Pan Xiangdong is a director of the China Chief Economist Forum and the chief economist of the Qirhenium Research Institute
As 2023 draws to a close, China's economy has a long-term positive trend while overcoming problems and challenges such as insufficient effective demand, overcapacity in some industries, still many risks and hidden dangers, and the increasing complexity, severity and uncertainty of the external environment.
Looking back on this year, China's GDP has maintained a low growth rate, focusing on structural adjustment and changing the mode of development, and macro indicators such as foreign trade and investment have fluctuated from time to time, and consumption has become an important supporting force for economic growth. How to understand the expression "virtuous circle of mutual promotion of consumption and investment" put forward by this year's ** economic work conference?What is the relationship between resolving local debt risks and resolving risks in real estate and small and medium-sized financial institutions?How do you view the economic trend in 2024, and what are the business opportunities of new quality productivity?
Focusing on these issues, the 21st Century Business Herald reporter interviewed Pan Xiangdong, director of the China Chief Economist Forum and chief economist of the Qi Rhenium Research Institute. In his view, in the future, China will highlight effective investment, in terms of risk resolution, especially to coordinate the relationship between local debt risk resolution and stable development, areas with high debt risk should develop while turning debt, find a new development path in the process of debt resolution, and areas with low debt risk should be able to develop as quickly as possible in high-quality development. High-tech strategic emerging industries and future industries will become the direction of long-term policy support, and also contain commercialization opportunities.
"21st Century": China has changed from a high GDP growth rate to a low growth rate, and the GDP growth rate is expected to be around 5% in 2023
Pan Xiangdong:As economic development is more prominent and high-quality, this will put forward new requirements and bring about changes to the old models and traditional routes that economic development has relied on before. From the perspective of industry, the transformation of the industrial structure will highlight the background of the new wave of scientific and technological revolution, while focusing on "leading the construction of a modern industrial system with scientific and technological innovation", the investment model also has new requirements, that is, highlighting the "effective investment".
This is due to the diminishing marginal benefits of traditional infrastructure investment, and the future investment model will be transformed into a guide to improving technology, reducing energy consumption and emissions, promoting large-scale equipment renewal and consumer goods trade-in, focusing on supporting key core technology research, new infrastructure construction, energy conservation, emission reduction and carbon reduction, and cultivating new momentum for development.
"21st Century" :* Economic Work Conference proposed "the formation of a virtuous circle of mutual promotion of consumption and investment", how to understand the background and expectations of this proposal?
Pan Xiangdong:The macro background of these proposals, as put forward by the ** Economic Work Conference, is a judgment made on some difficulties and challenges in economic operation in the short term under the expected trend of economic recovery.
The general tone of economic work in 2024 should adhere to the principle of "seeking progress while maintaining stability, promoting stability with progress, and establishing first and then breaking". "Breaking" is intended to solve the drag factors and hidden risks in the domestic economic development. From a macro perspective, it can be expected that the policy will continue to support various economic work.
"21st Century": Especially in terms of stimulating potential consumption, what are the changes in China's consumption patterns and what potentials can be stimulated?
Pan Xiangdong:"Potential consumption" will mainly focus on two aspects, one is new consumption, such as digital consumption, green consumption, health consumption, smart home, entertainment tourism, sports events, domestic "trendy products", etc., these will become new consumption growth points, and the second is to stabilize traditional consumption such as new energy vehicles, electronic products and other bulk consumption, will also become an important part of consumption.
21st Century: Since 2023, which problems in China's economic transformation have been more prominent, and which structural problems have been partially solved?
Pan Xiangdong:The main problems or risks in the economic transformation since 2023 are mainly reflected in four aspects: first, insufficient effective demand, second, overcapacity in some industries, third, weak social expectations, and fourth, there are still many hidden risks, involving key areas such as real estate, local debt, and small and medium-sized financial institutions.
We have also seen that the first level has taken action to resolve these structural problems as a whole, including actively and prudently resolving real estate risks, meeting the reasonable financing needs of real estate enterprises with different ownership systems without discrimination, and promoting the steady and healthy development of the real estate marketIn view of the resolution of local debt risks, the current thinking of debt reduction has been clear and is continuing to advance.
The "21st Century" :* Economic Work Conference proposed to coordinate and resolve the risks of real estate, local debt, small and medium-sized financial institutions, etc., highlighting what kind of signal is sent by these key areas?
Pan Xiangdong:The statement of the meeting added "there are still many risks and hidden dangers", indicating that the importance of risks and hidden dangers has been raised to a new height. In terms of the ranking of risks, the meeting mentioned that "it is necessary to coordinate and resolve the risks of real estate, local debt, and small and medium-sized financial institutions", that is, real estate, local debt, and finance.
Compared with the order of risk expression in 2022, which is real estate, finance, and local debt, it can be seen that the risk ranking of local debt is relatively high this time. On the whole, the proper handling and resolution of the three major risks is a concrete embodiment of overcoming difficulties and challenges in the process of further promoting the economic rebound.
"21st Century": Especially in terms of local debt, the first economic work conference proposed that the overall local debt risk resolution and stable development, the economic provinces should really provoke the beam. What is the relationship between resolving this risk and resolving the risk of real estate and small and medium-sized financial institutions?
Pan Xiangdong:**The Economic Work Conference refers to the risk prevention of real estate, local debts and small and medium-sized financial institutions, indicating that the risk resolution requires the use of overall thinking and systematic methods to promote risk disposal in a steady and orderly manner. At the same time, we should coordinate the relationship between local debt risk resolution and stable development, and areas with high debt risk should develop while turning debt into debt, and find a new development path in the process of debt resolution. It is necessary to be good at revitalizing stock assets and curbing incremental risks.
Local finance is highly dependent on land revenue, and an important part of local revenue is land revenue. At the same time, in the past, real estate credit expansion was closely related to the development cycle of banks, and urban investment platforms were an important area for small and medium-sized financial institutions to invest in assets. Since the second half of 2023, the regulators have made intensive statements, emphasizing financial support for local debt risk resolution, the financial system participating in local debt-to-debt or steady and orderly progress, and cooperating with the financial system to promote local debt resolution through measures such as debt restructuring of commercial banks and replacement of policy-based financial instruments.
So,Whether it is the real estate sector, the local debt sector, or small and medium-sized financial institutions, the three are closely intertwined, and it is easy to affect the whole body when dealing with risks, and it is easy to cause systemic risks if not handled properly. This means that future policies related to risk mitigation need to be more cautious, echoing the formulation of "establishing first and then breaking", ensuring the smooth operation of policies in the process of reform, and steadily advancing without rash progress, so as to coordinate and resolve the risks of real estate, local debt and small and medium-sized financial institutions.
"21st Century": Since 2023, the relationship between real estate supply and demand has undergone major changes, and various localities are also adjusting and optimizing real estate policies in a timely manner, but the market is on a downward trend. How do you view the current real estate risks and the problems that need to be addressed next year?
Pan Xiangdong:From the perspective of property performance, the real estate data in November 2023 weakened overall. From January to November 2023, real estate investment fell by 9 percent year-on-year4%, down 01 point, in the same period, the decline in the sales area of commercial housing expanded by 02 percentage points to -80%, under the background that the operating cash flow of real estate enterprises has not improved, the two-year average growth rate of construction and completion has expanded. Although the current real estate policy continues to exert force, it is also necessary to observe the sustainability of the policy effect.
Since sales are the core of real estate-related data, if sales are difficult to continue to boost, it will be difficult for real estate to get out of the predicament in the short term. From the perspective of real estate policy, it is expected that China will continue to actively and steadily resolve real estate risks, continue to "protect the main body", and accelerate the construction of affordable housing, the construction of "peacetime and emergency" public infrastructure, and the transformation of urban villages.
21st Century: What is your outlook for the economy in 2024?What are some trends to keep an eye on?
Pan Xiangdong:I am still full of confidence in the economy in 2024, although there are some problems in the short-term economic operation, and the foundation for economic repair is not yet solid, but on the basis of a series of stable growth policies, combined with the current situation that China's endogenous economic growth momentum is being repaired, the economy will usher in recovery in 2024.
From the perspective of trends, we can pay attention to potential consumption, effective investment, as well as strategic emerging industries and new quality productivity that are in line with industrial transformation and future development trends.
"21st Century": How to understand the focus of new quality productivity in scientific and technological innovation and commercialization?
Pan Xiangdong:The new quality productivity is a contemporary advanced productive force born from revolutionary breakthroughs in technology, innovative allocation of production factors, and in-depth industrial transformation and upgrading. This formulation focuses on scientific and technological innovation and technological progress as the leading, and creating new value through new technologies, which is different from traditional productivity.
In order to achieve high-quality growth, China's economic growth needs to be transformed from traditional factor input-driven to innovation-driven. At present, the most effective and urgent development direction is undoubtedly the transformation of China's economic development momentum, the upgrading of industrial structure and the strengthening of scientific and technological innovation.
As the great power game enters a new stage, China must accelerate the pace of scientific and technological self-reliance and self-reliance, increase the independent research and development of high-tech industries, and embark on a new path of high-quality development led by scientific and technological innovation.
In this process, high-tech strategic emerging industries and future industries will become the direction of long-term policy support, and also contain commercialization opportunities, including green and low-carbon industries, a new generation of information technology industry, high-end manufacturing industry, modern service industry, biological industry and new materials and other strategic emerging industries, as well as future industries including 6G network, quantum information, gene technology and other future industries will usher in development opportunities.