Liu Yuanchun: Some judgments on China's current economic situation
economic development
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The impact of the epidemic and people's lack of confidence in consumption are secondary factors, but the more critical factors are the low proportion of mainland residents' income in GDP, the gap in the social security system and the problem of investment. In response to the problem of residents' lack of confidence in consumption, Liu Yuanchun pointed out that it is necessary to adopt China's traditional "prescription", that is, the means of treating both the symptoms and the root causes, especially the in-depth reform of income distribution and social construction. The causes of insufficient domestic demand The appearance of insufficient domestic demand seems to be caused by the impact of the epidemic and people's lack of confidence in consumption, but this is only a secondary factor. The more crucial factors are as follows: First, in terms of income distribution, the proportion of mainland residents' income in GDP is too low, resulting in a relatively low proportion of residents' actual consumption funds, and their savings will naturally be too high. It's not that our residents can't spend, it's that our current overall income level can't support the mainland to move towards the threshold of high-income countries at the same time, and consumer spending to move towards the threshold of high-income countries. Second, the mainland's entire social safety net and social construction lag behind economic construction, and there are still some huge gaps in the social security system. The most typical is early childhood rearing, which has basically been incorporated into the national system in Europe and the United States, but this is still in the category of personal costs in the mainland. After considering the cost of time and money, of course, everyone is reluctant to have children. The decline in fertility has actually had a big impact on the decline in spending. The consumption of the elderly is the same, if we lack a good health care system, pension system, of course, the elderly can only provide for the elderly through self-savings. The reason why the mainland's consumption upgrading and high-end consumption have stagnated is that although the mainland's economy has entered the threshold of high-income countries, its social system and income system do not yet have the basic characteristics of high-income countries, and these major lags directly lead to the mainland's consumption rate being too low. The third is the issue of investment. At present, the biggest headache in terms of investment is private investment, not government investment. In 2023, the growth rate of government investment will be about 7%, but private investment will fall by 0.4%, so the key to expanding investment lies in private enterprises. It is necessary to adhere to the two "unwavering", and strengthen the protection of the property rights of private enterprises, so that private entrepreneurs can feel the safety and sustainability of assets and capital. In addition, it is necessary to ensure the living space of private enterprises and the profitability of private capital. If private enterprises find that they can't get into the fields they want to invest in, and they don't make money in the fields they want to invest in, they will definitely not invest. In addition, the core reason for the negative growth of private investment is the adjustment of real estate, and after deducting real estate, private investment in other industries still reached an increase of 8 to 9 percent, which is actually not low. For example, the growth rate of private enterprises' investment in high-tech has reached double digits, and the growth rate of investment in manufacturing has also exceeded 8%. Many people say that capital is "lying flat", but in fact, whether capital is lying flat varies from industry to industry, and where there are profits and hopes, capital will never "lie flat". First, the current consumption downgrade and lack of consumer confidence are actually a normal phenomenon in the post-epidemic era. Historically, after the pandemic, it is a normal and phased phenomenon that consumption contraction occurs, which cannot be exaggerated, but it cannot be simplified. Second, many people think that in response to the sluggish consumption, we can solve this problem by "copying homework" in accordance with US policy, and by "throwing money from helicopters" and "pie in the sky". In fact, it is impossible for us to "copy" the American "homework". This is because, according to the logic of the United States, adopting a deficit rate of 15 percent or 16 percent and expanding the balance sheet and subsidies on a large scale, the inflation rate on the mainland may not only rise from 2.1 percent to 9.1 percent like in the United States, but may rise from 2.0 percent to 16 percent or 17 percent. That's not what we want. The reason is simple: the United States issues money for their own benefit, the cost of the whole world, and 80 percent of the cost is borne by the people of the world. However, 95 percent of the cost of short-term stimulus and "flooding" on the mainland may be borne by ourselves, and only 5 percent of the cost will spill over to other countries. Therefore, in solving the current problems, we must adopt China's traditional "prescription", that is, the means of curing both the symptoms and the root causes, especially the in-depth reform of income distribution and social construction. "Common prosperity" is very important, so that the people have money, and the gap between the rich and the poor cannot be too large. It is necessary to improve the income distribution system, and the social security system should achieve full coverage, national overall planning and service equalization, and change the current dual system or pluralistic system. We want to realize socialist modernization, but at present, part of the mainland's population is in the countryside and part of the city, and some peasant workers are separated between the city and the countryside. Of course, the increase of short-term income is also very important, and in recent years, some local poverty alleviation has had an impact on all-round poverty alleviation, and we should pay attention to it. At the same time, in the short term, it is also necessary to tap the consumption potential, and the consumption vouchers should be issued. The bidding system of the capital market is facing restructuring and differentiation, and many people simply explain the current performance of China's stock market as a phenomenon caused by a single factor. In fact, the stock market is still a barometer of the national economy, but at present, the factors that affect the national economy are diverse. This is a great era, the end of the era of liberal globalization with the United States as the main body, and the gradual entry into a new era of multipolarization, reconstruction, and strife. On the one hand, the U.S. system has demonstrated its ability to be powerful and innovative in an era of strife, so that its stock market is still on the rise, and the currency market is overshooting, while on the other hand, the opposite phenomenon will occur in peripheral countries, because the risks are two-sided. Therefore, in this restructured world, the main body is actually China and the United States, and it is the norm for the U.S. stock market and the Chinese stock market to have a bipolar restructuring in this pattern change. We need to understand this point thoroughly, not that we are not doing well, but in this reconstructed world, the world's capital will choose sides on risks and future development, and the side selection effect has created the current results. Foreign Trade and International Competition StrategyChina's foreign trade has been greatly impacted from 2020 to now, especially in the post-epidemic era, global trade has shifted from a system with efficiency as the only indicator in the past to a system that pays equal attention to safety and efficiency, resulting in a major structural adjustment, which has further produced a total contraction effect. This year, our high-tech trade will gradually change from Europe and the United States to some emerging countries. There will also be major geo-economic adjustments, such as changes in the pattern of China and Japan, China and South Korea, and East Asia, and the layout of China and the 10 ASEAN countries will be further improved. The mainland's trade with the "Belt and Road" countries and some emerging countries will be further improved, so it is necessary to do a good job in the structural adjustment, especially the article on the rapid layout of emerging countries. In 2024, the mainland is also facing a very important node, that is, the United States will enter the stage of "blossoming and bearing fruit" after several years of "re-industrialization". But this stage is still uncertain for them. Although the United States has made large-scale investment and large-scale mass production, whether it has cost competitiveness is a test period from 2024 to 2025. In terms of foreign trade strategy and international competition strategy, the mainland should attach great importance to the aggregate and structural effects brought about by this period of time.
[Liu Yuanchun: Member of Chang'an Street Reading Club, President of Shanghai University of Finance and Economics]
Note: Authorized to publish, this article has been selected and included in the "Chang'an Street Reading Club" theoretical learning platform (People's Daily, People's Political Consultative Conference Daily, Beijing Daily, Xinhuanet, CCTV, National Party Media Information Public Platform, Vision, Beijing Time, Surging Government Affairs, Phoenix News Client "Chang'an Street Reading Club" column synchronization), reprinting must be uniformly marked "Chang'an Street Reading Club" theoretical learning platform source and author.
Editor-in-charge: Ma Jiajun, preliminary review: Cheng Ziqian, Chen Jiani, review: Li Yufan
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