Introduction: On April 18, the National Bureau of Statistics released data: Preliminary accounting, China's GDP in the first quarter of 2022 270178 billion yuan, calculated at constant prices, an increase of 4.8% year-on-year, and an increase of 1.3% over the fourth quarter of 2021. In the face of the more complex and severe international environment and the multiple tests brought about by the frequent occurrence of domestic epidemics, China's economy has risen to the challenge and made an overall stable start. China's economic growth target for this year is set at 5.5%, can it be achieved? In the new situation, how to view China's economic development goals?
【Article/Observer Network Columnist Chen Jing】
In 2022, for China's economy, there have been two "sudden accidents", the external conflict between Russia and Ukraine, and the internal impact of the Omiljung virus variant represented by the Shanghai epidemic. Can China's 2022 economic growth target be set at 5.5% be achieved? In the new situation, how to view China's economic development goals?
I. How to coordinate epidemic prevention and control and economic development?
The recent outbreak of the Opmikharong epidemic in many places is an "accident" with a relatively large short-term impact, and the impact on China's economic development during the year is obviously greater than that of the Russian-Ukrainian conflict. Some public opinion is concerned about the struggle between "coexistence" and "zero clearance", and the focus is on the fact that the whole world has basically coexisted, what should China do? Even if it is cleared now, will it continue to be cleared in the future? The reason why this round of the epidemic has become a problem is that the cost of the spread rate of the virus variant has increased significantly, and the impact on economic growth cannot be underestimated.
Express delivery business volume fell 2.5% year-on-year in March and is expected to decline even more in April. The economic data for the first quarter and April are bound to have a visible impact.
Starting with the original strain, the spread rate of the dominant new coronavirus variant has gradually increased, which is a fact that has already happened. One estimate is that the original coronavirus R0 value is about 3, Delta 5-6, Omikejong 10. For some time after the Wuhan epidemic, China's prevention and control has done very well, and the whole country has often cleared zero.
After the emergence of Delta in 2021, the impact of the epidemic has increased, but it can still be the first in the world to achieve zero, the threat is not large, and the global performance is the best. In 2022, the outbreak of Aumi kerong in Shanghai and Jilin is relatively severe, but many other places can basically achieve zero, but one after another serious impact on the overall economic development.
If the impact of Omicron is not solved, China's economic development will be greatly disrupted in 2022, and social expectations will be pessimistic and dare not invest in business. This has become the top priority for China's economy in 2022, not only to help Shanghai return to normal with the highest level of attention, how to deal with it in the future, but also to introduce solutions that give society confidence. If confidence can be built, then the impact of this round of defense can be regarded as a lesson learned, and this price China can afford to pay, and it will not affect the overall situation of development.
In fact, in 2021, China is already exploring how to reduce the cost of prevention and control. In terms of epidemic prevention and control, the cost of early clearance is obviously much smaller, and this truth does not need to be debated. China's national policy is to dynamically clear zero, and if the local government breaks through the defense and "forces" to relax, it is absolutely wrong, and the whole country has to spend a big price to save it. There are opinions to be discussed, but they must not be pushed back, and the results of breaking the defense should not be used to prove that relaxation is correct. Whether or not to relax should be decided by the central authorities in a unified manner, and it is not possible to "sneak away."
After updating the understanding, in fact, we can continue the idea of 2021, how to minimize the cost of prevention and control on the basis of dynamic zeroing. The current impact is mainly the result of wrong tactics leading to the breaking of defenses, not the invincibility of the World of Omikejong, and the overflow of many places would not have happened at all. In any case, we must keep the bottom line of not breaking the defense, otherwise the basic task will not be completed.
Judging from the prevention and control situation in many places, the early clearance of Aumechjong can be repeatedly achieved. Shenzhen is a first-tier city with a large population, and it has also directly faced the impact of Hong Kong and has done it beautifully. The author feels that prevention and control in Shenzhen is very promising, the cost of zeroing is not too large, or it is necessary to have the ability to test the whole city, and carry out various prevention and control arrangements for testing every 24 hours, 48 hours, and 72 hours. This is essentially an organized productive labor, which is a good trick in China. If this concept is formed, how to deal with the virus will have a bottom. To fight the epidemic, we cannot rely on large-scale blockades to prevent epidemics at home, but on actively organizing routine testing. If the whole city can easily detect at any time like eating, the epidemic will always be small-scale, it will not be difficult to detect and extinguish it at an early stage, and the test will not affect life.
As long as there are no more major mistakes in breaking the defense, the impact of the epidemic on China's economy is highly controllable, and the cost is also incalculable, do not try to save trouble, simply invest enough resources to achieve an absolutely safe, reliable and convenient epidemic monitoring system. Assuming that China's 1.4 billion people are tested 50 times a year and 70 billion tests a year, the cost can be as low as 200 to 300 billion, which is completely affordable. And this is not only pure consumption, but also creates GDP, and the relevant funds will enter the economy.
If the absolutely reliable global monitoring of the epidemic is realized based on the detection capacity, we can return to the previous thinking, have full confidence in the prevention and control of the epidemic, and the "soil policy" of excessive prevention and control that hinders economic development in some places can be cancelled. If you think about how to plug leaks everywhere, or even don't let outsiders come, this is actually very unscientific, and there has always been a problem of "adding weight layer by layer". But the root cause is that there is no bottom for the prevention and control after the leakage, and we have to distrust each other one-size-fits-all.
An ideal model can be envisaged: if 1.4 billion people in the country test nucleic acids every day, how can the virus spread quietly without being detected? The virus spread slightly, and as long as it is measured densely enough, it will definitely be detected. A person who has tested 4 nucleic acids in the past 5 days is negative, even if the itinerary code in the region is with stars, the field can be completely assured to let people come. Even if there is a problem, it can be found immediately locally and quickly extinguished. If cities have established a dense network of testing with absolute confidence, China will dare to claim impenetrability in the face of Omilon.
In fact, this model can be greatly optimized, sampling and testing in key areas, such as the whole weekly round test, based on the probability model can also be assured.
At 18:42 on April 3, the Medical Team of Wuhan University People's Hospital (Hubei Provincial People's Hospital) arrived at Shanghai Hongqiao Railway Station. Image source: Liberation Daily, photo by reporter Haishar
The more important strategic significance of strong detection capabilities is that when clearing zero, it can quickly locate the threat of the virus, quickly carry out isolation operations, and pull away a very small number of community isolation and close contacts, which basically does not affect economic development. Even if there are positive cases in the region, the vast majority of people just increase the number of frequent tests and still live and work as usual. In fact, as long as there are not many positives, even if you are isolated, you can work remotely.
As long as the prevention and control system can ensure non-proliferation, economic development will have confidence, and insurance companies will dare to insure affected businesses. If all parts of China can achieve 100% early clearance, there is no need to worry about the impact of the epidemic on the economy, and the number of infected people can be controlled at a very small proportion every year, and there is basically no personnel loss. For example, 30 local epidemics that are quickly extinguished every month affect 10,000 people, and only 3 million people are temporarily affected by the blockade throughout the year, but the number of nucleic acid tests is large, and the impact on the economy is not large. As long as the defense is not broken and millions of people are stationary for a long time, the impact is not large. In Western countries and developing countries, everyone passes the "flu" from time to time, and the number of people who have a situation throughout the year will be very large, and the company will reduce its staff from time to time, and it is unlikely that there will be any economic advantages of liberalization.
Another example is the liberalization of tourism, ball games, cinemas and other service industries, after the demonstration of the prevention and control system based on confidence can be liberalized, in 2021, many of China's service industry data is obviously much better than in 2020. China's prevention and control system was not built in advance, but was forced out in 2020. In 2022, Aumikoron presents a challenge, and we are fully capable of upgrading the prevention and control system again, and we are smarter and more adaptable to the needs of economic development.
The situation is quite clear, the biggest decisive factor in the economic growth data in 2022 is the success of the epidemic response. Making up our minds to establish an absolutely reliable monitoring system that integrates into life and does not affect economic development is a breakthrough. After Shenzhen built this prevention and control system, social confidence has increased significantly.
Even if the virus continues to moderate in the future and the vaccine coverage rate is sufficient, the epidemic prevention and control system that has been established by the whole society is very meaningful, and it may need to be used in the future. If the milding of the virus is not ideal, the time to adhere to zero is very long, and if the prevention and control system is strong enough, we can also explore ways to let people from abroad come in and communicate, such as shortening the isolation time or expanding closed-loop operation experiments. People who go out also have a way to come back, rather than not letting go back or need to quarantine for a long time.
In the long run, the Chinese government will respond to the challenge of the virus based on scientific analysis, the future situation is ever-changing, no one can say for sure, it will definitely need to be improvised, as long as it does not lie flat, the ability will become stronger and stronger. China's establishment of a set of scientific monitoring and unified thinking prevention and control of the whole people is bound to have advantages over overseas.
In the first quarter of 2020, the epidemic in Wuhan first appeared, the situation was more urgent and uncertain than now, and the quarterly GDP growth rate was -6.8% and the loss was huge. Such a big challenge, China has successfully turned the crisis into an opportunity.
Second, the Russian-Ukrainian conflict has triggered great changes in the international environment, how to adjust the goal of economic development?
The Russian-Ukrainian conflict and the subsequent large-scale sanctions and decoupling between the United States and Europe are bigger than the epidemic in the international arena, and their impact exceeds the financial crisis of 2008 and touches the fundamentals of the international political and economic system. For China's economic growth in 2022, the impact should be controllable, but the long-term impact will be very large, requiring in-depth thinking and preparation.
People of insight in the world are also thinking about it, such as the "Bretton Woods Phase III" proposed by Zoltan Pozsar, a former Federal Reserve and Treasury official and now Credit Suisse expert, which has aroused great concern among people in the investment community. Its core view is that the "inside money" printed by developed countries such as the US dollar and US Treasuries will not be trusted, resulting in the collapse of the Bretton Woods Phase II system, and the third phase will be supported by "outside money" such as gold and commodities, and resources and commodities have lower credit.
In 2020, China has proposed a "double cycle strategy" of "taking the domestic large cycle as the main body and the domestic and international dual cycles promoting each other", but some specific details need to be explored in practice. What is the basic assumption that is needed or believed in the international and domestic cycles is actually not very clear. After the Russian-Ukrainian conflict, the United States and Europe froze Russia's foreign exchange reserves, cut off economic and trade exchanges, and the crazy sanctions and decoupling operations shocked the eye, which greatly deepened China's understanding of the problem.
A very important point is that the previous debate on "how to view China's huge foreign exchange reserves" should have a conclusion. If foreign exchange reserves are assets that the United States and Europe can freeze, the significance to the security of the economic system is greatly reduced, and it becomes a risk in itself. It was prescient for China to control the size of its foreign exchange reserves six or seven years ago and no longer accumulate them. China's holdings of U.S. debt have remained at the $1 trillion level for about a decade and have not increased. The crazy growth of the total amount of US debt and the freezing order show that China's preventive operation is correct. However, in the new situation, prevention is no longer enough, and there are really visible risks.
China is willing to stabilize the international environment and develop economic and trade cooperation with other countries in the world, and developed countries have always been major trading partners. The SWIFT interbank settlement system established by the United States and Europe, the container-based global shipping system organized by international shipping companies, the software and hardware IT system led by the United States, the global Internet system, and many important trade cooperation norms and infrastructures, China as a later participant strictly abides by the previous industry norms. Even in the event of a U.S.-China trade war, China is still willing to expand trade exchanges as a stable foundation for bilateral relations. Unlike Russia, China is willing to trade according to the rules of the international community and has shown super competitiveness.
The situation is very clear, Russia cannot threaten Western society economically, only security threats. In the eyes of the United States, China is the more fundamental threat to its hegemony, and this strategic judgment has not been shaken by the Russian-Ukrainian conflict. The two parties in the United States, where partisan conflicts are fierce, often reach an agreement quickly when targeting China, and the intention of all-round containment is no longer hidden, but only specific means are discussed. The problem now is that China will abide by the rules and develop peacefully in accordance with the principles of the WTO and the United Nations, but the United States will undermine the trade rules it has led to establish, and through shameless framing, double standards, and other subordinate acts that it knows, it will unreasonably engage in hegemonism.
The significance of the Russian-Ukrainian conflict is that the changes in the international situation have formed a "backward force" mechanism for China. When China opens up to the world, in order to comply with international business rules, it must also carry out large-scale and in-depth institutional reforms, and opening up and reform promote each other. In the past, it was often said that China's accession to the WTO could "force" enterprise reform, otherwise it would fail in international and domestic competition. Facts show that many Chinese enterprises have developed very well and adapted well.
Trump launched a trade war against China, put many Chinese companies such as Huawei into the "entity list", and forced Chinese companies to establish an independent and controllable technology system, which was jokingly called "the total force". The awakening of China's scientific and technological system has played a great role in the United States, and has played an effect that no internal propaganda can achieve.
Before Russia was sanctioned by the West, China thought more about the security of the scientific and technological system, but after the details of the sanctions came out, the "idea opened", can it still do this? In addition to the independent scientific and technological system that has been recognized before, the security of the global financial and trading system has also had to be considered, and it has once again been "forced". This time the matter can be counted on Biden's head, the US president can not change people, should not be able to stop.
China has always had a strong sense of independent development, and some basic national policies are long-term planning and continuous implementation, but there are also some plans and specific operations that are not actively pursued, but triggered by events. The Russian-Ukrainian incident should be a very big touch, involving the origin of China's economic development goals.
The author has long had a question, many developed countries have a far lower level of science and technology than China, the people's diligence and output are far lower than those of Chinese laborers, and natural resources are also average, why are they developed countries with much higher per capita GDP? This time it should be answered: the East Asian production bloc with China at its core, as well as many resource-rich developing countries, believe in their currencies and bonds, are willing to exchange their resources and commodities for their currencies, and have also established huge foreign exchange reserves, which are the global financial and trade basis for these countries to maintain a developed position.
The IMF reports quarterly value of global foreign exchange reserves, in units of $1 billion
In 1990, the global foreign exchange reserves were only 890 billion US dollars, due to the 1998 Asian financial crisis in Thailand and other foreign reserves shortage economy collapsed, the willingness of the world's multinational reserves of foreign exchange suddenly increased, especially Asian countries. Global foreign exchange reserves rose to $1.94 trillion in 2000 and to $6.2 trillion in early 2008, with Asian countries increasing from $1.1 trillion to $3.9 trillion. In the fourth quarter of 2021, the IMF reported a global foreign reserve size of $12.94 trillion. In fact, China has felt that something is wrong to reduce its external reserves, but some developing countries with rich resources and fair development have generally increased a lot of external reserves.
The developing countries, led by China, have gone from debtor countries to creditor countries with extremely large reserves. The United States and many developed countries in Europe have become large debtors. Rich countries owe money to poor countries, and that is the ridiculous situation in the international community today. Russia has $500 billion in foreign exchange reserves, of which about 300 billion are frozen.
In addition to reserves, China also regards the US dollar and euro as the mainstream international payment currency, striving to export to earn an annual surplus of more than 600 billion US dollars; developing countries export resources to the United States and Europe, and receive US dollars and euros to buy various industrial products from China. A large number of dollars and euros are deposited in the trade circulation link, and the share of the renminbi in the SWIFT system is only 3%, and the share of the remaining developing countries is very small.
The Russian ruble exchange rate reversed
Perhaps the United States and the European Union did not think much about freezing Russia's foreign exchange reserves and kicking Russia out of SWIFT, and seemed extremely confident that the ruble would collapse. But when Russia fought back decisively, declaring that "unfriendly countries" could only buy Russian energy in rubles, the rupee exchange rate dramatically reversed back to pre-war prices. This is definitely unexpected by the United States and Europe, and it has the feeling of "moving a stone and dropping it on your own feet".
It is very likely that the developing countries led by China were shocked and suddenly had an epiphany: it turns out that the dollar and the euro are not resources, nor commodities, but things that can be printed at will. This "Minsky moment" type of truth exposure is the key to analyzing China's economic development goals that cannot be ignored.
Therefore, the long-term impact of international environmental changes on China are two factors. One is that the United States is bound to launch an attack on China, which poses an all-round challenge to China's economic security, and its importance has exceeded the development goal that has been adhered to for many years, with GDP growth rate as the core indicator, and some development indicators should give way to security considerations. Another is the bankruptcy of the currency and bond credibility of the developed countries in the United States and Europe, and to give way to commodities and industrial goods, China's "external circulation" must no longer be based on the past international financial banking system.
2022 is an opportune time when China can appropriately abandon its GDP growth targets and look at some basic economic security indicators. Perhaps setting the economic growth rate in 2022 at 5.5% instead of 6% is such a consideration.
The National Security Law, adopted in 2015, emphasizes important areas such as political security, homeland security, military security, economic security, social security, scientific and technological security, resource security, ecological security, and nuclear security, and adds new areas such as cultural security, network and information security, space deep-sea and polar security. Judging from the current situation, these formulations are very forward-looking.
In 2022, we will measure national security, and in the case of political security, homeland security, and military security, the economic security will rise to the most important position and can be deepened again. For the sake of economic security, epidemic prevention security should be added, and as one of the most important economic development foundations, it should be put into the inspection target. Population security and food security have also become important in the new situation. Scientific and technological security, resource security, network and information security are also directly and closely related to economic security.
The concept of economic security needs to be examined in conjunction with the GDP growth rate (including the quality of economic growth). If the GDP growth rate conflicts with economic security, it is entirely possible to reach a consensus that security is the priority. Many companies have consciously used the guidance of safety concepts to give domestic parts the opportunity to trial and error improvement, rather than blindly pursuing foreign advanced products.
If the pursuit of GDP growth makes science and technology subject to people, epidemic prevention fails, the birth rate of the population is worrying, and resources are tight, then the concept of economic security should be used to examine development goals. With the correct guiding ideology, Shanghai may be able to correct the relationship between "precise prevention and control" and economic development; real estate regulation and control can give more consideration to the marriage and fertility needs of the young population; science and technology projects can not one-sidedly pursue international advancement, but more consideration for the safety of scientific and technological foundations; some projects that consume resources to earn foreign exchange can regulate restrictions and change to long-term strategic projects such as supporting new energy.
Two years after the "double cycle strategy" was proposed, the Russian-Ukrainian conflict provided an opportunity to think deeply about the "outer cycle". In response to the needs of Russia and other countries, we should develop a bilateral multilateral trade mechanism that is free from the influence of US and European sanctions. In this regard, it should be less talk and more to do, and Iran also has a long-term cooperation framework. But these are only defensive expedient measures, or should we have a more holistic view of global economic and trade: What is the relationship with the developed countries in the United States and Europe?
According to the rhythm of the past, China will regard the United States and Europe as win-win trading partners, mainly positive, hoping to guide the other side to "go in the same direction". However, when the Russian-Ukrainian conflict broke out, and looking at the Western countries' great sanctions and decoupling style, China could only introduce more bottom-line thinking, abandon some illusions, and carry out competition and even struggle thinking.
The global investment community is thinking about the fundamental problems of the monetary and financial systems of the United States and Europe, and China does not have to contribute to the economic security of the United States and Europe, and can also follow the trend. In fact, various analyses will easily find that China has an extremely important position in the economic and financial systems of the United States and Europe. If the madness of the United States and Europe causes developing countries to lose confidence in them, and thus falls into the stagnation of low inflation and high inflation (as Pozsar predicted), then China's movement is crucial.
If Europe and the United States adopt some arrangements to effectively ensure China's development interests (such as returning Taiwan to China after the collapse of the US and European economies), China can also help stabilize the world economy, suppress global inflation, and so on. It is more likely that the extreme emotional attack of racism in Europe and the United States cannot clearly understand the problem, and still frantically perversely acts, then China can also withdraw from it and let the countries in the United States and Europe that have problems "do their own evil and cannot live." If the investment circle and developing countries feel that there is a problem with the dollar and the euro, and the things printed out are unreliable, China is not very good at coming out to support the United States and Europe, and it will have to consult with some countries to find ways to protect itself.
Many analysts believe that In a series of fierce confrontations triggered by the Russian-Ukrainian conflict, China will be the big winner. This intuitive direction should be correct, and indeed the United States and Europe should not be thought of too strongly, and it seems that the bottom of the bottom is leaked out just to deal with Russia. The united opportunity for the United States and Europe to sanction Russia to the point of collapse and then find an excuse to launch harsh sanctions against China is not too great, and aspirations cannot replace reality. More likely, the US and European economic systems already have great loopholes and are increasingly suspicious, because the big sanctions against Russia have finally triggered irreversible changes, a century-old adjustment, and some European countries as the weak links of the developed country camp, because of high inflation and other issues.
In this context, China will have considerable opportunities to play an increasingly important role in the international arena. The deeper the crisis in the United States and Europe, the more powerless it is to launch a fierce attack on China. Maintain strategic concentration, the opportunity is not crazy, there is no opportunity not to be impatient. The international environment will be like the epidemic, the more chaos the greater the test, the greater China's advantages.
China is certainly not strong enough, but it should be stable, and the turbulent international situation will be a good period of strategic opportunity. The United States and Europe are very powerful, but they live too luxuriously and overdraft too much, and it is impossible to maintain their status. Therefore, 2022 is likely to be the beginning of a great strategic turning point, and China itself has stabilized, watching the situation change and seizing the opportunity to act.
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