Zhang Junkuo: The next step is reform

Author: Zhang Junkuo, Deputy Director of the Proposal Committee of the 14th National Committee of the Chinese People's Political Consultative Conference, Chairman of the China Development Research Foundation, and Former Deputy Director of the Development Research Center of the State Council

Zhang Junkuo: The next step of reform must be in accordance with the general laws of the market economy and the requirements of high-quality development, and what should be determined by the market must be fully liberalized

Source of this article: The Paper reporter Zhou Di

On December 16, at the Sanya Finance and Economics International Forum with the theme of "Exploring the Road to High-level Opening Up in a Complex Environment", Zhang Junkuo, deputy director of the Proposal Committee of the 14th National Committee of the Chinese People's Political Consultative Conference, chairman of the China Development Research Foundation, and former deputy director of the Development Research Center of the State Council, said that the Central Economic Work Conference judged the overall situation as "the favorable conditions facing the development of the mainland are stronger than the unfavorable factors". Calm down, but also more emphasis on fully estimating the difficulties and challenges in the process of moving forward.

Zhang Junkuo said that while seeing the overall economic rebound, we should also fully see the problems of development differentiation and poor enterprise efficiency. Although the decline in corporate profits has narrowed in recent months, the problem of poor efficiency has not been fundamentally reversed, and in the first 10 months, the profits of industrial enterprises above the designated size fell by 7.8% year-on-year. Compared with the profit decline index, what is more worthy of our attention is the loss side of the enterprise, that is, the proportion of the number of loss-making enterprises to the total number of enterprises. The loss of industrial enterprises above designated size was as high as more than 34% at the beginning of this year, and although it has continued to narrow this year, it was still as high as 26.9% until September, accounting for more than a quarter of all enterprises, significantly higher than the normal level for many years before the epidemic. If this is still the case for the above-scale industry, the problem of small and medium-sized enterprises will be more prominent.

Zhang Junkuo said that the problem of unstable expectations and weak confidence is still relatively prominent. Since the beginning of this year, the manufacturing purchasing managers' index PMI, which reflects the expectations of enterprises and the state of industrial prosperity, can be described as ups and downs and fickle. On the one hand, this situation shows that the problem of unstable expectations and weak confidence is still relatively prominent, and on the other hand, it also shows that the factors affecting expected confidence are relatively complex, including short-term market reasons and deeper structural and institutional reasons in the medium and long term, and more targeted countermeasures need to be taken.

"In the short term, the most important thing is to focus on improving market demand. Among the six major problems mentioned by the central authorities, the lack of effective demand is both the primary and the decisive. If the market demand does not go up, and the orders and benefits of enterprises do not go up, it will be difficult for expectations and confidence to really and effectively improve, and risks and hidden dangers will continue to appear, and it will be difficult for the economy to enter a virtuous circle of stable recovery. Zhang Junkuo said.

Zhang Junkuo pointed out in particular that judging from the analysis of next year's growth environment by various parties in the recent period, it is difficult to effectively alleviate the pressure of insufficient demand, whether it is domestic demand or external demand, in the short term or even in a certain period of time next year.

In addition, Zhang Junkuo also said that in recent years, with the complex changes in the domestic and foreign environment and situation, in the process of coping with various risks and challenges, there have been "non-market" signs of increased administrative intervention and weakening of market-oriented forces in some areas to varying degrees. For example, in order to control the rise in the prices of some important commodities, some localities and departments have frequently implemented administrative intervention and even directly limited prices. In order to meet emission targets, some localities simply adopt measures such as power rationing and gas rationing. Even in the process of implementing policies such as "optimizing the structure", "industrial upgrading", and "converting old and new kinetic energy", the power of administrative intervention is getting stronger and stronger.

In this regard, Zhang Junkuo said that although such intervention has a certain policy basis, no matter what the reason, if it is used too much or even becomes the norm, it will objectively lead to the strengthening of planning and administrative power and the weakening of market power, which will destroy the market adjustment mechanism and make the price signal fail. It will not only produce a huge crowding out effect, but also be detrimental to the optimization of the business environment and the enhancement of the confidence of market players, and ultimately damage the stamina of development.

"In the relationship between the government and the market, the correct play of the role of the government is in a leading and key position, because only by correctly playing the role of the government can the decisive role of the market be guaranteed. Zhang Junkuo pointed out that the next step of reform must be in accordance with the general laws of the market economy and the requirements of promoting high-quality development, further clarify the boundaries of the role of the government, and strive to do a good job in what the government should do.

The following is a transcript of the speech:

Zhang Junkuo: It is my great pleasure to be invited to participate in the "Sanya International Forum on Finance and Economics". Focusing on the theme of the forum, combined with the study and Xi of the spirit of the Central Economic Work Conference, I would like to exchange two views with you on the current economic situation and the deepening of reform and opening up.

First, the foundation for economic recovery needs to be further consolidated, and the policies to stabilize the economy and promote development will be further enriched and improved

The Central Economic Work Conference pointed out that since the beginning of this year, the mainland's economy has rebounded for the better, and at the same time, it is also facing some difficulties and challenges in promoting a further economic rebound. I feel that this judgment is in line with reality. In the first three quarters of this year, the country's GDP increased by 5.2% year-on-year, with a quarter-on-quarter increase of 0.5% in the second quarter and a 1.3% increase in the third quarter over the second quarter, showing a quarter-by-quarter upward trend. Judging from the growth of indicators of industry, service industry, and consumer demand in October and November, the trend of stabilization and rebound is more obvious. Under these circumstances, there is basically no problem in achieving the expected target of about 5% for the whole of this year.

Regarding the main difficulties and challenges faced by the next step of development, the Central Economic Work Conference talked about six points, one is the lack of effective demand, the second is the overcapacity of some industries, the third is the weak social expectations, the fourth is that there are still many risks and hidden dangers, the fifth is that there are still blockages in the domestic cycle, and the sixth is the complexity, severity and uncertainty of the external environment. In particular, the "Communique" makes a judgment on the overall situation, that is, "the favorable conditions facing the mainland's development are stronger than the unfavorable factors," which is more objective and sober than the commonly used formulation of "opportunities outweigh challenges" in the past, and also places more emphasis on fully estimating the difficulties and challenges in the course of advancement.

I would like to emphasize two points.

First, while seeing the overall economic rebound, we should also see the problems of development differentiation and poor enterprise efficiency. Second, it is necessary to further stabilize expectations and confidence. The factors affecting expected confidence are complex, ranging from short-term market reasons to medium- and long-term structural and institutional reasons, which require more targeted countermeasures.

In the short term, the most important thing is to focus on improving market demand. Among the six major problems mentioned by the central authorities, the lack of effective demand is both the primary and the decisive. If the market demand does not go up, and the orders and benefits of enterprises do not go up, it will be difficult for expectations and confidence to really improve effectively. It is precisely for this reason that the Central Economic Work Conference continues to emphasize that to do a good job in economic work next year, "we must focus on expanding domestic demand and forming a virtuous circle in which consumption and investment promote each other", "consolidate the basic market of foreign trade and foreign investment", and put forward clear requirements such as "active fiscal policy should be moderately strengthened", "prudent monetary policy should be precise and effective", and "enhance the consistency of macroeconomic policy orientation". It is believed that under such a macroeconomic regulation and control orientation, various sectors will expand domestic and foreign demand and further enhance their pertinence and effectiveness, so as to provide a more favorable macroeconomic policy environment for the further rebound of the economy next year.

Second, in deepening reform and opening up under the current situation, it is necessary to highlight key issues and respond to social concerns

It is important to consolidate the positive trend of economic recovery and promote innovation and expand demand, but what is more important and fundamental is to deepen reform and expand opening up. This is not only the most basic guarantee for short-term stable expectations, strong confidence and vitality, but also the most important measure to further release the potential of domestic demand and enhance the momentum of development. It is precisely for this reason that the Central Economic Work Conference not only included "comprehensively deepening reform and opening up" as the guiding ideology for doing a good job in next year's economic work, but also identified "deepening reform in key areas" and "expanding high-level opening up" as the two major key and key tasks for next year. Here I would like to highlight four aspects.

First, it is necessary to act in accordance with the principle of "two unswerving" and "three unchanged" and earnestly implement the requirements for promoting the development and growth of the private economy. At present, the focus of stabilizing expectations and improving confidence is on private enterprises. The issue of the expected confidence of private enterprises is not only a key variable affecting the current stable economic rebound, but also a major issue related to the mainland's modernization process and the great cause of national rejuvenation. In July this year, the CPC Central Committee issued the "Opinions on Promoting the Development and Growth of the Private Economy", and successively introduced a series of policies and measures to promote the development of private enterprises, which played a very good role. The next step is to continue to work hard in two aspects. On the one hand, it is necessary to truly implement the requirements put forward in the document, so that enterprises can truly see practical results. It is necessary to get a good grasp of introducing detailed and concrete policies and measures to make them operable and testable. For example, how to effectively solve the problem of invisible barriers that enterprises have strong reactions to, and how to effectively solve the unfair treatment of private enterprises in participating in bidding and obtaining loan support. In addition, it is necessary to conduct in-depth research on the ideological root causes of the remarks that have repeatedly appeared in recent years that do not conform to the spirit of the central authorities and that the development of the private economy is easily disturbed by all kinds of noise, and further clarify the status and role of the private economy in the great cause of national modernization and national rejuvenation, so as to lay a good ideological and theoretical foundation and social atmosphere for the long-term and healthy development of the private economy.

Second, efforts should be made to ensure the decisive role of the market and give better play to the role of the government. In a certain sense, reform and opening up over the past 40 years or so can also be said to be a process of constantly expanding and strengthening the role of the market in the allocation of resources and giving better play to the role of the government. In the relationship between the government and the market, the correct play of the role of the government is in a leading and crucial position, because only by correctly playing the role of the government can the decisive role of the market be guaranteed. Therefore, in the next step of reform, we must further clarify the boundaries of the government's role in accordance with the general laws of the market economy and the requirements of promoting high-quality development, and strive to do a good job in what the government should do.

The third is to continuously optimize the way of promoting reform and promote the implementation of various reform measures. In addition to promoting the development of the private economy, it also puts forward requirements for deepening the reform of state-owned enterprises, promoting the development of small and medium-sized enterprises, speeding up the construction of a unified national market, reducing the logistics costs of the whole society, and fiscal and taxation reforms and financial reforms. These reforms are not only very important for cultivating new drivers of economic growth, but also for fully tapping and unleashing the huge potential of the mainland's economy. For example, if the reform of state-owned assets and state-owned enterprises can make progress in enhancing competition and improving efficiency in the monopoly field, then it can effectively reduce the cost and price of upstream products, thereby enhancing the overall competitiveness of the mainland's manufacturing industry.

Since the 18th National Congress of the Communist Party of China, the CPC Central Committee has attached unprecedented importance to deepening reform and expanding opening up in the new era and deployed major reform measures, and has made unprecedented efforts to promote reform, and positive progress has been made in many important aspects of reform and opening up. I feel that the next step to promote the implementation of reform and achieve results should focus on two aspects. On the one hand, it is necessary to deal with the relationship between top-level design and grassroots exploration, and leave more space for grassroots exploration. The mainland is a vast country with great differences from different places, and it is necessary to encourage all localities to explore and innovate in light of the actual situation. On the other hand, it is necessary to more fully arouse the enthusiasm of the broad masses of cadres, especially local leading cadres and officials, in starting a business. One of the important reasons why the mainland's economy has been able to achieve rapid development since the beginning of reform and opening up is that the local governments and the vast number of cadres have strong enthusiasm for development. In the face of the arduous tasks of deepening reform, opening wider to the outside world, innovating and developing, and transforming and developing, it is necessary to strengthen positive incentives and capacity building for cadres, establish and improve a fault-tolerant and error-correcting mechanism, and more fully mobilize the enthusiasm of the vast number of cadres, especially local cadres, for reform and innovation.

Fourth, it is necessary to take a more proactive stance and strive to open wider to the outside world. Since the Third Plenary Session of the 11 th CPC Central Committee, we have grasped reform with one hand and opening up with the other, and written a splendid chapter on the land of China in which reform and opening up complement each other and promote each other. Facing the future, the CPC Central Committee has always emphasized that "China's door will only open wider and wider". Against the backdrop of the intensifying tide of anti-globalization and the intensifying geopolitical game, the environment facing the mainland in opening wider to the outside world will become more complex, and the challenges and difficulties will also increase significantly. In this regard, we must maintain our strategic focus and, on the premise of fully safeguarding the interests of the mainland, expand opening up to the outside world in a more proactive posture and in more unilateral ways. For example, the recent unilateral visa-free policy for citizens of six countries to come to China for a short period of time is a good initiative to open up and has also achieved good results. At the same time, it is necessary to properly handle the relationship between releasing the potential of domestic demand and expanding foreign trade, independent innovation and open innovation, and form a new development pattern of a virtuous circle in internal and external interaction and win-win cooperation.

In short, reform and opening up is a key move in determining the future and destiny of contemporary China. In the past 40 years and more, the reason why the mainland has been able to achieve historic achievements that have attracted worldwide attention in its development has been due to reform and opening up, and in the coming historical period, whether it is to maintain and consolidate the existing development achievements, or to expand and strive for new and greater development achievements, whether it is to promote the full release of the mainland's huge development potential, or to effectively cope with various risks and challenges at home and abroad, it is necessary to continuously deepen reform and open wider to the outside world from a new and higher starting point. As long as we maintain our strategic focus, unswervingly adhere to reform and opening up, and constantly optimize the business environment and development environment, no external force will be able to stop China's development, and we will certainly be able to turn crises into opportunities in future development competition, so as to smoothly achieve our goal of building a modern and powerful country.