Li Daokui: The global economy is facing 1 black swan and 3 gray rhinos, and China needs to create two new growth points

"Now the world economy probably has 1 black swan and 3 gray rhinos." On November 27, Li Daokui, dean of the Institute of Chinese Economic Thought and Practice of Tsinghua University, said at the "Caijing Annual Meeting 2022: Forecast and Strategy" that the current international situation should not be taken lightly, and we should be vigilant against the "black swan" of the epidemic and the three "gray rhinos" of debt recession, industrial chain restructuring and low-carbon impact.

The first is the "black swan" of the epidemic. Just on November 25, the news of the rapid spread of a new variant of the new crown in South Africa with a large number of mutations caused concern around the world. Li Daokui said that the evolution of the current epidemic situation has great uncertainty, if "again", the global economy is likely to face the biggest downturn or recession since World War II, and countries cannot take it lightly.

Regarding the "gray rhinoceros", Li Daokui first mentioned the debt recession. Previously, in response to the epidemic, countries used fiscal policy on a large scale, and the level of national debt around the world rose by 18% relative to GDP, superimposed on the previous high base level, and the impact of future debt recession cannot be ignored. Li Daokui believes: "Whether the epidemic continues or not, global debt is a big trouble, and the level of interest rates will increase in the future." He also reminded that after the contraction of US fiscal policy, the risks to emerging market countries are higher.

The second is the restructuring of the industrial chain. The re-layout of the industrial chain has been staged around the world, and the epidemic is strengthening the awareness of "anti-globalization" in all countries, especially developed countries. Li Daokui pointed out that "moving some industries back" to their own countries violates basic economic laws, and the rise in production costs will further exacerbate inflationary pressures. On the other hand, many developing countries, including China, will suffer a greater negative impact and need to be prepared in advance.

The third is the low-carbon shock, the essence of which is that the traditional energy alternative technologies, including energy storage technology, are not mature enough. "Developed countries are now riveting to reduce carbon, but in percentage terms, advanced economies are much less dependent on fossil fuels than emerging market countries because they have passed that stage." Li Daokui suggested that the conditions for developed countries to promote low carbon are better than ours, but the rise in fossil energy prices brought about by carbon emission reduction, carbon taxation and carbon trading has further increased inflationary pressure. In the future, more and more oil giants will join the ranks of production cuts on the grounds of practicing social responsibility, coupled with rising prices, Li Daokui believes that in the worst case, there is a possibility of a "second crude oil crisis".

As for how China should respond to the above challenges, Li Daokui believes that no matter when the epidemic disappears, it is necessary to attach great importance to economic work in the next few years, transform the growth mode, and create new economic growth points, including mobilizing the enthusiasm of the government, especially local governments, as economic entities, and striving to increase the proportion of the middle-income population; cultivating a new low-carbon market and making it really play a role. "If it takes 15 years to turn 400 million of the 1 billion people into middle-income people, then the middle-income people will double, the economic growth will be very dynamic, and the double cycle pattern will really be formed." Li Daokui believes that compared with the carbon trading market with fewer participating companies and affected by financial funds, the collection of carbon taxes may be more effective in raising the cost of carbon emissions.