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Li Shenming: Land finance must be ended to avoid a serious crisis

Original Editor's Note Comrade Xi Jinping pointed out in the report of the 19th National Congress of the Communist Party of China: "The world is in a period of great development, great change and great adjustment", "the world is facing outstanding instability and uncertainty, the momentum of world economic growth is insufficient, the gap between rich and poor is becoming more and more serious, regional hotspot issues are rising and falling, non-traditional security threats such as terrorism, network security, major infectious diseases, and climate change continue to spread, and mankind is facing many common challenges." "At present, the situation at home and abroad is undergoing profound and complex changes, and the mainland's development is still in a period of important strategic opportunities, the prospects are very bright, and the challenges are also very severe." These major conclusions are entirely correct. From an international point of view, the two sides and parties in today's world of mutual cooperation, competition, game and even competition are giving full play to their subjective initiative to a great extent and fully, so that they will appear in a state of white clouds and dogs, and waves and clouds.

  But the economy is the foundation, and politics is the concentrated expression of the economy. The world pattern, international politics and international relations are only and can only be the continuation of the domestic politics of all countries in the world, especially the major countries, and are the manifestation of the parallel quadrilateral diagonal of the competition of forces in the world.

  At present, the mainland's international and domestic opportunities and challenges are unprecedented and rare in the world, but the focus of contradictions is still at home, and the main aspects of contradictions are still at home. Fundamentally, the deep foundations of domestic opportunities and challenges are also deeply rooted in the domestic economy.

In order to help deepen the understanding of the various opportunities and challenges at home and abroad today, this public WeChat account has republished Li Shenming's article "Seven Major Resource Scarcity Calls for Accelerating the Transformation of Economic Development Mode" published in the 10th issue of "Red Flag Manuscripts" in May 2010. The title of the republished article is separately prepared by the editors. The article was originally published in the internal journals "Bulletin of the Chinese Academy of Social Sciences" on February 3, 2010, No. 14 and February 4, 2010, and was included in the january 2018 book "Li Shenming on the Financial Crisis".

Li Shenming: Land finance must be ended to avoid a serious crisis

The article pointed out: "In the coming years, of all the new situations and new difficulties facing the mainland, the situation in which the seven resources for sustainable development may be relatively scarce is the most important and basic. "In the next few years, these seven relatively scarce resources are: First, land resources. The second is the government's investment of resources. According to the current data, it is the resource for the re-lending of about 75 trillion yuan of urban and rural residents' deposits. The third is material resources. The fourth is environmental resources. Fifth, international and domestic market resources. Sixth, labor resources. Seventh, foreign-funded resources. The article also said: "The above seven kinds of resources have led to the rapid growth of infrastructure construction such as real estate, high-speed railways, highways and airports, automobile industry and foreign trade exports, which have led to the extraordinary development of more than 30 industries such as steel, cement, chemical industry, electric power, and building materials." "But right now these resources are shrinking or shrinking relatively."

  It is particularly noteworthy that the first thing proposed in the article is land resources. When Mao Zedong read the Soviet textbook of socialist political economy, he said: "Now we do not count the value of land. Since ancient times, there have been no houses that are not destroyed, but there is land that is not destroyed. At present, 1.58 billion mu of arable land on the mainland are mostly left behind by the ancients and operated by the labor of people for thousands of generations. Up to now, we have also added our own labor to it every year. Land is the most basic means of production, and economists should do well to calculate the value of land. Chairman Mao Zedong's exposition is still shining brightly today. In a sense, all our wealth is inseparable from the land. Land is the mother of all wealth. Leaving the land, we had nothing. Unless you can go to the moon and other planets to get resources in the future. In the past 40 years of reform and opening up, in addition to the decisive role played by our correct reform and opening up policy, one of the key mysteries of our rapid economic growth is that all kinds of material wealth on 9.6 million square kilometers of land have entered the field of data and monetization. This was the fundamental material foundation laid for us by the "one transformation and three reforms" of the Mao Zedong period, when the land was nationalized and collectively owned. In this way, engaging in special economic zones and high-tech development zones, attracting foreign investment, expanding cities, and building high-speed railways, highways, airports, etc., not only has no cost, but also can transfer land on a large scale, resulting in land rent, differential land rent, and super land rent. In addition, it is also possible to lease out various mines such as oil fields, coal fields, rare earths, gold mines, etc., which has released many "dividends". For more than 70 years, successive authorities in Taiwan have tried to build a highway around the island, but they have never been able to do so, because the cost is too high for public finances to afford. Since the reform and opening up, we have "managed the city", that is, managed the land, and made great achievements. But now there is a sharp and serious conflict between land finance and our food strategic security, and in 2017, the mainland alone imported more than 95 million tons of soybeans, equivalent to about 800 million mu of arable land. There are only 1.8 billion mu of arable land on the mainland. The task of how to implement General Secretary Xi Jinping's instructions on "our rice bowl must contain our own grain" and "houses are for living, not for frying" is very arduous. It can be said that the cycle of relying mainly on land finance to maintain economic growth is about to basically end. If the mainland's economic development mode is no longer determined to take the initiative to carry out the change, it will be forced to change in the future, the cost will be even greater and greater, and even the economy is very likely to enter a more difficult period. General Secretary Xi Jinping is far-sighted and timely put forward the "five major development concepts", and the first of the "five major development concepts" is "innovation". Now we must eliminate all interference and conscientiously and solidly implement the "five major development concepts." Now we must understand that the real estate prices, which are already at a high level, are already a cancer that we have to pay attention to in the mainland's economic and social development. Taking real estate as the main pillar of the mainland's economic development, the days of supporting our economic development have become unsustainable. We fully agree with General Secretary Xi Jinping's proposal to introduce a scientific and reasonable real estate tax as soon as possible. Only in this way can we seize the last better "window period" of real estate reform, if we miss this last "window period" and are reluctant to break the wrists of heroes, in the near future, it will affect the whole body, and it will inevitably trigger a serious financial and even economic crisis.

  Eight years ago, the author proposed in the article: "In a certain sense, it is urgent to change the 'mode of economic growth' and adjust the 'mode of income distribution'. This 'one transformation' and 'one adjustment' is the 'cow nostril' of the current sustainable economic and social development. By grasping these two 'cow nostrils,' we will hold the 'bull nose' of the entire economic and social development, and reform, opening up, and socialist modernization may open up a new situation. Re-reading this article and the above conclusions now may still have some practical significance. (July 14, 2018)

【Text】

The mainland is preparing the 12th Five-Year Plan. Compiling a scientific and rational plan is very important for us to seize unprecedented opportunities at home and abroad and to cope with challenges rare in the world at home and abroad. At home and abroad, domestic work is the foundation; economic, political, and cultural, economic work is the foundation. Correctly understanding the domestic economic situation is an important prerequisite for scientifically judging the historical orientation in which we are located and scientifically planning the future. In the more than 60 years since the founding of the People's Republic of China, especially in the more than 30 years of reform and opening up, the mainland's economic construction has made tremendous achievements that have attracted worldwide attention and cannot be doubted. At the same time, in the rapid economic growth of more than 30 years, some new situations have also emerged. First, we must not take the newly emerging relevant situation too seriously, lose confidence in the future, or even deny the correct direction of reform and opening up. We must persist in continuing to emancipate our minds and adhere to the path of socialism with Chinese characteristics; there is no way out for any retrogression. Second, we must be prepared for danger in times of peace, and we must never fail to see the existing problems, be blindly optimistic, and refuse to keep pace with the times.

One

Of all the new situations and new difficulties facing the mainland in the coming years, the situation in which the seven resources for sustainable development may be relatively scarce is the most important and basic.

The first is land resources

According to the 2006 national land use change survey results released by the Ministry of Land and Resources, the mainland arable land accounts for only 13% of the land area, accounting for 8.4% of the world total, and the per capita is only about 1.4 mu. In the past 30 years, the net reduction of cultivated land in the country has been about 200 million mu. About 200 million mu of arable land has entered the fields of real estate commodity development and infrastructure construction, which has played a considerable role in stimulating the growth of national GDP, increasing fiscal revenue at the central and local levels, promoting the development of the national economy, and improving the lives of the broad masses of the people. However, if there is no relatively significant progress in agricultural science and technology in the future, it will be impossible for more arable land resources to enter the commodity field, otherwise there will be a fundamental contradiction with ensuring the security of this strategic resource of grain. As of 2008, the mainland had a total of 1,825.74 million mu of arable land, and the task of guarding the red line of cultivated land itself was quite arduous. In 2007, the continent's total grain production only recovered to 1996 levels, but the population increased by 100 million. From 2020 to 2030, the population of the mainland may reach 1.5-1.6 billion, and it will need 560-600 million tons of grain per year, if there is no major scientific and technological progress, we can only produce about 500 million tons per year, but now the annual commodity trade in the international market is only 200 million tons. In extremely difficult circumstances, food is a more precious item than gold. In our country of 1.3 billion people, the production and supply of food must be based on self-reliance.

The second is the government's investment of resources

As of the end of October 2009, the deposits of urban and rural residents on the mainland totaled more than 25 trillion yuan. Since the 1997 Asian financial crisis, the mainland has implemented a proactive fiscal policy, through the issuance of long-term treasury bonds, direct bank loans, the vast majority of which have been invested and loaned, and mainly for infrastructure construction, some projects may take 20 to 30 years to recover investment. Government investment in economic construction is entirely necessary, but this resource will also be significantly reduced or limited in the future.

The third is material resources

In the past, fertilizer and water flowed rapidly, and individuals, collectives, and state-owned enterprises together played a very important role in developing resources and promoting development, but some of them were predatory exploitation. In the future, various strategic resources such as grain, oil, water, and minerals will be greatly constrained. The mainland economy is mainly an extensive type of growth. According to the statistics of the National Development and Reform Commission, in 2006, the total GDP of the mainland accounted for only 5.5% of the total GDP of the world, but the energy consumed accounted for 15% of the world, the steel consumed accounted for 30%, the cement consumed accounted for 54%, and the energy consumption per unit of the continental output value was 3-4 times that of the developed countries; the water consumption of the main product units of the mainland was more than 500 times higher than that of the developed countries; the comprehensive utilization rate of the mainland timber was only 40%, while the comprehensive utilization rate of wood in developed countries had reached 80%. The water environment is in a grim state. The per capita water resources of the mainland are only 1/4 of the world average, and 2/3 of the more than 600 cities in the country have insufficient water supply, of which 1/6 of the cities are seriously short of water, and the development and utilization rate of many rivers exceeds 30% of the international warning line. Mineral resources are in short supply. At present, in addition to non-metallic minerals for coal and building materials, 2/3 of the state-owned backbone mines in other minerals have entered the middle and late stages. The per capita energy recoverable reserves of the mainland are far lower than the world average, with only 2.6 tons of oil recoverable reserves per capita in 2000 and 1074 cubic meters of natural gas recoverable reserves per capita, 11.1% and 4.3% of the world average, respectively. In 2003, the mainland became the world's second largest oil consumer and the seventh largest oil importer. At present, the degree of guarantee of domestic oil resources to demand is only about 50%, and by 2020, it may only be 42%, and the degree of external dependence will increase year by year. Among the 45 major mineral resources that have been proven, only 21 can meet the needs of economic and social development.

The fourth is environmental resources

Half of the country's seven major river systems already have serious pollution problems. The discharge of pollutants is large, and the pollution of rivers, lakes and seas is serious. 75% of the country's lakes are eutrophicated to varying degrees. As of 2009, about 300 million rural people across the country still have no access to drinking water that meets the standards. In previous years, the mainland's sewage discharge ranked first in the world, exceeding 68% of the allowable amount of environmental protection standards; sulfur dioxide emissions also ranked first in the world, exceeding 77% of the allowable amount of environmental protection standards. More than 90% of the country's natural grasslands are degraded to varying degrees, and the area of grassland degradation, desertification and alkalinization has reached 135 million hectares, accounting for 1/3 of the total grassland area, and is still increasing at a rate of 2 million hectares per year. The atmospheric environment is at a serious pollution level. Of the 340 cities monitored in 2003, 32 per cent and 27 per cent were slightly polluted and 27 per cent were seriously polluted, respectively. In the past, many places could pollute first and then treat, but now not only can not do this, but also require a lot of investment in the treatment of pollution in the past. Since 1993, the water pollution control of the Huai River has been carried out for 16 years, and governments at all levels have invested more than 70 billion yuan, but they have only maintained the original level of pollution and have not continued to aggravate the deterioration. According to the Ministry of Environmental Protection's "2006 China Environmental Protection Report", 78.7% of the 2,000-kilometer section of the HuaiHe River does not meet the standard of drinking water, 79.7% of the river section does not meet the standard of fish water, 32% of the river section does not meet the standard of irrigation, 10 years ago, the Huai River still grows more than 60 kinds of fish, and now almost extinct. If we do not pay close attention to prevention and control now, the Yangtze River in more than 10 years will become another Huai River today.

Fifth, international and domestic market resources

The continent's GDP consists of nothing more than three parts. The first is the net export to the international market, that is, foreign trade. In previous years, China's imports and exports have increased by more than 30 percent per year, and it can be said that it has fully enjoyed the benefits of WTO accession. According to the statistics of the National Bureau of Statistics, the mainland's imports and exports in 2004 have exceeded 1.15 trillion US dollars, accounting for up to 70% of GDP (the world's major powers are generally about 20%), the market for foreign labor-intensive products, China can occupy the basic occupation, so the future of the mainland's import and export to continue to grow at a high speed of the potential is limited. In October 2008, the mainland's imports and exports increased by 17.6% year-on-year, but in November it fell sharply by 9%, and the total value in December fell by 11.1%. In the first half of 2009, the total value of the mainland's imports and exports fell by 23.5% year-on-year. Among them, exports fell by 21.8% and imports fell by 25.4%. The second is domestic investment. In 2007, the investment rate on the mainland was still as high as more than 42%, and the consumption rate fell to 48%. In the first half of 2009, the investment rate on the mainland reached 33.5%, or 41.2% if the decline in resource prices is deducted. Such a high investment rate is difficult to maintain. The third is the consumption of urban and rural residents in the domestic market. In recent years, the biggest hidden concern in the mainland economy is the relative shortage of domestic demand for urban and rural residents. In the primary distribution, the proportion of mainland workers' remuneration in GDP has decreased year by year. In 1990, it accounted for 53.4 per cent, in 2005 it fell to 41.4 per cent, and in 15 years it declined by 12 per cent; However, labor remuneration in general market economies accounts for more than 60% of GDP. Of the financial products owned by mainland residents, 20 percent of the wealthy account for 66 percent, while the 20 percent of low-income earners own only 1.3 percent. To implement the scientific concept of development and achieve comprehensive, coordinated and sustainable development, the purchasing power of urban and rural residents is the foundation. Over the years, for the sake of pension, medical care, education, housing and other considerations, the people dare not spend a little money in their pockets. In particular, the rural income of 800 million people has grown significantly weakly. Domestic consumption accounted for only 15.5% in the first half of 2009. There is now a backlog of about 4 trillion yuan of inventory in the country. Crude steel production in 2009 was about 700 million tonnes, but the market demand was only about 500 million tonnes. The proportion of oversupply commodities in the total surveyed commodities may reach 70%-80%. Under the conditions of the market economy, it is inevitable that consumption will ultimately determine production and GDP. Things can't be sold, who dares to invest? With less investment, higher GDP growth rates are difficult to sustain for long.

Sixth, labor resources

Over the past 30 years of reform and opening up, the wages of the vast majority of migrant workers in developed coastal areas have basically been maintained at about 800-1000 yuan. Abundant and cheap labor supports the competitiveness of mainland commodities in overseas markets, but this competitiveness of relying on cheap labor will be difficult to maintain. The mainland is not rich but has entered a quasi-aging society, and by 2015, the number of people at the production age (15-64 years old) will be significantly reduced. When the "post-80s" and "post-90s" enter the production age, some may have to raise two children and four elderly people. At this point, cheap labor on the mainland will cease to exist. According to the current economic growth mode, the competitiveness of mainland commodities in overseas markets will be significantly reduced.

Seventh, foreign-funded resources

Due to the relative abundance of the above six kinds of resources in the past, coupled with the mainland's good investment environment, various policies have been introduced to encourage the attraction of foreign investment, foreign investment can obtain rich profits after entering the mainland, and the mainland's level of attracting foreign investment continues to improve, ranking first among developing countries for 17 consecutive years. The exports and imports of foreign-funded enterprises on the mainland account for more than 50% of the national total. Foreign investment has brought economic prosperity, which has led to a rapid increase in the mainland's GDP. At present, foreign capital entering the mainland will still maintain a certain amount (only from April to June 2009, foreign "abnormal funds" came in a total of 88 billion US dollars), mainly to see that the renminbi is appreciating in recent years, and these "abnormal funds" come in order to earn the exchange rate of rmb appreciation. The second is to invest in and push up our housing market and stock market, and "blow up" the housing market and stock market "bubble" in an attempt to make huge profits. The third is to acquire state-owned and private enterprises in our key industries, and then package and list them to make money or directly "do yellow" to achieve their monopoly on the mainland consumer market. The fourth is to occupy our service industries, especially in the fields of finance, insurance, and cultural industries. However, we should pay attention to the fundamental purpose of foreign investment in order to make money, if after three to five years, ten years and eight years, the above six resources have obviously shrunk or been restricted, making money is more difficult, foreign capital This seventh resource may gradually or even a lot of reduction. Therefore, in recent years, we must attach great importance to preventing and defusing the financial and social risks brought to us by the large-scale withdrawal of foreign capital under specific conditions.

Two

The above seven kinds of resources have driven the rapid growth of infrastructure construction such as real estate, high-speed railways, highways and airports, automobile industry and foreign trade exports, which has led to the extraordinary development of more than 30 industries such as steel, cement, chemical industry, electric power, and building materials. Due to the limitations of the above seven kinds of resources, in a certain sense, these four industries may become "sunset industries". We urgently need to seek and cultivate new economic growth industries. If we want to implement the scientific concept of development and achieve sustainable development, we cannot only consider problems from the perspective of technical economics and economic operation; forecasting the economy and planning development cannot only care about this year, next year, and the year after, but should be 5 years, 10 years or even 20 years, and there should be medium- and long-term strategic considerations. Considering the goal of achieving a moderately prosperous society in an all-round way by 2020, how to solve the problem that the above seven strategic resources may shrink relatively in the next few years? In the "Twelfth Five-Year Plan", we must attach great importance to changing the "mode of economic development" and regulating the "mode of income distribution".

Li Shenming: Land finance must be ended to avoid a serious crisis

To transform the "mode of economic development", we must implement the requirements of building an innovative country in the scientific concept of development. According to the 2005 National Bureau of Statistics Economic Census Data No. 2 Communiqué, the research and development expenses invested by mainland industrial enterprises accounted for an average of only 0.61% of sales revenue. Even for medium- and large enterprises, investment in technology development accounts for only 1.7% of sales revenue. Domestic enterprises with independent intellectual property rights core technology are only three in 10,000, and 98.6% of enterprises have not applied for patents. Mainland research spending accounts for only 1.3 percent of GDP, compared with 4.9 percent in Israel, 4 percent in Sweden and 3.9 percent in Finland. Take the Nike shoes produced by mainland enterprises as an example, the price is 200 US dollars, foreign designers can get 100 US dollars, brand owners can get 90 US dollars, our company income is only 10 US dollars, and the wages of workers are even lower. The patent fee for the production of a DVD produced by the mainland to foreign countries is 18 US dollars, and the company only earns 1 US dollar. Some products produced on the mainland tend to have a profit of only 2%-3%. China's rise cannot be achieved solely by a "sweat industry," environmental pollution, and excessive consumption of resources. Therefore, in the formulation of the "Twelfth Five-Year Plan", we must attach great importance to the construction of innovative national strategies in scientific development, and effectively increase support for education, scientific research and new technologies, new industries, and new product development. We must never exclude and vigorously introduce core technologies, but we must be based on self-reliance and self-creation; on the key issue of core technologies, the more we base ourselves on self-reliance, the easier it is to introduce advanced technologies. We have changed radically from previous years and we are not short of foreign exchange reserves now. When using foreign capital now, we must "raise the threshold" and attach great importance to the introduction of new technologies.

Li Shenming: Land finance must be ended to avoid a serious crisis

To adjust the "income distribution mode," we must start with the overall planning of the distribution of the whole country, so that the income of the broadest masses of the people can be significantly increased. In the medium and long term, we must cultivate the consumer market to ensure the full realization of a moderately prosperous society. To cultivate the consumer market, the most fundamental thing is that the income gap should not be too large. But the income gap is widening, not narrowing. In the medium and long term, this will inevitably restrict economic development and affect social stability. Distribution belongs to the category of relations of production, and the productive forces determine the relations of production. However, we should also bear in mind that the relations of production react against the productive forces, and that if distribution is not done well, the development of the productive forces will ultimately be restricted. Therefore, to study economics and guide economic work, we must pay more attention not only to studying and guiding from the perspective of productive forces, but also from the perspective of production relations. We must pay attention to using the party's basic theory, especially Marxist political economy, to guide our economic work. Comrade Deng Xiaoping mentioned the issue of distribution several times in his later years. He pointed out that if only a few people were rich, it would fall to capitalism; the problem of distribution was very great. The central authorities' emphasis on attaching great importance to resolving the distribution problem is of very profound significance. The key now is how to solve the distribution problem in a solid and effective manner in the specific work deployment. If this problem is not effectively resolved for a long time, it will not only seriously affect social stability, but also affect the nature of our party and country. Of course, we can't suddenly raise people's appetites too high or revert to the old egalitarian path. But the main tendency now is not to hang too much or to go back to the old ways. We should continue to emancipate our minds, seek truth from facts, and not have any dogmatism, but should truly proceed from the national conditions of the mainland, from the characteristics of the current era and the general trend of development in the world today, and from the fundamental interests of the broadest masses of the people (this fundamental interest should be the organic unity of individual and collective, partial and overall, immediate and long-term interests). It is necessary to unswervingly implement the scientific outlook on development and adjust the distribution policy from the perspective of coordinating the long-term development of China as a whole.

  In a certain sense, it is urgent to change the "mode of economic growth" and adjust the "mode of income distribution". This "one transformation" and "one adjustment" are the "cattle nostrils" of the current sustainable economic and social development. By grasping these two "nostrils," we will hold the "bull's nose" of the entire economic and social development, and reform, opening up, and socialist modernization may open up a new situation.

Source: "Li Shenming on the Financial Crisis", published by Social Sciences Academic Press in January 2018

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