Recently, Wu Xiaoping and experts and scholars advocated a sharp reduction in the deposit interest rate to -2%, which was intended to stimulate residents' consumption, but the result was widely questioned. Netizens have denounced it as "either stupid or bad", and put forward a variety of coping strategies. This incident fully demonstrates the complex situation facing China with negative interest rate policy, which requires us to judge from a more comprehensive and long-term perspective.
It started with Wu Xiaoping's speech at an academic forum. He predicted that the human economy had entered an era of "zero interest rates" and believed that the deposit interest rate should be lowered to zero or even negative first. He believes that even in a zero-interest rate environment, there are still deposits from the masses, so it is necessary to implement negative interest rates to further stimulate consumption. Specifically, he proposed to raise the current deposit rate from 0.3% to -2%.
This idea immediately caused an uproar on the Internet. Many netizens labeled it as "bad" or "stupid". They questioned the relevance of negative interest rates, fearing that they would trigger capital outflows. Some people ridiculed Wu Xiaoping for "never working in his life".
So, what is the practice of negative interest rates abroad? Japan and many European countries have been practicing negative interest rates for several years. The data shows that it can indeed promote loans and stimulate investment and consumption by enterprises and institutions, but it has a limited impact on residents' savings. After all, physical assets such as cash and gold are more expensive to store, and large amounts of cash withdrawals also face security issues. Practice has shown that the negative interest rate policy is not achieved overnight, and its effect needs to be reflected in the long-term operation.
If negative interest rates are implemented, the impact on the business model is also worth paying attention to. For example, banks will face greater operational pressure and will have to charge for various services to keep up costs. Merchants may also take the opportunity to increase the prices of goods and services. This has virtually increased the cost of living for consumers. Negative interest rates can even promote a certain degree of social "cashization", such as bank runs. It can be seen that the effect is a complex chain reaction.
The deposit rate is only a means of regulating economic policy, and we cannot use it in isolation or absolutely. This debate also made us realize that social and economic development needs macro guidance, and more importantly, the active participation of the grassroots people, embracing different viewpoints and jointly grasping the direction.