Zhang Ming | How to understand the industry changes in 2021? ——Book review of "Ripe Economy - Xiangshuai Wealth Report 3"

Note: This article is a book review written by the author for Xiang Shuai's new book "Mature Economy - Xiang Shuai Wealth Report 3", please be sure to indicate the source when reprinting.

In 2021, many industries in China have undergone earth-shaking changes, such as education and training, real estate, medical equipment procurement, Internet platforms, digital currency, etc. As for why these great changes in the industry have occurred, there are many opinions and differences between the parties concerned. However, some interpretations are relatively one-sided and superficial, full of subjective prejudices and assumptions of observers, and lack of deeper and longer-dimensional thinking. Recently, her friend Xiang Shuai sent her new book "Mature Economy - Xiang Shuai Wealth Report 3". After reading it, I think this book can provide a useful new perspective for interpreting the industry upheaval in 2021.

The term "cooked economy" may seem a bit confusing at first glance. However, the English title of the book, "China's Economy in Mid-Age", is straightforward and self-explanatory. In the book, the author specifically mentions several first and second halves, which are impressive. For example, 2012-2013 was the dividing line between the first and second halves of China's economic growth. For another example, 2016-2017 is the dividing line between the first and second halves of China's real estate industry. For another example, 2020-2021 is the dividing line between the first and second halves of China's income distribution. These observations are undoubtedly very perceptive. The author believes that there are several more, 2010 is the upper and lower half of the Chinese dividend, 2016-2017 is the upper and lower half of China's financial supervision, 2020 is the upper and lower half of China's double carbon environmental protection, and so on.

The connotation of the first and second half is naturally a major change, and more often than not, the structural changes in the economic and social market will bring about structural changes in relevant policies. For example, 2012-2013 was roughly a watershed in China's economic growth from being driven by manufacturing to being driven by the service industry, which also brought about a significant decline in economic growth. From 2012 to 2019, China's annual economic growth rate fell from more than 10% to 6%. Affected by the outbreak of the new crown epidemic, the average growth rate in 2020 and 2021 is only 5.1%, and the economic growth rate in 2022 is expected to be only 5.3-5.5%. At least as important as the dynamic structure of economic growth is the increase in The proportion of China's working-age population in the total population in 2010. In addition, changes in real estate regulation, financial supervision, income distribution policies and energy conservation and environmental protection policies will also have an impact on economic growth.

What important changes will we see in the era of the "ripe economy"? And look at the three wonderful conclusions of this book: first, "at the beginning of the basic completion of industrialization in 2012, China's economy gradually entered the "mature age", accumulating a certain amount of wealth and experience value, but the inherent growth impulse is no longer the same year"; second, the "arbitrary growth" of various market players will be replaced by "orderly growth"; third, "the mature economy will also face the "mid-life crisis" of rising stock wealth, but the reduction of investable projects, coupled with the global release of water and low interest rates, the asset valuation system will be rewritten. ”

The structure of the book "Cooked Economy" is very interesting, divided into two parts. The previous part, "What year is this evening - those waves of wealth that swept through us" is divided into six chapters, basically according to the chronological order of 2021, a detailed inventory of the major events in the financial field that occurred in the spring, summer, autumn and winter. In fact, the events of the year have been overwhelming and dizzying, and it is necessary to record this year's chronicle. Moreover, the author greatly appreciates Xiang Shuai's emphasis on "somatosensory": "The feeling of being impacted in figuration is our deepest memory of the times." The next part, "Future Horizons – The Wealth Variables That Will Affect Us," is divided into five chapters that provide a forward-looking analysis of the future direction of inflation, secondary markets, primary markets, digital currencies, and digital platforms. The first part traces the past, the next part looks ahead, and each chapter is sandwiched between the discussions, infiltrating the author's views and feelings. Many places can also appreciate the wonders of the Spring and Autumn brushwork.

What impressed me most about this book was Xiang Shuai's two wonderful analyses of digital platforms and capital markets.

First, let's look at the author's analysis of the reasons for the rise of the platform: one is the fundamental factors that drive it. From 2000 to today, China's urbanization, industrialization, and Internet informatization are almost simultaneously and at high speed. Internet values are deeply embedded in the process of urbanization and industrialization; the second is the promotion of regulatory inclusion. The rapid rise of China's Internet industry, especially the consumer Internet platform giants, is one of the achievements of China's wide regulation; the third is the characteristics of the platform itself. By controlling algorithms and data, digital platforms have unimaginable power over organizations like enterprises. This force is increasingly having an immeasurable impact on society as a whole, and human society is not yet ready, from policy to thought.

Look at the author's in-depth portrayal of the essence of the Internet platform: first, the digital platform is a market that standardizes complex transaction contracts and processes them in batches; second, unlike the previous platform, the digital platform has a new production factor in the digital age - digital capital formed by the accumulation of data and algorithms. It is the non-competitive characteristics of this new factor of production that make the digital platform produce a super natural monopoly, change the scope and form of the market, and also change the balance of forces of social production relations, and even the social structure; third, the platform enterprise has thus become a unique existence: it is both an enterprise, a market, or a social organization, and plays a part of the role of the government, with considerable dominance over consumers, workers and traditional manufacturers, and even touches the traditional power field of the government; fourth, On the one hand, it is an indispensable digital infrastructure and a perfect tool for digital social governance; on the other hand, it is the conflict and contradiction of the dual attributes of enterprises and public markets, which is a change and challenge to traditional production relations and power structures - for the existing social power structure, the platform must be a double-sided body of red and black. As far as the author's reading scope is concerned, Xiang Shuai's portrayal of the essence of the platform can be described as quite profound.

Looking at the author's two-point outlook for the future development of Internet platforms and digital technologies: first, the efficiency and strong organizational mobilization ability of platforms in information, logistics, community services, charitable donations, etc., are the parts of the "digital power" that emerge from the sun; second, digital technology will inevitably penetrate into the field of industrial production, triggering the improvement of social productivity. If digital technologies want to make substantial progress in productivity, it is the trend to move from the first half of the consumer Internet to the second half of the industrial Internet, and the automotive industry may be a breakthrough.

Xiang Shuai's housekeeping skills are financial research, and her analysis of the capital market undoubtedly deserves the reader's attention. In response to the bursting of the blue-chip bubble in early 2021, her sharp assessment is, "The iron law of the capital market is that the public's carnival is always after the feast of prices." In response to the very different markets between the primary market and the secondary market, her literary description is that "this is a very dark and humorous scene in the equity market in the past few years: in the same segment, the price of the primary market is a dream, and the secondary market is in front of the reality of the backbone." Subsequently, she made a very convincing and penetrating explanation for the above phenomenon: "The head agency pursues the head project, and the head project only needs the head agency's money." The double-head effect has produced two market phenomena, "casting a wide net" and "valuation front". These two phenomena have further strengthened the double-head effect, and the K-type differentiation of the market is becoming more and more extreme. One possible consequence is that both innovation and revenue die in crowded racetracks. ”

In addition to the remarkable content, the writing features of this book are also worth mentioning. Xiang Shuai looks quite personality and uninhibited (this is reflected in the hair color and dress style), but in his bones he is a traditional old Wenqing. Looking at the quotations at the beginning of each chapter and the lyrics used as a verdict at the end, you can't help but make people in the 70s and early 80s sigh. The whole book is gorgeous and fluent, and it is very readable. But the point that Xiang Shuai surpasses our peers is the in-depth understanding of the post-90s and post-00s Generation Z. For example, in the eyes of Gen Y and Gen Z fans, Musk is not a purely figurative person, but a totem of the digital technology idealism of this era, symbolizing "subversive destruction of innovation" and "complete reconstruction of the rule order." For another example, "the emotions of the nation and the people's livelihood are gradually becoming the mainstream aesthetics of the new generation, and a discourse system that is more "lost" in desire, richer in emotion, and more diversified in value orientation is gradually taking shape." ”

Finally, the author also wants to get an axe and explore his understanding of the great changes in the industry in 2021. I believe that the above policy changes can be sorted out from two main lines. First, how to deal with the impact of population aging on the potential growth rate of China's economy. This means encouraging young people to have more children. To achieve this, it is necessary to dismantle the four mountains that currently stand over the heads of young people: housing, education, medical care, and old-age care. In this way, we can understand the importance of reforms such as "no speculation in housing", double reduction in education, and direct procurement of medical equipment. Second, how to integrate development and security. In this way, we can understand the reasons for the continuous introduction of policies such as strengthening antitrust, preventing disorderly expansion of capital (especially into education, entertainment and other industries), strengthening the supervision of Internet platforms, and strengthening tax supervision.

China's economy has now sailed into more volatile seas, the external environment is more complex, and the internal risks and challenges should not be underestimated. In the context of declining economic growth, improving the quality, sustainability and inclusiveness of economic growth has become a top priority. Innovation-driven, green transformation, common prosperity and new opening up are expected to become new keywords for China's economic and social development in the next few years. Therefore, I also hope that the "Xiangshuai Wealth Report" series can better record the times, care for the grassroots, and provide investment suggestions with practical guidance for ordinary people.

"Mature Economy - Xiang Shuai Wealth Report 3", by Xiang Shuai, Nova Press, January 2022 edition.

(The author is Deputy Director of the Institute of Finance, Chinese Academy of Social Sciences, Deputy Director of the National Finance and Development Laboratory)