Editor's note
On January 19, 2024, the "10th (2024 Spring) Macro Situation Forum" hosted by Chinese University, organized by the Chongyang Institute for Financial Studies of Chinese University (Renmin University Chongyang), and co-organized by the Center for Global Governance of Chinese University and the Center for Sino-US People-to-People Exchange Research Center of Chinese University, was successfully held in Beijing. At the meeting, the research reports "The World at the Y-Shaped Intersection - Annual Report on the Macro Situation of the Chongyang Household of the National People's Congress in 2024" and "The Absurd Narrative: The Rise of the "Summit Theory of China's Rise" in the West and Suggestions for Responding to Them were released. Jiang Xiaojuan, professor at the University of the Chinese Academy of Social Sciences and former deputy secretary-general of the State Council, delivered a keynote speech on the topic of "Macro Situation Outlook in 2024". The following is the content of his speech:
▲Jiang Xiaojuan, professor at the University of the Chinese Academy of Social Sciences and former deputy secretary-general of the State Council
The topic I would like to share with you today is "Harnessing the New Opportunities of Globalization and Adding New Momentum to Stable Growth". I have a few things to think about.
First, the economy is stabilizing and improving, and stabilizing the positive trend depends on the short-term policy mix, and more importantly, it depends on the reform and opening up to provide long-term new momentum.
Second, we hope that opening up will provide new momentum, and if this fundamental is there? If globalization shrinks and the chain is broken, this momentum will not exist. So, we need to take a closer look at whether globalization is developing. After a while, we will give the data, and after the epidemic, globalization has accelerated again, which is indeed providing new momentum.
Third, China's current open international environment and economic environment are very different from those in the past, and the friction, competition, and strife we face in the next step are completely inevitable, and the suppression of us by certain countries will not disappear, and these will become a normal situation. In the face of this situation, don't go to extremes, say that the domestic market is complete with large industries, and we will retreat to the country to do internal circulation, but also don't be blindly optimistic, saying that we can once again use large-caliber external circulation to promote economic growth. I would like to make these three main points.
Our economy for the whole year of 2023 will be 5.2%, and the overall recovery is improving, reaching the expected target. Confidence in the market as a whole has recovered, for example, private investment has seen positive growth after removing real estate for several consecutive months since September, which is a good trend. However, on the whole, under the general trend of economic recovery, the downward pressure on the economy also exists.
We have entered the second year after the epidemic, and we cannot say that after all the problems brought about by the epidemic are solved, the economy will stabilize and improve, but we still have to see some long-term fundamentals that have undergone great changes, including the problem of low-cost labor, the problem of demographic dividend, and the opportunity to introduce low-cost technology, etc., have undergone very big changes.
The large-caliber external circulation, the introduction of large-caliber technology, and a large number of low-cost labor are all very important fundamentals of our past many years, and they are indeed changing. Therefore, the next step of economic development needs to find new growth and momentum.
The 2023 Central Economic Work Conference clearly talked about "insisting on relying on reform and opening up to enhance the endogenous driving force of development".
Since the 2022 Economic Work Conference, the central government has emphasized many times that in 2022, it is proposed to better coordinate domestic and international circulation, make greater efforts to attract foreign investment, and steadily expand institutional opening-up.
At the first meeting of the 20th Central Financial and Economic Commission on May 5 last year, there were several important words: we must adhere to open cooperation, not work behind closed doors, and strengthen the opening and cooperation of industrial and supply chains. When Premier Li Qiang was abroad, he made a special remark that risk prevention and cooperation are not opposed, that non-cooperation is the greatest risk, and that non-development is the greatest insecurity. Imagine the downward pressure on our economy, and economic problems are indeed the biggest insecurity.
In August, the State Council issued the "Opinions on Further Optimizing the Environment for Foreign Investment and Increasing the Efforts to Attract Foreign Investment", calling for the creation of a market-oriented, law-based, and international first-class business environment, giving full play to the advantages of the mainland's super-large-scale market, and making greater efforts and more effective efforts to attract and utilize foreign investment. That document is very substantial. In November, the access to foreign investment was completely abolished. Therefore, it can be said that the central government has foresight, high vision, and insight. Behind this is a very forward-looking understanding of what kind of new power sources globalization can bring. Otherwise, if this power source does not exist.
After the pandemic, the process of globalization has accelerated again. In the post-pandemic period, global trade has grown faster than global GDP. The peculiarity of trade is that when the economy goes down, it generally falls deeper than GDP, but when GDP recovers, it generally goes faster.
It is particularly obvious that in the middle of this epidemic, trade fell very deeply in 2020, and we will talk about globalization, and the recovery of international trade in 2022 will be very fast. In terms of the proportion of global trade in GDP, it fell to 52.01% in 2020, which is the lowest point in the past 26 years, and the proportion of global trade in GDP rose to 60% in 2022. If trade is taken as an important indicator, it shows that after the epidemic, globalization is accelerating, and foreign trade is indeed providing new space and opportunities.
Cross-border investment has not returned to a record high like trade, but it is indeed very obvious that it has stopped falling and rebounded. The world's top 100 multinational companies have an open index of multinational companies, which is calculated annually through the World Investment Report.
Based on the arithmetic average of the proportion of overseas assets, the proportion of overseas employees and the proportion of overseas sales, we find that it has exceeded 60% since 2012 and will fall to a low of 60.5% in 2020. Fortunately, after the epidemic, it is steadily rising, indicating that multinational companies still continue to deploy globally, because overseas assets, overseas sales, and overseas employees are all signs of global layout. Therefore, after the epidemic, globalization is still developing rapidly, both in terms of trade and investment.
The globalization of science and technology is even faster. The number of countries with patents for complex products in many countries is expanding rapidly. Under the current technological conditions, some of the top-notch products are products that many countries have combined with their own advantages, and the globalization of science and technology is actually developing faster than the trade and investment just mentioned. So, globalization continues to develop after the pandemic.
It is true that China's environment is different from that of others, and we are subject to many obstacles, whether it is the demands of multinational corporations out of their own competition or the suppression brought to us by the international political and military pattern, which makes us very different from before. Foreign investment in China has also entered the adjustment stage. We must look at this rationally and strive for it.
We still have a lot of work to do to improve the environment for foreign investment, so that they can stabilize their expectations and increase their confidence in doing business in China, which is important. We have a lot to do. However, it should also be noted that the proportion of foreign capital is affected by many important factors.
01
The domestic industry is growing very fast
After 2016, the number of industries and products of our leading enterprises and multinational companies at the same grade on the basis of horizontal division of labor has increased rapidly. Therefore, it is not easy for many multinational companies to compete with our leading enterprises in China. In fact, this trend did not start today, the United States, Japan's home appliance companies have left, the mechanical engineering industry, the communication equipment industry has gone, Nokia has withdrawn very early, at that time there was neither confidence and no expected problem, is the competitiveness of Chinese enterprises.
We are still relatively good at reviewing ourselves, and whenever we have foreign capital, we always feel that we have not done a good job. Sometimes it's a normal adjustment. Toshiba's company in Dalian was withdrawn in December last year, and we reviewed it, but Toshiba was delisted from the Tokyo stock market a few days later, and the company had its own problems in operation. In addition, after the epidemic, changes in the military pattern of the global economy, etc., shrinking the battlefield, strategic retreat, and adjustment by multinational companies are very common, do not interpret all the departures as our own problems.
In the last 20 years of the last century and the first 20 years of this century, many multinational companies moved from South Korea and Japan to China, which is an adjustment at different stages of development. Many multinational companies come to China because they value our low-cost labor, which was only $400 in the 90s, a little more than $1,000 in 2000, and about $10,000 now. Therefore, at this time, it is quite normal for labor-intensive industries to adjust to places with lower wages, such as India and Vietnam. Generally speaking, we should not completely link the adjustment of multinational corporations in China with whether their own environment is good or not, and whether foreign capital has confidence.
We have a lot to improve, we need to change it well, and at the same time we need to see the whole situation change. Many foreign e-commerce companies have also tried the local Chinese market, and it is not easy to compete with local e-commerce, and found that the best thing to do is to sell Chinese goods overseas, so 60% of the new online stores are Chinese.
For good domestic enterprises, capital is not a big problem, if they cannot bring good products and technologies or better design in terms of owners' equity, multinational companies only have insufficient financial attractiveness. Therefore, we should look at it rationally and strive to strive for more foreign investment to come in, but we should not look too far for problems from ourselves, and the cost of retaining it at any cost is very high, and it will not be able to retain it in the long run. It's better to find useful places to start improving the environment and doing something meaningful.
02 Now the proportion of "horizontal division of labor" has increased significantly
From blessing cooperation to cooperation and competition, competition is the mainstay. In the past, it was a vertical division of labor, multinational companies produced analog standard mobile phones, we produced, toys, clothing, bags, in the 90s of the last century, our industry was not fighting, each did a good job of itself, and the two sides exchanged, and their respective consumers benefited.
After 2016, the horizontal division of labor is rapidly improving, and many domestic enterprises have improved their technology rapidly, which is no worse than their overseas counterparts. Some multinationals have joint ventures in China that have better technical skills than their overseas parent companies. In the face of such changes, why can't multinationals make some strategic adjustments?
When multinational companies first entered China, our technology level was low, and the domestic consumption level was low, and the technology given to us at that time was the technology they eliminated or the technology was very general, but it was a great improvement for us, so it would not be stingy, it was a period of mutual blessing, hello and good me. Now the technology we want most is the most advanced technology of multinational companies, and sometimes we are really unwilling to give and cultivate competitors. However, they also see that our market is large and that our industrial chain is good, so they are not willing to give up these interests.
Now it is the norm for multinational companies to be two-faced, to come to China to cooperate with us and benefit from each other, but they also hope that we will not compete with him in his home market or in a third-party market, so they say something different at home or overseas. Coupled with the political and military background, the background of the game between countries, this will be the norm in the future, both cooperation and competition, cooperation without forgetting competition, competition without forgetting cooperation.
03
We still need to open up to the outside world
China is the world's largest economy with the most complete industrial chain, which is our outstanding advantage. On the other hand, we have more demand for resource and energy products. On a per capita basis, many of our important resources and energy are relatively scarce, but when the economic aggregate is small, it is not a prominent limitation.
In 1990, China's GDP accounted for only 2 percent of the world's total, and now it is close to 20 percent, but its resources will not increase. Therefore, being more open and making more use of global resources is a win-win situation for us and for those resource-rich economies.
There are also new industries and new products that we have advantages, such as electric vehicles, solar modules, lithium batteries, etc., we have technology and cost advantages, and we are competitive in the global market, so we must develop and use the global market more. In the face of the current international situation, we must be more self-reliant and self-reliant, and accelerate the independent development of those technologies that are limited by the card. But there will always be duality and a balance.
By making greater use of foreign technology, we will be able to accelerate the process of self-reliance and self-improvement in science and technology on the mainland from a higher starting point; on the contrary, the higher the level of independent innovation on the mainland, the more it will be able to promote international scientific and technological cooperation at a higher level. Therefore, we need to have the concept and ability to balance this relationship. It is necessary to be at the mercy of each other and to do it with mutual blessings. Holding high the banner of global cooperation in science and technology is not only in line with the mainland's own interests, but also conducive to the realization of an important concept of global cooperation and win-win results.
In addition to promoting development through opening up, it is also necessary to promote reform through opening up. The 2022 and 2023 Central Economic Work Conferences have a particularly clear statement on this. The 2022 Central Economic Work Conference used the phrase "actively join high-standard economic and trade agreements such as the CPTPP, and take the initiative to deepen the reform of relevant domestic fields in accordance with relevant rules, regulations, management, and standards." ”
The 2023 Central Economic Work Conference requires that "benchmark against international high-standard economic and trade rules, earnestly solve issues such as cross-border data flow and equal participation in government procurement, and continue to build a market-oriented, law-based, and international first-class business environment", all of which clearly put forward benchmarking against global high standards and promoting domestic reform through opening-up. The high-standard economic and trade agreements require the domestic market system to be more in line with relevant international rules, and most of them are also the focus of our reforms.
High-standard economic and trade rules and agreements deal with border measures and post-border measures. The domestic industry is required to comply with relevant international rules in terms of intellectual property protection, green production, labor protection, policy transparency, and standardized subsidies. These are consistent with the general direction of the construction of a high-standard domestic market system. Therefore, working in this direction is an important guarantee for enhancing the confidence of domestic and foreign investors, stabilizing expectations, and encouraging long-term investment.
04 Summary
China's stable economic development needs policy support, and more importantly, new momentum for reform and opening up. The external environment still offers a variety of opportunities as well as challenges. In the face of those actions that try to exclone us from the process of globalization, whether it is the "small courtyard and high walls", the duplicity of transnational corporations, or the international political environment, in short, there are great forces that want to exclude us from globalization and slow down our growth.
All in all, the challenges are great and unprecedented. However, if we want to see the opportunities of globalization, participation is our demand and the demand of global common development, we must try our best to overcome obstacles, strive to seize new opportunities, participate in the global division of labor system and continuously improve the level, and continue to empower development and promote reform through openness.
Chongyang, the National People's Congress
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RDCY
Established on January 19, 2013, Chongyang Institute for Financial Studies of Chinese University of China (Renmin University Chongyang) is the main funding project donated by Chongyang Investment to Chinese University and set up an education fund for operation.
As a new type of think tank with Chinese characteristics, Chongyang has hired dozens of former politicians, bankers, and well-known scholars from around the world as senior researchers, aiming to pay attention to reality, advise the country, and serve the people. At present, the Chongyang National People's Congress has 7 departments and 4 operation and management centers (the Center for Ecological Finance, the Center for Global Governance, the Center for China-US People-to-People Exchange, and the China-Russia Center for People-to-People Exchange). In recent years, the Chongyang National People's Congress has been highly recognized at home and abroad in the fields of financial development, global governance, major-country relations, and macroeconomic policy.
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