How to increase the fertility rate? Ren Zeping: It is suggested that at least high school and kindergarten should be made compulsory

The 46th Tsinghua University China and the World Economic Forum was held at Tsinghua University on January 8, 2024, with the theme of "2024 China Economic Outlook".

We are in an era of great economic transformation, and economics has become confusing, but it is also pregnant with great innovation and collision of ideas. Ren Zeping, an economist and founder of Zeping Macro, expressed his views on the stock market, he believes that the stock market is not only a barometer of the economy and a barometer of currency, but also a barometer of people's hearts to a certain extent.

Talking about real estate, he said, "China's land finance and infrastructure are the inventions of China's wisdom, and it should not be burdened with high housing prices." Today we are facing a huge challenge in real estate, but I think we should prescribe a better prescription. ”

Finally, Ren Zeping focused on expressing concern about the population issue: "We cannot ignore the human problem, especially the fertility problem in China. The high cost of childbearing, parenting, and education inhibits fertility, and the most important idea is to share the cost of childbirth equally among households, businesses, society, and the state. ”

The following is the transcript:

The AI we just talked about seems to be omnipotent, but I would say that economics and predicting the stock market are irreplaceable. Economics is not a science because it involves a lot of human things.

China has not reached a stage where it can solve its problems by relying on some simple means. I have been thinking about a question and would like to ask Mr. Li Daokui for advice: over the years, some of our underlying logic, including the underlying logic of economic operation, our variables, and even the logic of our decision-making have changed. Using the logic of the past to deduce the present situation will inevitably lead to pessimistic conclusions.

Second, we investment banks will probably not be replaced. Predicting the stock market is not only not science, it is more of a literature, even magic. The history of China's stock market tells us that it is difficult to predict stock market movements through science. The stock market is a complicated thing, I once predicted that 5,000 points is not a dream, but then I stopped predicting, because if the prediction is right, it will be ruined, and if the prediction is wrong, it will be scolded. I've been asked why the stock market has been at 3,000 points, and this question can be traced back to the original purpose of building the stock market. The stock market started out as an instrumental purpose, not as a purely market action. Therefore, to explain it with market analysis, problems arise.

First, the real estate problem cannot be completely "blamed" by land finance

If you want to talk about the stock market this year, I think the stock market, real estate and the exchange rate are all reflections of the general environment. We are all products of the times, living under the great time. There are some striking features of the current era, such as the fact that China has gone from being the biggest beneficiary of globalization to being part of de-globalization. How does globalization affect us in terms of fragmentation and regionalization? I talked to a very good entrepreneur from one of the top three companies in China, and he told me why many Chinese entrepreneurs choose to lie flat. He believes that China's production capacity is prepared for the world, and when the window of the world is no longer open for us, we have to shrink and cannot expand anymore. Therefore, going overseas is an inevitable choice for Chinese enterprises.

Second, the dividends of globalization, reform and demographic are gradually disappearing. Those born in the baby boom of '62-'76 are now gradually entering retirement age, and the end of the golden age of real estate also means that there is less demand for home exchange. Many people believe that the era of big real estate development has come to an end, partly due to the three red lines, but more importantly, it is impossible to build more and more houses.

In our current situation, the household ratio has reached 1.9 units, and the per capita housing area and urbanization rate have reached 66% and 85% respectively. However, we have 300 million migrant workers, of which more than 100 million move across provinces. Our urbanization process is incomplete. If we take into account their families in rural areas, the degree of urbanization of migrant workers has exceeded 70%. While there is still room for 10-15 percentage points of urbanization, the overall process has slowed down and may only grow by one percentage point every two to three years in the future.

We are in a time of great economic transformation, and economics has become confusing as a result. But I think it's also a huge deal of innovation and a collision of ideas. The collision between the thoughts of the past and the thinking of the future will inevitably produce new sparks.

The same is true of the stock market, which is not only a barometer of the economy, a barometer of the currency, but also, to a certain extent, a barometer of people's hearts.

I once proposed an analytical framework: real estate looks at population in the long term, land in the medium term, and finance in the short term. I think the high price of real estate in China in the past is mainly a problem of our understanding, that is, the mismatch between people and land, which is economically solvable.

In the past, what were our real estate and land planners? In the documents, we often talked about controlling large cities, developing small and medium-sized cities, balanced regional development, revitalization of the northeast, and large-scale development of the northwest.

If we look back at the history of the world and dozens of large samples, we can always find some patterns, that is: people migrate to metropolitan areas and urban agglomerations, and human beings aspire to more advanced civilizations; second, you will find that the more urban agglomerations in the world, the more efficient, more energetic, and more economical land and resources, this is the victory of cities.

But why is it that people are constantly moving to the urban agglomerations in the metropolitan areas, but we want to control the big cities, develop small and medium-sized cities, develop balanced regional development, and tilt toward the large-scale development of the western region? Therefore, this has led to high housing prices in first- and second-tier cities and high inventories in third- and fourth-tier cities.

High housing prices do not make land finances completely blamed. In fact, China's land finance and infrastructure construction is an invention of China's wisdom, and it should not bear this pot, we have thrown this pot wrong. Today we are facing a huge challenge in real estate, but I think we should prescribe a better prescription.

Second, we have a population of 1.4 billion, but the issue of fertility is seriously neglected

We've partnered with Zhaopin.com to publish a list of the most attractive cities in China for talent, but it's not complicated. The main reason why people stay in a certain city is that the city has advanced ideas, civilization, and more employment opportunities. Such exchange meetings are helpful for the growth of each of us. Therefore, the conclusion is clear, the most attractive talent cities include Beijing, Shanghai, Guangzhou, Shenzhen, plus new first-tier and strong second-tier cities.

However, we cannot ignore the human problem, especially the fertility problem in China. According to the data, South Korea's fertility rate just announced is very low, with only 240,000 newborns born to South Korea's 50 million population in 2022, and the fertility rate was 0.8 the year before last and fell below 0.7 this year. South Korea could become the first country in the world to disappear. Even without the declining populations of Japan and the United States due to factors such as the financial defeat, Japan's demographic structure would be unsustainable because the total fertility rate is just over 1 point. The combined fertility rates in the United States and the United Kingdom are slightly higher, at 1.8 and 1.6, respectively. In contrast, Muslim and African countries have a total fertility rate of more than 3. China's total fertility rate, which was 1.05 in 2021, is likely to fall below 1 this year. We have a population of 1.4 billion, but fertility is sorely neglected.

We are also facing the problems of an aging population and a declining birthrate. The speed and scale of China's aging population is unprecedented. The fertility curve shows that the population born between 62 and 76 has dramatically changed the social structure, so China's aging problem will inevitably accelerate. However, our social security and other systems are not ready for this. In addition, the phenomenon of non-marriage is also becoming more prominent, with the marriage rate falling sharply and the divorce rate rising sharply, only to ease in 2021 and 2022 due to the epidemic. By 2050, one-third of China's elderly population will be over 65 years old, which will put tremendous pressure on social development.

Third, the high cost of childbearing, parenting and education has inhibited fertility

It is abnormal for China to have a low fertility rate, we generally think of it as an inverted U-shaped curve or U-shaped curve, but it is unreasonable for China's fertility rate to be so low. The fertility rate in Britain is 1.6, Germany is 1.6, but why should China break through 1? South Korea has fallen below 1, with a per capita GDP of nearly $30,000, while Japan has a per capita GDP of 1.35 and a per capita GDP of $50,000. Obviously, we have problems in some areas, and after solving these problems, China's fertility rate is expected to increase.

What are the problems? Liang Jianzhang and I both called on everyone to pay attention to these issues. To put it simply, South Korea has the world's lowest fertility rate, and we are the second-to-last. The high cost of childbearing, parenting and education inhibits fertility. Countries such as Europe and the United States have responded to the low fertility trap by issuing birth subsidies. European countries subsidize an average of 2-300 euros per month, and subsidies are directed to give subsidies for childbirth. In contrast, we have no similar measures. In addition, 55 per cent of infants and toddlers are covered by inclusive public nurseries in France, while we do not cover even 5 per cent.

I asked you on the spot, if each person receives a monthly subsidy of 2,000 yuan, will you give birth? If the subsidy is 20,000 yuan, whether you will have a child or not. If the subsidy is 200,000 yuan, will there be a solution, and we are experts in this area.

I'll give you one more statistic. 3-6 years old is the kindergarten stage, and 0-3 years old is the nursery stage. In France, 55 per cent of infants and toddlers are covered by inclusive public nurseries, while we do not cover even 5 per cent. Having a baby can delay your career because you need to spend time with your children. If the coverage rate of childcare reaches 50 per cent, the burden of childbearing will be much reduced. In addition, there are a number of policies that can increase fertility, such as guaranteeing the employment rights of women in the household. These measures are not imaginary, but are based on a large body of international scientific literature. Last year, we also awarded Ms. Golding, a woman who has studied women's issues, the Nobel Prize in Economics. Her research deals with the relationship between women in the workplace and childbearing.

In my opinion, the most important idea is to share the cost of childbirth equally among families, businesses, society and the country. Fertility is not just a personal matter, the child will become a builder of society, an engineer, and perhaps even a courier. They promote the progress of society and have a public character. Therefore, the cost of fertility should be divided equally among all parties. Under this concept, measures such as maternity subsidies are reasonable.