Per reporter: Liu Yanmei Per editor: Yang Huan
"Everyone has a lot of questions, what stage has China's economy reached, and whether it can continue to grow in the future? My own judgment is that China's economy has undergone several rounds of adjustment in the past decade, and China's economy will enter a new development cycle in the next 5 to 7 years. On May 22, Yao Yang, dean of the National Institute of Development Studies of Peking University and director of the China Economic Research Center of Peking University, pointed out at the 2021 International Gateway Hub City Development Forum.
At present, the unprecedented changes in a century are superimposed on the impact of the new crown pneumonia epidemic, and the "double cycle" strategy has come into being. Under the new development pattern, how to view the future prospects of China's economy?
In Yao Yang's view, after the adjustment of the past decade, the whole world will enter a new round of long growth cycle. After several rounds of adjustments, the eliminated enterprises and the backward production capacity that should be eliminated have basically been cleared, which lays the foundation for the next round of economic recovery and the long cycle of the economy, and the next wave is that the new long cycle of technology is coming - generally speaking, this cycle can last for 10 to 20 years.
That is to say, on the basis of the growth of the first decade of this century, the next decade china's economy will usher in a golden period, and inland cities like Chengdu are expected to win the lead in the new growth period.
The following is a transcript of Yao Yang's speech (abridged, subtitled by the editor), and the theory of urban evolution is authorized to be published.
Yao Yang, dean of the National Development Research Institute of Peking University and director of the Center for Economic Research at Peking University Photo credit: Photo by reporter Zhang Jian
<h2>The "savings rate is too high, the consumption is too low" has changed a lot</h2>
The past decade has been a decade of China's economic restructuring.
The first is rebalancing. We used to have too high savings rates and too low consumption, and this phenomenon has changed a lot in the past decade.
Source: China Statistical Yearbook
From the perspective of changes in China's economic structure, since the reform and opening up, China's net exports have reached the highest peak of 9% and 10% of GDP, which has actually been relatively low, so economic growth mainly depends on consumption and capital formation.
What we call "China's economic imbalance" is mainly from 2000 to 2010, the proportion of consumption fell very, very quickly, falling by more than ten percentage points between ten years, and only after 2010 began to recover. We now mention "double cycle", referring to the increase in the proportion of consumption, so if we look at it, in fact, we began to enter the "double cycle" in 2010, and the domestic cycle is the mainstay.
Look at gross capital formation, or investment. In the first decade of this century, gross capital formation as a share of GDP has become increasingly high; but over the past decade, the share of gross capital formation has declined, that is, China's economic growth is no longer mainly driven by investment.
Looking further at the changes in consumption, in fact, it is mainly the change in the proportion of household consumption to GDP, because enterprises have no consumption according to accounting standards, and the proportion of government consumption in GDP has hardly changed. And if you look at the change in the resident savings rate, from the perspective of the resident savings rate after deducting the newly purchased housing, the fluctuations for more than 20 years are very large, the 90s of the last century was actually declining, the first decade of this century was very high, and then began to decline, less than 20%, not so high.
There is a view circulating in society that China's economic growth has slowed down in the past few years because of insufficient consumption. I think this statement is specious and does not conform to the principles of economics.
If a country's economy wants to grow, the main factors are nothing more than two aspects, one is that savings become investment, and the other is technological progress. When is consumption useful? It only works if the rate of economic growth does not reach its potential growth rate. Therefore, for the next step of China's economic growth potential, I personally feel that the focus is not to further increase the proportion of consumption in the national economy, but to return to the original point to think about how to promote capital accumulation and technological progress.
Corresponding to the improvement of the savings rate and the low consumption rate, the proportion of labor income has risen, and the pattern of income distribution has gradually improved.
It can be seen that in the composition of national income, the proportion of government revenue is relatively stable, and the proportion of labor income and capital income is "one after another". Due to the increase in the proportion of labor income, China's Gini coefficient began to decline after 2008 and 2009, and there was a little wandering in these two years, but overall it was declining. Economic growth can not only look at the GDP figures, but also depends on whether the people have benefited, and the income of residents is a very good indicator.
<h2>Deindustrialization is accompanied by the fading of the demographic dividend and the shift in economic growth</h2>
The second is deindustrialization.
In terms of employment composition, our industrialization has developed very, very quickly in the first decade of this century, and the proportion of employment in the secondary industry reached its peak in 2010 and then began to decline.
Source: National Statistical Office
In fact, the general law of economic structural transformation is "the decline in the share of agriculture - the rise in the share of services - the rise in the share of industry first, and then the decline", which is a process that all countries, especially successful economies, have experienced, which is not a bad thing, but an inevitable law of economic development.
It must be said, however, that the financial crisis did lead to the premature deindustrialization of our country. We have calculated that if there is no financial crisis, the rapid development of Industrialization in China should continue until 2017 and 2018, but in fact, there will be a turnaround in 2010, which is related to the financial crisis.
Correspondingly, the demographic dividend is fading. Judging from the important indicator of "the proportion of the working population to the total population", 2010 was also the peak of China's demographic dividend, and then began to decline. It can be seen that the process of industrialization and the change of labor structure are highly correlated.
There is a lot of discussion about this census, and we have also seen that the Chinese are being readjusted on a large scale, and the provinces with large population growth are basically provinces with large economic growth, such as Guangdong, Zhejiang, and Jiangsu; the provinces with declining population are not surprisingly the three northeastern provinces, as well as some economically backward areas in the north.
Our urbanization in the past was leapfrog urbanization, that is, the population flowed directly to the coastal areas in the central and western regions, including Sichuan, which had a large population flow; but now this process has basically stopped, and the population flow has become a ladder flow, that is, the third- and fourth-tier population flows to the first and second tiers, and the rural population flows to the county and the third- and fourth-tier cities, so it triggers a population war.
At the same time, economic growth is shifting gears, which used to be mainly based on scale-up, but now technological progress is becoming more and more important. According to China's statistics, by last year's research and development investment reached 2.4 trillion yuan, accounting for 2.4% of GDP.
However, this has not actually achieved our goals during the 13th Five-Year Plan period. During the "13th Five-Year Plan" period, we set it at 2.5%, so there is still a difference of 0.1 percentage points. Of course, according to international statistics, this number is far more than this number. According to the OECD, the United States accounts for about 29% of global R&D investment, and China accounts for 23%, more than the next four countries combined.
Looking specifically at the sub-data of 2019, China is still relatively low in basic research, accounting for only 6%; experiments account for the most because it spends more money. In contrast, there is a lot of basic research in the United States, more than 10%, which is also the gap between us and the United States, and China is still catching up.
But our enterprise research and development has come up, Huawei spent 130 billion yuan on research and development investment in 2019, which is also the fifth and sixth position in the world. Moreover, from the perspective of the top few domestic enterprises' R&D investment, the top ones include Huawei, Alibaba, Tencent, Baidu, ZTE, etc., all of which are high-tech enterprises in the field of communications.
In addition, we have also experienced de-capacity and deleveraging. It is worth noting that the de-capacity is mainly aimed at the north China, in terms of eliminating backward production capacity and polluting enterprises, the northern region is too fast to reduce production capacity, which in turn leads to the deindustrialization of the north being worse than the south.
<h2>The rise in the PPI is a sign that the economy has entered a new growth cycle</h2>
After the adoption of these measures, the Chinese economy has undergone great changes, some relatively inefficient enterprises have been eliminated round by round, and the remaining enterprises are more dynamic and have stronger technical strength, which has also laid the foundation for the next round of economic recovery and the long cycle of the economy.
For the next wave of new technology long cycle, the growth potential mainly comes from AI and robotics, new energy, electric vehicles and other fields.
With the development of AI and robots, China has great advantages and potential. First of all, China has a huge market, which is very important, because a technology must let the market digest this cost; secondly, we have a huge amount of data, which can become productivity; although aging is a challenge, it will in turn accelerate the automation development of AI.
In the field of new energy, China is far ahead. Our solar installed capacity is 1/3 of the world's solar energy, producing 3/4 of the world's photovoltaic modules. Our last round of photovoltaic explosive growth caused a lot of problems, but there was a lot of capacity left, and this capacity was upgraded. Now, the cost of photovoltaic power generation has basically been the same as thermal power, 3.5 gross degrees, and more advanced enterprises can even achieve 1 cent once, far lower than thermal power. Wind energy in China is also the largest installed capacity, solar energy If we can have some technological breakthroughs, such as energy storage technology breakthroughs, we want to achieve the "14th Five-Year Plan" period coal in energy consumption reduction of 10 percentage points, or it is possible to achieve.
Electric vehicles are a strategy for China's "curve overtaking" and still seem to be relatively successful. China's electric vehicle sales account for 30% to 40% of the world's sales, compared with fuel vehicles accounted for only 10% of the world's total. It is clear that China is leading in electric vehicles, lithium battery production capacity accounts for about 70% of the world, and the Ningde era has changed from a small enterprise to the world's first lithium battery company, which is very remarkable. The field of electric vehicles is a huge industry that will drive the development of other industries.
The field of electric vehicles is a huge industry that will drive the development of other industries. And China also has a huge cost advantage. Not only in the field of batteries, such as a hyaluronic acid company I saw in Shandong, his enterprise efficiency can reach twice that of Japanese companies, Japanese companies simply "surrender", there is no way to play with him.
At the same time, this year's economic recovery is quite encouraging, with an increase of 18.3% in the first quarter, of course, mainly driven by exports. Some people say that the US economy has recovered, and the demand for Chinese exports will come down, which I personally think is not right, and the economic recovery of the United States will definitely increase the demand for Chinese products. The world is linked, it is not a zero-sum game, and economic competition is always a positive sum game. My prediction is that this year's export growth rate of 15% to 20% is not much of a problem.
In contrast, the return to investment differentiation is severe. The fastest running in investment is still real estate, that is, the "outpost" industry that drives economic growth is still real estate, and the growth rate has basically caught up with the growth rate in 2019. In addition, manufacturing and infrastructure recovered relatively quickly in March and April.
The recovery is relatively slow is consumption, catering, and 2019 is also negative, this "May Day" Golden Week can be seen, the number of tourists increased by 3% compared with 2019, but the consumption is only 77% of 2019, this gap is very large, where is the reason? The main reason is that our income recovery is relatively slow, especially the income growth of the low-income class has not kept up. It is estimated that in the second half of the year, with the further recovery of the economy, the quality of our employment will further improve, and consumption can keep up.
In addition, this year's PPI correction has been discussed a lot, and many people are worried about whether China is going to enter stagflation. In fact, whether the transmission from PPI to CPI will promote the overall price rise in China, in fact, look at 2016 and 2017, which can be a good reference. At that time, it was also the price of PPI commodities that soared, but in fact, CPI did not rise too much, why? The main reason is that we now have too much overcapacity, and the price of raw materials will be completely absorbed by this excess capacity when it rises, so we don't have to worry about CPI rising.
In my opinion, the rise in the PPI is a good sign, a sign that the economy has entered a new growth cycle. I personally believe that in the next five to seven years, China's economy will enter a new growth cycle, because backward production capacity and backward productivity have been cleared, and we should also enter a new cycle.
(In addition to the "changes in the absolute number of population in various regions in ten years", the charts in the article are all from Yao Yang's on-site speech)
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