In 2023, China's economy has shown resilience and vitality. Goldman Sachs' latest global macroeconomic research report pointed out that by the end of 2023, the full recovery of China's domestic demand will drive global GDP growth by about 1%. This growth momentum will continue into 2024. Morgan Stanley, JPMorgan Chase, Citigroup, UBS and many other international institutions have raised their forecasts for China's economic growth.
In 2024, where will China's economy go, and how will it move forward against the backdrop of a weak global economy? Red Star Capital Bureau launched "Recovery: Economists Look at 2024", which dialogues with many well-known experts and scholars in China to explore the road of China's economy seeking progress while maintaining stability and promoting stability through progress in 2024.
Recovery – Economists Look at 2024 (8)
Expert of this issue: Liu Shengjun, chief expert of Guoshi Financial Reform Think Tank and chief expert of Shandong Human Resources Promotion Association
At the beginning of the new year of 2024, Liu Shengjun, chief expert of the State Financial Reform Think Tank and chief expert of Shandong Provincial Human Resources Promotion Association, accepted an exclusive interview with Red Star Capital Bureau. He said that 2024 is a critical year for China's economic recovery, the real estate market is expected to stabilize, and the expectations of private enterprises are also expected to gradually improve. However, uncertainties still exist, so more care and support are needed in terms of policies.
Red Star Capital Bureau: You have previously pointed out that theoretical innovation is needed to stabilize the expectations of private enterprises, and entrepreneurship is the primary productive force. Combined with the economic environment in 2023 and the trend in 2024, how to understand this sentence?
Liu Shengjun: Stabilizing private enterprises is the core of stabilizing the economy. The private economy is "56789", that is, it contributes more than 50% of tax revenue, more than 60% of GDP, more than 70% of technological innovation achievements, more than 80% of urban employment, and more than 90% of the number of market entities.
On July 19, 2023, the "Opinions of the Central Committee of the Communist Party of China and the State Council on Promoting the Development and Growth of the Private Economy" was officially released, with a total of 31 opinions, further clarifying the political and economic status of the private economy.
At present, I believe that stabilizing private enterprises needs to be strengthened from two aspects. First, more substantive actions should be taken to alleviate the difficulties faced by private enterprises. For example, in the financial environment, the proportion of loans obtained by private enterprises in the first to third quarters of 2023 is still only about one-third, which is not symmetrical with the status of private enterprises. Therefore, it is necessary to make more efforts in the fields of finance, investment, and industry access.
The second aspect is to give private enterprises a real sense of security. In Maslow's hierarchy of needs, security is one of the most basic needs.
In recent years, the central government has continuously improved the status of private enterprises. In 2017, the Central Committee of the Communist Party of China and the State Council issued the "Guiding Opinions on Creating a Healthy Growth Environment for Entrepreneurs, Promoting Excellent Entrepreneurial Spirit, and Better Playing the Role of Entrepreneurs", which is the first time that the central government has clarified the "entrepreneurial spirit" in a special document.
It can be said that innovation is the theme of contemporary social development. The so-called innovation is the recombination of production factors, and the key to realizing the recombination is entrepreneurship.
Entrepreneurship is a very valuable and scarce resource in a society, and they all have a strong will, dare to take risks, endure setbacks, and persevere. If the whole society forms a perception of respect for entrepreneurs, then the insecurity of entrepreneurs will naturally disappear. Therefore, I proposed that theoretical innovation is needed to stabilize the expectations of private enterprises, and entrepreneurship is the primary productive force.
Red Star Capital Bureau: In the first half of 2023, China's household bank deposits increased by 11.91 trillion yuan, the highest increase in a decade. In late December, the six major state-owned banks and many joint-stock banks lowered their deposit interest rates one after another, which was the third time this year. What do these two events illustrate, and how can we stimulate household consumption?
Liu Shengjun: The large increase in fixed deposits in 2023 is a very important signal. This indicates that residents are more cautious in the face of uncertainty and less willing to spend. The reason why people are saving fixed deposits now may indicate that they have no plans to make large purchases in the short term, and everyone's expectations for the future may be relatively unstable. Therefore, it is a very important strategic task to promote the reform of the income distribution system so that the people can have more ability and confidence to consume.
Consumption is important. Compared with developed countries, our household income as a percentage of GDP is low. China's household consumption accounts for less than 40% of GDP, compared to the world average of 60%. Therefore, it is necessary to promote the reform of the household income distribution system, so that the proportion of residents' income in GDP can be significantly increased, so that we can solve the problem of consumption.
Some people say that consumption is not important, but in fact this is a very wrong view, for a country or the national economic cycle, consumption is the ultimate link. If there is no consumption, all the previous links are waste, and only consumption can truly realize the last link of value creation.
In order to stimulate the momentum of consumption, in the long run, it is necessary to promote the reform of the income distribution system, increase the proportion of residents' income in the distribution of national income, and solve the problems of education, pension, medical care and housing, which means that the focus of government investment must shift from infrastructure to education, pension, medical care, affordable housing and other public welfare undertakings.
Red Star Capital Bureau: For many investors in A-shares, 2023 will be a year of great testing. How do you see the stock market in 2024?
Liu Shengjun: For the stock market, we must maintain a rational mentality, don't care about the stock market just because the stock market has fallen, and can't let the stock market go up for the sake of the stock market.
2024 is a crucial year for China's economic recovery, with the real estate market expected to stabilize and private enterprises expected to gradually improve. However, uncertainties still exist, so more care and support are needed in terms of policies.
Suggestions: First, we must do a good job in the real economy, and only when the real economy is good can the stock market be good. Second, we must be determined to eliminate the bubble and relax the restrictions on the pace of IPOs. As for whether there will be labor pains to let go, I think there will definitely be, but if this bubble is not eliminated, it will never be able to get by. Third, it is necessary to have a stable legal system and supervision to build a long-term confidence in the stock market, so that listed companies can enter a positive cycle of value creation, and China's capital market may have the real foundation of a bull market.
Stability is even more important in the context of the uncertain world economy, especially as the U.S. economy faces uncertainty as it faces the 2024 election. In such an environment, we should all the more train our internal skills and concentrate on doing our own things well. In order to achieve a stable expectation, it is more important to carry out reforms, and to substantively promote reforms and release more dividends of reforms, which is my biggest expectation for 2024.
Red Star News reporter Qiang Ya Milling
Edited by Yang Cheng
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