I happened to chat with a friend who has been working in Shanghai for many years and talked about his recent living situation. Because he was busy with work in the past, he was basically on the front line at three o'clock in Shanghai, either working overtime or on his way to and from work. After years of intense work, he didn't even know what commercial businesses were around the neighborhood he rented.
Recently, he lost his job, and when he was thinking about how to have dinner, he found out that there were two fresh supermarkets at the entrance of their community. It was dinner time when we were chatting, and he asked me to see the situation around the neighborhood as he walked. And expressed his views on the so-called stimulation of consumption that is popular at the moment. In his opinion, eating is a matter of wanting to eat well without spending more money. As an unemployed person, the best way is naturally to buy groceries and cook them yourself.
In the past, when I was unemployed, although I had some savings, compared with the higher prices in Shanghai, the savings in my hand were really nothing. Looking at the bright lights along the way, I feel that the unemployed self is so out of place in this city.
Following his lens, I saw several shops, which were brightly lit but had few customers. In his words, the logic of stimulating consumption is wrong, what can we rely on to consume if we have no money? Encouraging childbirth is not valid, and even if we live in uncertainty, how dare we have children?
The mainland's foreign trade has ushered in an inflection point, and this inflection point reflects the reshaping of global commercial trade in the global manufacturing supply chain, and the profit is not us. An economic myth that has lasted for 40 years is ushering in an era of great change.
Hello everyone, and welcome to Bandian Qingliu. Please pay attention to this official account in time to avoid missing more exciting content.
In 2023, the share of China's exports in the world has declined, and the global economic recession has led to a slowdown in the demand for Chinese goods in the international market. China's exports fell for the first time in the whole of last year. Of course, this refers to the dollar-denominated aspect. Exports in renminbi terms rose 0.2 percent, essentially unchanged from last year. In dollar terms, exports were close to $3.4 trillion, down 3.6% from last year and the first decline since 2016.
In terms of imports, the mainland's total imports in US dollar terms last year were about 2.65 trillion US dollars. Imports, denominated in US dollars, fell by 5.5 percent. And imports are subordinate to exports and domestic consumption, just like a store, the turnover has fallen, and there will not be so many goods. A combination of weaker-than-expected consumption and weaker exports contributed to the decline in exports. However, China achieved a foreign trade surplus of more than US$820 billion last year, which is a relatively large decline compared with the foreign trade surplus of US$877.6 billion in 2022.
The main factor leading to the decline in the mainland's import and export data is the change in the global situation. As you know, before the epidemic, the mainland's total import and export volume was only about two-thirds of what it is now, but under the epidemic, China's exports suddenly soared by 10 trillion yuan, and such rapid growth is not normal in itself.
Europe and the United States, as the world's major consumer markets, have seen their over-dependence on Chinese manufacturing in the epidemic, and are targeting our industrial chain to de-risk. From the perspective of the great power game, the United States has imposed sanctions on our trade while engaging in so-called friendly shore outsourcing and leading the industrial chain to move out of China. These external factors have put great pressure on our import and export trade.
Although there is little change in the export data, considering the obvious increase in the export of mid-range goods such as automobiles, it will inevitably lead to a sharp decline in the export of clothing, footwear and socks in the low-end manufacturing industry. The decline in the production capacity of these labor-intensive industries has directly led to the loss of thousands of jobs. After they lose their jobs, they can't enter the mid-to-high-end manufacturing industry, and naturally, they have no income.
This is also the reason why everyone is concerned about deflation throughout 2023. So do we have deflation at all?
Looking at the whole of last year, we cannot define last year as a year of deflation. This is because consumer prices have risen by 0.2%, which is the lowest year for inflation since 2010, but there has been no decline in prices. However, judging from the situation in the second half of the year, the CPI has been in the contraction range for three consecutive months. This is also direct evidence that the academic community believes that we are already in deflation.
In terms of data comparison, the last time the consumer price index fell was during the global financial crisis in 2008. At that time, China's consumer price index experienced a temporary decline in CPI due to the decline in external demand. Then it was washed away by the stimulus package.
Since the CPI fell into deflationary territory last year, it seems that economic policy has failed. As people experience the economic winter, they are increasingly worried about the uncertainty of the future, so we find that unnecessary consumption is being abandoned by more and more households, and food has become the key drag on the CPI data.
As everyone discussed, it's time again when confidence is more important than gold. In the intensive adjustment last year, everyone's confidence still does not seem to have recovered, which is reflected in consumption, that is, everyone does not spend money, spends less, and does not spend unnecessary money. The decline in consumption in China is part of the decline in imports. Under the influence of external factors, exports do not seem to see the light of resumption of growth in the short term.
Under the leadership of Europe and the United States, Mexico, Vietnam, and India have become the biggest beneficiaries of this round of the game. According to the U.S. Department of Commerce, U.S. imports from China accounted for 20 percent of U.S. imports last year, while China, which has been the largest importer of the United States since 2004, has been surpassed by the European Union, Mexico, and Canada to rank fourth in U.S. imports. Specifically, it accounts for less than 14% of total U.S. imports, the lowest in 17 years.
The United States imposed tariffs on mainland goods, plus the relocation of leading industrial chains out of China. As a result, a large number of domestic suppliers have set up factories in Mexico. In December, the U.S. stopped implementing tax subsidies for new energy vehicles installed with Chinese-made NEV parts and materials, which led Tesla to build the world's largest factory in Mexico. And we are also ready to take away dozens of our new energy vehicle suppliers. Tesla's approach is similar to Apple's model of taking away Foxconn. Tesla's exodus is not only about GDP being taken away, but also about high-quality investment and the disappearance of a large number of jobs.
Now that I think about it, some things are doomed and there is no way to undo it. Tariffs have caused our industrial chain to lose its comparative advantage, and geographically, Mexico is to the United States what Southeast Asia is to China. Reflected in the Sino-US trade game, Mexico has a natural advantage.
Truth be told, we're also ramping up our investment in Mexico. For nothing else, the United States is already the world's largest single market, and the game is a game, but capital is profit-seeking, and they will naturally change with the needs of the United States, a customer. After all, the order is still in the hands of the American buyer.
This is just like Apple pulling Foxconn to Vietnam and India to build a factory, in the face of customer needs, suppliers only obey and have no choice. If Foxconn doesn't listen to Apple, then some suppliers are willing to listen to Apple's call.
All these illustrate a basic fact: Europe and the United States still control the global supply chain, and the advantages of the industrial chain in our hands must ultimately obey the needs of the supply chain. In other words, in this regard, we are still controlled by others, not that we can really use the industrial chain to lock Europe and the United States.
The sharp decline in China's exports to the United States is reflected in the domestic situation, which is the price index at the lowest rate since '08. The severe economic situation in China also shows that we are actually constrained by Europe and the United States in the supply chain. The reason why it is subject to Europe and the United States is because of the high per capita income of Europe and the United States, and their people have the ability to consume, creating a huge consumer market.
It's like your business customer, your role as a supplier, and the natural customer's demand is the basis for you to change the way you supply. There is nothing else to do with that. At present, a large number of Chinese companies are going overseas to invest in Vietnam and Mexico, isn't it the best illustration of this problem?
In fact, in terms of labor costs, Mexico is not cheaper than China. Even if Vietnam has lower labor costs than Chinese, it is not the fundamental reason for the industry to go overseas. Everything is still the need for producers to follow demanders, or European and American brands. And the negative impact of this transformation on us is very serious.
As we mentioned above, the rise in the consumer price index is very low, everyone does not dare to spend money, a large number of employees of foreign trade enterprises are unemployed, their income is reduced or there is no income directly, and domestic consumption is sluggish, which leads to the phenomenon of industrial surplus in domestic production enterprises focusing on domestic sales.
Under the pressure of the market, Chinese local brands have also had to go abroad and deeply participate in international competition. At present, the hot automobile price war is unfolding round after round, and the production rate seriously exceeds consumer demand. The construction of new energy vehicles going overseas is the best illustration.
The industrial chain has moved out, domestic brands have gone to sea, foreign trade has been lost, and imports have declined. All this data gives a sense of uncertainty about the future. Uncertainty, in turn, has increased residents' savings. According to the latest data, as of the end of 2023, the scale of mainland residents' deposits has reached 137 trillion yuan, and the new deposits last year alone reached 16.67 trillion yuan. In terms of total scale, it has exceeded the scale of the mainland's GDP of 126 trillion yuan last year, which is a very terrible figure.
An increase in precautionary savings and household deposits will lead to a poor monetary function, as well as a malfunctioning monetary cycle between businesses and households. Not only do people not want to spend, but even their interest in financial management is declining. Reflected in the data, in the first half of last year, the balance of investment assets of China's wealth management products was about 27.7 trillion yuan, 4.11 trillion yuan less than the same period of the previous year. The number of newly established public service funds in the first half of 2023 will only be 599 in the first half of 2023, after rushing to 1,046 in the second half of 2021
Macroeconomic risks and uncertainties have in fact aggravated the risks of investment, wealth management and the stock market. In addition, there are some unspeakable loopholes in our stock market, which has led to more and more people losing trust in the capital market, although the fixed interest on bank deposits is very limited, but people are not willing to take risks to manage their finances in the financial market. This kind of conservative saving behavior is itself a huge harm to the macroeconomy. The reason is that the financial market is the catalyst of the macroeconomy, and if the capital market does not get up, then the macroeconomy loses its biggest driving force.
If someone had told you ten years ago that China's economy would be in the predicament it is today, you would not have believed it. Because of the vigor and vigor, the goal was ten years before the sea of stars, and if you look at it now, it seems to be a beautiful dream. Today we have in fact reached a crossroads, and great changes have arrived. I have stressed many times that at this crossroads, we need to be determined to change, and the sun is shining brighter, and taking a step back is an abyss.
In terms of macro data, 1.4 billion people have 137 trillion in savings, almost 100,000 per capita. This is a very good result, and if the money can be used for consumption, our internal circulation will be set in motion in an instant, offsetting the economic difficulties caused by the decline in exports. If the problem of Baiyansong is true, residents must first have money, and then discuss how to stimulate consumption. As for the wrong premise of "rich", this person was once again scolded on the hot search.
Everyone should be clear that our definition of the middle class is only 3,000 yuan per month. The total number of people who meet this criterion is only 400 million. Another billion people are people with a monthly income of less than 3,000. This is doomed, the vast majority of people do not reach the per capita level, you and the rich on average, there may be hundreds of millions per capita, but these hundreds of millions are not yours, maybe you have a few dollars left in your pocket for food. As a result, there is a huge amount of household savings in the banks, but most people have to face the dilemma of insufficient income.
The difference in savings caused by the difference in income directly determines that the possibility of converting savings into consumption does not exist at all, and the so-called premise of having money is also an excuse used by some people to whitewash. In the past 40 years, the rapid growth of economic dividends has created a huge amount of wealth, and most of this wealth has been pocketed by a small number of people. And most people, with empty wallets, are also burdened with heavy debts. This kind of environment stimulates consumption, and most people have no money, so how can they consume? This underlying logic itself is problematic, and the premise of "having money does not dare to spend" is a wrong truth.
And even if the wealthy class holds a huge amount of savings in their hands, they only eat three meals a day and sleep in one room. No matter how much the wealthy class consumes, it is impossible to pull a virtuous circle of the entire domestic demand market. According to the latest Hurun data, by the end of 2023, there were 2.11 million households with assets of more than 10 million yuan and more than 5 million households with assets of more than 5 million. Taken together, the total number of wealthy people is about 20 million, accounting for only about 2% of the total population size. How else can this stimulate mass consumption?
What we should focus on at the moment is not to stimulate consumption, not to restrict the industrial chain to go overseas. Instead, we should find ways to increase the income of the general public from the policy side. Since the de-risking of China by Europe and the United States has become a foregone conclusion, if we do not take the right approach at this time, it will inevitably lead to the continuous loss of the industrial chain and eventually hollow out our advantageous industrial chain.
As I have mentioned many times in previous articles, the key to solving this dilemma lies in our huge internal market base. At present, the internal market cannot get up, in the final analysis, there is no money. At this time, increasing people's income is the first issue to be considered. But high wages have a side effect, which will inevitably lead to higher product prices in factories. Rising prices, in turn, lead to a decline in our exports. It doesn't seem like a good idea either. If you can't sell it, you can't use high wages to do it for a long time.
In fact, it is entirely possible to erect trade barriers in industries where we do not have a comparative advantage. On the premise that there are no trade barriers, these industries will definitely move out if they are not protected, and the employment after the relocation will be gone. In the end, there will be even less employment, and there will be nothing left of the residue.
It is better to simply set up high tariff barriers on some industries that have lost their comparative advantages under the premise of gradually increasing everyone's income, and use this method to retain manufacturing and employment opportunities, even if the demand of 1.4 billion people in China is enough to feed a large number of industrial chains, and the key to breaking the situation is to maintain this most basic industrial chain.
By using trade barriers to keep out foreign goods that have lost their comparative advantage, we have the basic conditions for higher wages for workers. Gradually increase the income of workers, and when everyone has money, the internal circulation will naturally circulate. The premise of Bai Yansong's question exists, and the question he raised does not exist.
All of this, in the final analysis, is a matter of stimulating consumption and cultivating the methodology of the internal market. If we can't figure out this logic, maybe we really can't find the right direction in the big changes!