Economist Wu Xiaoqiu should stop stimulating domestic demand

Mondo Finance Updated on 2024-01-29

In the past few days, economist Wu Xiaoqiu has become popular again, and his remarks have aroused widespread attention.

This time, he directly pointed to the capital market and the crux of China's **

The biggest problem in the development of China's capital market is the problem of positioning, the "financing market" is unsustainable, and it must be changed from "financing" to "investment" to strengthen the pivotal role of the capital market.

**I've talked a lot before, and I won't say more today, mourning its misfortune and anger, it's useless to say more!

I have always known that there is a mistake, I know where the mistake is, but I don't change it, maybe it is too difficult to change it under the layers of interests.

Today I would like to talk about something else, and Wu Xiaoqiu made a thought-provoking point in his recent speech:

Don't stimulate domestic demand anymore, because the common people have no income at all, and their pockets are cleaner than their faces!Consumption does not need a stimulus, it is not generated through stimulus, but is based on the fact that people have money and income in their hands.

His point is actually quite concise:To promote consumption, the key is to drum the trouser pockets of the peopleOnly on this basis can people rest assured that they can "eat well, drink well, and play well".

In the past few years, with the great power game, the three-year epidemic, and the economic downturn, people's actual feelings have become worse and worse.

From top to bottom, from the official to the non-governmental, they are looking for a "prescription" for economic rejuvenation.

In the current macro context, we are all talking about insufficient domestic demand, and in China it is mainly due to insufficient consumption.

Therefore, the prescription prescribed by many experts is to vigorously stimulate domestic demand, stimulate consumption, and change the economy from investment-driven to consumption-driven.

They will say that if you look at developed countries such as the United States, Europe, and Japan, the proportion of final consumption in GDP is generally more than 70%, for example, in 2020, the proportion of final consumption in GDP in the United States was 82%, 74% in the European Union, 75% in Japan, 64% in South Korea, and 73% in India.

And our final consumption in 2021 has just reached 55% of GDP, which is still the basis for consumption to occupy a large part.

But do you know the percentage of disposable income in these countries?

In the United States, it is above 80 percent, in Europe and in Japan, it is above 60 or 70 percent, and the disposable income of Chinese residents accounts for only a pitiful 43 percent of the national income, which is almost the lowest in the world.

** It is also proposed to stimulate consumption 20 articles, but what about the effect?

The people's desire to consume is getting lower and lower, and it seems that they have fallen into a dilemma of more stimulation and contraction.

Consumption is determined by the economic situation of the people, just like Wu Xiaoqiu said that the people's pockets are cleaner than their faces, what do you tell him to consume?

If it is just to stimulate domestic demand, only pay attention to how the people spend money, and do not want to try to increase the income of the people, it is in vain to formulate 50 estimates to stimulate consumption, after all, it is difficult for a good woman to cook without rice.

Simply shouting to stimulate consumption is just an empty slogan, that is, a headache, a pain in the feet, or even putting the cart before the horse.

I knowMany institutions and experts are staring at the "big cake" of residents' deposits.

According to the report on the third quarter of monetary execution released by the central bank, at the end of September this year, the balance of household deposits reached 134 trillion yuan, with a year-on-year growth rate of 165%, residents' deposits are still "soaring".

Many ordinary people are completely indifferent to this amount of resident deposits, and many netizens say how come I don't know that I have so many deposits

We should be able to see the problem from the 2023 China Wealth Report released by CICC this year.

This diagram should be clear enough that I won't expand on it.

The central bank said in the report that since the beginning of this year, it has continued to play the role of a market-oriented adjustment mechanism for deposit interest rates. Enhance the investment and consumption momentum of enterprises and residents, and create favorable conditions for banks to make profits in the real economy.

Obviously, if residents' deposits continue to "soar", then the deposit rate will definitely fall.

But does this stimulate the consumption you want?Even if this is the wealth of a small number of people, it must be a big question mark.

Numerically, our GDP is still rising year by year, but ordinary people do not feel the warmth of this prosperity, and the pressure on their lives is becoming heavier and heavier.

Why hasn't economic growth penetrated the grassroots?

Is there some kind of structural problem with this?

This disconnect between the economy and people's livelihood and well-being makes people think deeply.

The phenomenon of a house draining the savings of several generations is very terrifying.

The three mountains of housing, medical care, and education in the new era are not only economic problems, but also huge social problems.

The pattern of income distribution is unbalanced, and the gap between the rich and the poor has widened rather than narrowed, further exacerbating the shortage of domestic demand.

* It is necessary to pay attention to the distribution and social security system, and improve the social security system such as pension, medical care, and unemployment, so that people can have more sense of security and happiness.

Is there a need to discuss an undifferentiated social security system?Whether it is inside or outside the system, whether it is a state-owned enterprise or a private enterprise.

In fact, if you calculate this financial account, the amount of money needed is not as large as you think.

The vitality of the consumer market is not simply achieved through stimulation, but needs the support of economic development, and the people need to have enough strength and confidence to support.

By raising the real income level of low- and middle-income earners, the problem of income distribution imbalance will be improved, so as to stimulate their consumption demand.

More precise financial policies should be introduced to support the financing needs of micro, small and medium-sized enterprises, reduce their financing costs, and improve the sustainability of their development.

Give them more policy support and tax incentives, so that more people have the opportunity to start a business, so as to promote the diversification of the economy and reduce the concentration of wealth.

Most of our people's income comes from private and small and medium-sized enterprises, which are the main drivers of employment and consumption.

In this era when there are secrets hidden in the trouser pockets, to stimulate consumption, we need to start from two aspects: increasing income and reducing burden, in order to find the real password.

The fundamental way out of expanding domestic demand is to increase the proportion of residents' disposable income in GDP.

When residents' incomes increase, consumption will improve, China's internal circulation will be unimpeded, and China's economy will develop healthily.

Only by truly satisfying the people's basic living needs, raising their income levels, and optimizing the social security system can we achieve all-round economic development and a happy life for the people.

If we can truly put the people first and solve the practical problems of the people through comprehensive livelihood policies, then the market will usher in a virtuous circle.

Behind China's economic development, we cannot ignore the actual feelings of ordinary people, so that China's prosperity is no longer limited to numbers, but truly integrated into the happy life of thousands of households.

The key to stimulating domestic demand lies in making the dividends of economic development truly benefit every family and every ordinary person.

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