Liu Shijin: Monetary policy should stabilize enterprises and real estate, and fiscal policy should stabilize infrastructure and public services

Beijing News (reporter Hou Runfang) recently in the 2022 economic trend forecast and judgment meeting jointly sponsored by Tengjing AI Economic Forecast and Primus Macro Forum, Liu Shijin, deputy director of the Economic Committee of the National Committee of the Chinese People's Political Consultative Conference, said in his speech that compared with before the epidemic, China's economy is still on the platform of medium-speed growth, but the center of gravity of medium-speed growth may drop by one percentage point, and it is expected that China's economic growth rate will be 5% to 5.5% in 2022. He also said that if China's economy wants to achieve stable growth in 2022, it is still necessary to stabilize investment in the short term, and the focus of stable investment is to prevent infrastructure and real estate from falling abnormally. "In the short term, it is recommended that the focus of monetary policy is to stabilize small and medium-sized enterprises and real estate, and the focus of fiscal policy is to stabilize infrastructure and basic public services."

Liu Shijin first pointed out that this year is the third year since the epidemic, in the two years of 2020 and 2021, The average annual growth rate of China's economy will be 5.1%, and it is expected that China's economic growth rate will be 5% to 5.5% in 2022. "On average in the past three years, China's economic growth rate is between 5% and 5.5%, is this a phased phenomenon or does the Chinese economy enter a new platform for a longer period of time in the future?" Will the platform focus of China's economic growth move downward in the future? In this regard, one of our preliminary judgments is that compared with before the epidemic, China's economy is still on the platform of medium-speed growth, but the center of gravity of China's medium-speed growth platform has shifted down by one percentage point, which is not only a phenomenon that has occurred in the past three years, but also for a long time in the future, China's economy will enter such a new growth platform. We believe that China currently has the ability to maintain a potential growth rate of 5% to 5.5%. ”

The 2021 Central Economic Work Conference proposed "steady growth", and Liu Shijin pointed out that the main reason for the economic downturn is due to the decline in investment. "Our investment, especially infrastructure investment and real estate investment, has experienced a relatively large decline after the third quarter of 2021. In addition to being affected by short-term policy shocks, this is also related to the decline in some medium- and long-term investment potential. The results of a comparative study conducted by our research team on the structure of terminal demand in China and OECD countries show that under the same per capita income ratio calculated by the purchasing power evaluation, the proportion of Infrastructure Investment in China in terminal demand is more than 1 times higher than that of OECD countries, and real estate investment is 30% higher. Liu Shijin said that one of the issues that needs to be considered is whether China's potential overdraft in infrastructure and real estate investment in the past few years may be a relatively large decline in investment when it cannot be sustained at a certain point.

Liu Shijin further said that in 2022, if China's economy wants to achieve stable growth, it is still necessary to stabilize investment in the short term, and the focus of stable investment is to prevent infrastructure and real estate from falling abnormally. "Stable investment or stable expectations, to prevent infrastructure and real estate investment from falling in the short term, even if there is a decline, it should be a soft landing, let them return to the normal growth track, of course, we can not expect investment growth to rise to the pre-epidemic level."

When talking about macro policies, Liu Shijin said that on the whole, China's macro policies and the needs of China's economic growth are in line with each other. Especially during the epidemic period, we have a relatively good grasp of the degree of macro policy, and there is no flood irrigation, and the policy basically meets the needs of economic recovery and growth.

Specifically from the perspective of macro policies in 2022, Liu Shijin said that macroeconomic policies still have to play an important role in anti-slip support, that is, to support the trend of economic decline, and not to let the economy slide too fast. "In addition to monetary policy in terms of reducing the RRR and guiding the decline in interest rates, some structural policies are also playing a relatively important role. For example, for small and medium-sized enterprises, it is still necessary to provide targeted support. In addition, real estate has an important impact on the entire national economy, even if the real estate growth rate to slow down, hope that real estate can be soft landing, monetary policy in terms of structural policies to provide the necessary liquidity for the soft landing of real estate and medium- and long-term stable development, in fact, recently the central bank also has some policies in this regard. At the same time, it is also necessary to focus on supporting the housing construction funding needs in the process of urbanization and structural transformation, such as supporting the construction of housing projects for urban migrant workers. In terms of fiscal policy, the next step of fiscal policy to play a positive role in the space is relatively large, it is recommended to support a number of infrastructure projects with returns and long-term potential, such as focusing on supporting transportation and communication projects in the development of metropolitan areas and urban agglomerations. In addition, the focus of fiscal policy should also gradually shift to improving basic public services and strengthening the construction of human capital. Simply put, in the short term, it is recommended that the focus of monetary policy is to stabilize small and medium-sized enterprises and real estate, and fiscal policy focuses on stabilizing infrastructure and basic public services. ”

Liu Shijin also stressed that there is no very obvious situation in China where macro policies are too tight to restrict the growth potential, but it is necessary to pay attention to the constraints on the growth potential of certain institutional policy factors. While macro policies play a good role, we must pay attention to giving play to structural potential.

"The so-called structural potential is the structural potential that China, as a late-developing economy, has in the process of consumption structure, technological structure, industrial structure upgrading and urbanization. Simply put, China is now $12,000, advanced economies are generally $30,000, $40,000, the United States is $64,000, and the gap in the middle is our structural potential. Liu Shijin pointed out that in the past 30 years, China's economic growth rate has been about 10%, and in recent years it has entered a period of medium-speed growth, but the economic growth rate is still 1 times or even 2 times higher than that of the United States, and the growth of China's economy is not mainly based on macro policies. Therefore, we must emphasize what macro policies should do, and at the same time, we must think clearly about what macro policies cannot do, and we must pay attention to structural potential. Infrastructure, real estate, import and export in the past were the main structural potentials driving China's rapid economic growth, and now they are gradually weakening, including 2022, the "14th Five-Year Plan" period, or even a longer period of time, we must tap the structural potential matching the medium-speed growth period.

Proofread by Li Ming