldron is an unbearable burden for Shanghai’s businessmen. Therefore, since this year, businesses that have survived the previous three years have collectively been unable to survive. At the end of January, the Shanghai Landmark Plaza on Nanjing Road closed its doors; at the end of August, the Pacific Department Store in Xuhui District also closed completely. According to data released by Savills, the vacancy rate of Shanghai shopping malls in the third quarter was 12.1%, much higher than the 5.4% vacancy rate at the end of 2019.

In the coming days, all resources in the financial sector will have to be prioritized over extending the life of local debts. This will inevitably mean that the financial industry will lose liquidity and die as a whole. At the same time, foreign financial institutions will leave without hesitation. China. For Shanghai’s economy, this is unbearable. For those provinces in the central and western regions that are highly dependent on Shanghai’s fiscal transfer payments, there is no doubt that this will be a blow to them and make it more difficult for them to borrow debt. This is a tragic vicious circle.

Editor in charge: Fang Xiao#