**: China Macroeconomic Forum (CMF).
Yang Ruilong is a first-class professor at Chinese National University, co-director of the Institute of Economic Research, co-founder and co-chairman of the China Macroeconomic Forum (CMF).
The following views are compiled from Yang Ruilong's speech at the CMF Symposium on Macroeconomic Hot Issues (Issue 79).
First, there are two major reasons for the slowdown in economic growth
Since the first quarter of 2011, China's economic growth has stepped out of an L-shaped curve, and economic growth has slowed down. Statistics from January to November this year show that the third quarter reached 4., despite the fact that real GDP growth was somewhat9%, showing a weak recovery, but the nominal GDP growth rate is lower than the real GDP growth rate, indicating that the demand is relatively weak and the foundation for recovery is not solid enough.
There are two main reasons for the slowdown in China's economic growth. First, cyclical factors: in recent years, there has been a marked lack of investment demand, consumer demand and exports. Second, structural factors, such as the attenuation of traditional growth drivers that support China's economic growth (such as the decay of reform dividends, globalization dividends, industrialization dividends, demographic dividends, etc.), lead to economic downturns. Under the superposition of cyclical factors and structural factors, coupled with the impact of the epidemic and changes in the external environment, China's economy has been under great downward pressure, and stable growth has become a very important task at present. The report of the 20th National Congress of the Communist Party of China (CPC) clarified the strategic arrangements for building China into a great modern socialist country in an all-round way, and the first stage is to basically realize socialist modernization from 2020 to 2035. In 2021, China's per capita GDP was 1250,000 US dollars, in 2035 to initially build a modern socialist power, that is, one foot into the ranks of developed economies, according to international data is about 20,000 US dollars per capita GDP. If China's per capita GDP reaches or exceeds the level of about 20,000 US dollars in 2035, then the GDP growth rate from 2021 to 2035 will reach 473 per cent to achieve this strategic goal. It should be said that it will not be easy to maintain this growth rate.
Therefore, whether it is the goal of stabilizing the economy in the near term or the long-term goal of basically realizing socialist modernization in the medium and long term, it is necessary to stabilize growth, which is why the first economic work conference put forward the general policy of seeking progress while maintaining stability and promoting stability. "Stability" and "progress" are mutually reinforcing, and in order to achieve stability, it is necessary to make progress, and maintaining moderate economic growth has become an important condition for stabilizing the economy. Therefore, the first economic work conference has repeatedly emphasized the need toMaintain high-quality economic development, and promote the economy to achieve qualitative and effective improvement and reasonable quantitative growth.
Second, both supply and demand will make two-way efforts to promote high-quality development
On how to achieve effective qualitative improvement and reasonable quantitative growth, the ** Economic Work Conference emphasized the need to promote the high-quality development of China's economy from both demand and supply aspects.
1. Demand side
First of all, we need to make efforts from the demand side. In view of the cyclical factors that lead to the downturn of China's economy, it is necessary to strengthen the counter-cyclical and cross-cyclical adjustment of macroeconomic policies to stimulate aggregate demand, so that the real GDP can approach the potential GDP growth level. ** The Economic Work Conference emphasizedFirst, we will continue to implement a proactive fiscal policy and a prudent monetary policy. It should be said that fiscal policy and monetary policy are very important, but under the condition of weak market expectations, fiscal policy will be more effective, so in order to achieve stable growth, fiscal policy should be more active and promising, and focus on making efforts. Expanding the scale of infrastructure investment is still an important way to boost investment demand, but it is necessary to improve the efficiency of the use of funds. Second, it is necessary to resolve the risk of local debt, which is conducive to giving better play to the efficiency of fiscal policy. The weakness of the real estate market and the decline in real estate investment have had a certain impact on the local government's financial dependence on land, and the current local government's income and expenditure situation is in difficulty. Therefore, it is necessary to actively resolve the financial difficulties of the local government, so as to better play the role of the local government in stabilizing growth. At the same time, there is still room for fiscal policy to stimulate consumer demand, for example, many experts have raised the issue of the issuance of consumption vouchers, which can be an important exploration in the future. Third, as far as monetary policy is concerned, it is necessary to pay attention to precision and effectiveness. In the past few years, the monetary policy has been relatively active, mainly reflected in the growth rate of M2. However, there is a disconnect between the growth rate of M2 and the scale of financing, and when M2 maintains a certain growth rate, the ** level, especially PPI, is still in negative growth, indicating that there are certain problems in the transmission mechanism of monetary policy. Therefore, in the future, we need to focus on the precision and effectiveness of monetary policy. At present, although China's nominal interest rate is relatively low, due to the relatively low level, especially the negative growth of PPI, the CPI is also hovering at a low level, and the real interest rate is relatively high, resulting in the actual financing cost of enterprises is still high. In order to stimulate economic vitality in the future, there is still some room for RRR and interest rate cuts. In the second half of next year, it may be a high probability event for the dollar to enter the interest rate cut cycle, which will bring more conditions and space for the use of China's monetary policy.
In order to achieve steady growth, the first economic work conference also emphasized the need to stabilize investment, we should pay attention to the decline in private enterprise investment and the negative growth of real estate investment, and need to introduce relevant policies to stabilize investment, especially in stabilizing private enterprise investment and stabilizing real estate investment. ** The economic work conference also put forward the "two unswerving" issues, and made relevant institutional arrangements for stabilizing private enterprises and encouraging the development of private enterprises. Such institutional arrangements, coupled with the introduction of relevant policies, will help further encourage the development of the private economy and boost the investment confidence of private enterprises in the future.
Stabilizing consumption is also a very important aspect on the demand side. To stabilize consumption, we need to stabilize employment, because only by stabilizing employment can we stabilize income, and only by stabilizing income can we stabilize consumption.
With regard to foreign trade in the troika, the economic work conference raised the issue of new momentum for foreign trade, indicating that it is necessary to continue to play the role of foreign trade in China's economic development. Although China's dependence on foreign trade has declined in recent years, from the perspective of international level, China's dependence on foreign trade is still relatively high. Therefore, imports and exports play a very important role in China's economic growth. **The Economic Work Conference made arrangements in foreign trade, especially mentioning that high-level opening up plays a vital role in stabilizing foreign trade.
The economic work conference also raised the issue of the consistency of macroeconomic policy orientation. CMF China Macroeconomic Forum once did a special discussion on the fallacy of macro policy synthesis, from the past few years, because the macro policy was introduced in different departments, although the policy is reasonable from the perspective of different departments, but after the policies are put together, due to the lack of coordination of macro policies, the effect of the policy may cancel each other, or even have a negative effect. Therefore, it is very important to avoid the fallacy of the synthesis of macroeconomic policies and strengthen the consistency of policy orientation.
2. Supply side
In view of the structural factors that lead to the economic downturn, the ** Economic Work Conference proposed to exert force from the supply side, transform the growth momentum, improve the total factor productivity, and then improve the potential GDP growth level and achieve the improvement of economic quality.
The slowdown in China's economic growth in recent years is, to a certain extent, a general law. International experience shows that when the per capita GDP reaches about 10,000-15,000 US dollars, most countries and regions will encounter the problem of economic slowdown. However, it is important to see whether the economic slowdown will eventually emerge from the middle-income trap, and if per capita output can increase along with the slowdown, we may be able to get out of the trap and move from middle-income to high-income development. HowThe key to maintaining an increase in per capita output while slowing down economic growth is to realize the transformation of growth mode and growth momentum, and improve total factor productivity.
* The Economic Work Conference made important arrangements in this regard, proposing to develop new quality productive forces. New quality productivity is an important new growth driver. **The general secretary pointed out that it is necessary to integrate scientific and technological innovation resources, lead the development of strategic emerging industries and future industries, and accelerate the formation of new quality productivity. In fact, new quality productivity refers to the integration and development of innovation and industry, disruptive technologies and cutting-edge technologies, to give birth to new industries, new models and new kinetic energy. In addition to that,The improvement of consumption level, the expansion of consumption scale, new urbanization, new momentum of foreign trade, population quality dividend, and structural reform dividend are all new momentum that we can rely on in the future.
How to realize the transformation of new and old growth momentum, the ** Economic Work Conference proposed to "establish first and then break". That is to say, it is necessary to continue to maintain and give full play to the role of traditional economic growth momentum, and at the same time strive to tap and cultivate new growth momentum, which is conducive to raising the level of potential growth, and it is entirely possible to maintain an average annual GDP growth rate of about 5% in the future, so that socialist modernization can be basically realized by 2035. We have confidence in our country's future economic growth.
How to cultivate new kinetic energy and improve total factor productivity, the first economic work conference proposed to lead the construction of a modern industrial system with scientific and technological innovation. We should take a new path of industrialization, that is, to improve the efficiency and core competitiveness of economic quality through the upgrading of industrial technology and the modernization of the industrial chain, and to realize the industrialized growth mode in the form of digitalization, intelligence, informatization, greening and high-end through the transformation and upgrading of the industrial structure and the innovation of industrial science and technology, so that we can build a modern industrial system with high scientific and technological content, good economic benefits, low resource consumption, less environmental pollution and full play of human resources.
A large number of experiences and theories have proved that the cultivation of new drivers and the improvement of total factor productivity depend on market-oriented reforms. Therefore, in the future, we must strengthen our determination to reform, build a high-level socialist market economy system, promote high-level opening up, promote scientific and technological innovation through institutional innovation, lead the construction of a modern industrial system through scientific and technological innovation, improve the potential growth level, and achieve qualitative improvement of economic growth.