All kinds of controversies about China's economy have made waves again.
The background to the argument is that the economy is in a weak recovery cycle, and almost all important economic data is less than satisfactory, except for the GDP index.
The troika of investment, consumption, and exports stalled at the same time;The youth unemployment rate released in July was 214%, three consecutive highs, no longer announced after August;The Industrial Purchasing Managers' Index even shows signs of deflation;Real estate, which accounts for China's economic weight, has fallen off a cliff, from 1.8 billion square meters of sales area in 2021 to about 1 billion square meters.
All these phenomena cannot be explained by the three-year epidemic;In a post-pandemic era, academic assessments of the economy are beginning to converge:
First, the cycle of China's rapid economic growth has ended
Second, China's long-standing positive trend towards debt growth is fraught with risks
Third, China will enter a super real estate cycle;
As a result, some traditional debates began to get to the bottom of the matter, and people seemed to realize that China's economy is completing a historical cycle full of inevitability, and will face a comprehensive summary and the soul torture of society, and history seems to be standing at a crossroads again.
In the past decade, academics have debated whether investment or consumption should lead the economy, and the problem is that neither investment nor consumption has a long-term perspective. There has been a diminishing efficiency and misallocation of resources in the investment pullConsumption is even more contradictory, to shift the economy from investment-oriented to consumption-oriented, it will need to add 400 million middle-income people, while state-owned enterprises with absolute resources support only 7% of employment, 44 million in 2022;Under the pressure of overcapacity, private enterprises are laying off employees and cutting salaries.
The issue of debt has also been put on the table, and the fiscal deficit ratio has broken through the bottom line of 3% and has been adjusted to 3.8%, and it is likely that it will continue to be adjusted.
It is against this economic backdrop that the call for reform is once again sounding.
There's been a hot topic lately: standing first and then breaking.
As a result, there is an overwhelming amount of interpretations on the Internet, as if the language of economic policy is becoming more and more unqualitative and philosophical, and I do not support all the specific and varied interpretations. Because it is not a quantifiable measure, it is more of a moderate attitude towards the current core debate.
What is the current core debate?
This is the principle of putting reform firstOr is it the main thing to expand demand?
Demand is the main contradiction of the current economy, why there is insufficient demand, in the final analysis, from the superposition of internal and external aspects;On the one hand, external relations are becoming more complicated, and China will face the impact of the de-sinicization of Western economic powers for various reasonsOn the other hand, due to the dual economic structure and many non-market-oriented behaviors, the misallocation of resources has been caused, the accumulation of residents' income and wealth has lost its balance, and the private economy does not have the same market position, and has lost confidence and expectations for the future.
Establishing first and then breaking means that some things are done in advance, such as market access, which is an important part of establishing an equal market position. Those who advocate reform first will say that if you don't reform and don't list the negative list of industry access, market access is a cutscene, and in actual operation, you can't get into it. Those who advocate expanding demand will say that they will be able to expand demand after reform, and it is very likely that the expansion of demand will not be realized, but state-owned enterprises will be impacted.
The tone of the policy of the high-quality author list is to establish first and then break, that is to say, to treat specific issues concretely, and recognize the results when they are available. The new economic work conference is "planning" to deepen reform, focusing on returning state-owned enterprises. It must be clear that we are talking about "initiatives", not directions. Yuan Fang, do you think this is an affirmation of reform first, or an affirmation of expanding demand first?