General Secretary Xi Jinping stressed at the 10th meeting of the Central Finance and Economic Commission that common prosperity is the essential requirement of socialism and an important feature of China's modernization, and it is necessary to adhere to the people-centered development thinking and promote common prosperity in high-quality development. Recently, a seminar on the implementation of a package of local government debt solutions hosted by the Institute of Political Information of the Central University of Finance and Economics, supported by the China Capital Construction Optimization Research Association and the Government Credit Investment Group, was held in the academic hall of the Central University of Finance and Economics.
Researcher Li Hongwei made a speech
"Solving the local government debt problem is a complex task that requires our joint efforts," Li Hongwei, a researcher at the Institute of Political Information Studies of the Central University of Finance and Economics, pointed out in the report, "By exploring the path of market economic development with Chinese characteristics, rationally adjusting the economic structure, revitalizing existing assets, breaking the prohibition on rigid payment (the income part), and guiding private capital to participate in fixed asset investment, we can gradually resolve the local government debt problem and achieve sustained and healthy economic development."
Adapt to local conditions
When it comes to how to effectively solve the problem of local government debt, Li Hongwei believes that first of all, we must realize that China's political system is not completely compatible with Western market economy theory, and there are only two ways out: either the political system adapts to the market economy, or it adjusts the economic rules that are now based on the Western market economy.
In order to continuously improve the socialist market economic system, it is necessary to explore the path of market economic development with Chinese characteristics to improve production efficiency. Debt itself is not a risk, the key to the problem lies in the expenditure structure and efficiency of debt, the matching of debt term structure and cash flow, whether high-quality assets and sufficient cash flow are formed, and whether there is a term mismatch. If the debt cannot be fulfilled on time and the capital chain is broken, it is not only a risk, but also a real danger!
Secondly, excessive reliance on real estate as an economic pillar locks in most of the social capital, resulting in a weakening of social capital liquidity, affecting reinvestment and the innovative development of various industries.
On the basis of adhering to the policy of "housing instead of speculation", a capital reservoir should be re-established to maintain such a large capital volume, so as to avoid the collapse of the overall debt ratio. China's current debt problem has different characteristics from Western societies, and the debt problem that has occurred in the 40 years of reform and opening up also has different backgrounds and characteristics.
Therefore, debt resolution should focus on innovation, new ideas and methods; Encourage innovative thinking and innovative methods to resolve.
Western economies have proven in successive financial crises that rapid economic recovery is possible through infrastructure development.
Third, President Xi Jinping presided over the 10th meeting of the Central Financial and Economic Commission and pointed out: It is necessary to study the issue of promoting common prosperity in a solid manner, study the prevention and resolution of major financial risks, and do a good job in financial stability and development.
Due to the public ownership of the socialist means of production, the existing debts are resolved by revitalizing the existing assets, and the "income right corresponding to the assets" is selected for transfer transactions to avoid the loss of state-owned assets. This is the core key point to solve the local government debt problem, and it is also the basic logic for establishing the issue.
Next, it is necessary to break the dilemma of prohibiting rigid payment. Although the prohibition of rigid payment is reasonable in name, it is easy to deviate in practice, making it a reason to avoid payment.
Q: Which individual investor can have higher risk control capabilities than professional institutions?
Therefore, this problem should be solved from the normative management and subjective accountability of professional institutions.
Precise regulation combined with reality
Large-scale government investment can easily lead to flooding, which can create new problems. To this end, Li Hongwei suggested:
1. We can start by revitalizing existing assets, establish new financial market infrastructure, and innovate trading scenarios. Set up the "Revitalization of Stock Assets Trading Platform" and use the digital RMB dyeing mechanism to enable funds to be paid accurately to the projects marked in the contract. And appropriately limit the scope of circulation of funds. The government can use market behavior to adjust the market price and market share of products at any time to ensure the retention of funds in the market.
2. Government platform company projects are an important source of local government debt. Under the premise of ensuring that the issuer pays the income part rigidly, the "income right corresponding to the asset" can be traded at the market price on the circulation platform (the trading product at this time has the characteristics of "quasi-perpetual bond"). In order to improve the degree of marketization, financial supervision can assess the proportion of income right products of financial institutions in total assets in a time-sharing manner to promote market activity.
3. Yan Jirong, Dean of the School of Government of Peking University, believes that resolving debts is not moving debts, and transferring debts is not simply letting others take over top debts. The key is to revitalize existing assets through the transaction of "income rights corresponding to assets".
Ordinary people have almost no ability to reinvest, and it is private entrepreneurs who can really drive private investment. Therefore, it is necessary to tap assets with intrinsic value, and through new trading mechanisms and institutional arrangements, let the future income of these funds generate new value and tax sources.
The research group of "National Governance and Local Government Credibility" of the Institute of Political Information of Central University of Finance and Economics believes that:
Through the establishment of the "Revitalization of Stock Asset Trading Platform", the people are given the opportunity to directly participate in infrastructure construction, so that people have channels to support national infrastructure construction and give slightly higher stable returns. This can not only achieve more work and more reward, but also a reasonable means of common prosperity. (Simply put: that is, the two-track system of interest rates) In the dual-track system, our country has rich management experience. It can also be used to settle arrears on a large scale through digital currency to restore the credit between the government and enterprises and individuals, give policy preferences to capital reinvestment, and guide social capital (arrears) to enter fixed asset investment again, thereby driving the development of other industries. If the offshore currency market can be liberalized, under the guarantee of rigid payment of income rights, the pressure on the exchange rate can be reduced and the investment channels of offshore currency can be expanded.
4. Some people think that an innovative financial model is a drumming of a different situation, and it is better to rot debt in the hands of institutions than directly rot in the hands of ordinary people, which is not correct. From the default of real estate companies' U.S. bonds to the default of local government debt, it seems that it has been transmitted to the society, directly affecting the liquidity of all walks of life, (international reputation is not analyzed) has caused serious harm to the investment confidence of domestic social capital, not only affecting employment, but also destroying the credit of government ministries.
Dean An Xiumei spoke
5. To regain the credibility of local governments, as An Xiumei, dean, professor and doctoral supervisor of the Institute of Political Information of the Central University of Finance and Economics, said, the integrity of government platform companies is a key factor affecting the credibility of the government and an important cause of contradictions between the government and the masses.
At present, some operating capital (including central state-owned enterprises) has a certain gray area in the process of obtaining government projects, and can use digital RMB to track the use of the yuan, and directly convert the reasonable profit related to people's livelihood into normal RMB. This not only effectively revitalizes the existing assets, but also directly reduces the liabilities of government platform companies, encourages reinvestment to a limited extent, and extends the period of repayment of principal and interest... The value of the future earnings of these assets is recognized. In turn, it promotes the effective trading of these assets and creates new sources of taxation, so as to achieve the purpose of resolving debts.
Therefore, a clear incentive mechanism is particularly important. Encouraging local governments and relevant institutions to explore in this regard, the State Council clarified the spirit of first implementation and pilot in document No. 5.19 of 22, and then the National Development and Reform Commission issued a notice on July 1 to encourage innovation, creating sufficient policy space for the comprehensive recovery of economic development.
Opportunities and challenges coexist, in Li Hongwei's view, in the future, local governments should be encouraged to innovate, dare to explore, and become small gang villages to resolve local debts in the new era.
Authors: An Xiumei, Li Hongwei, Ji Xinbo, Yan Jirong