The full text is 2100 words in total and takes about 6 minutes long.
This article**: Liu Shengjun's overall view (produced by Liu Shengjun Micro Finance).
Text: Liu Shengjun.
At present, the downward pressure on the economy is still significant. From the unemployment rate, the number of online car-hailing, the vacancy rate of office buildings and supermarkets, the price index, residents' deposits, FDI growth rate and other micro indicators, it is not difficult to see that there is a lot of pressure on the troika.
The pressure of consumption mainly comes from the scarring effect after the epidemic. Developed countries generally did not have enough cash to distribute to people during the epidemic, which alleviated the scarring effect. In addition, the "negative wealth effect" caused by the real estate decline has also had a dampening effect on consumption.
The pressure on exports mainly comes from the decoupling and disconnection of the chain promoted by European and American countries.
The pressure of investment mainly comes from the downturn in real estate and the unstable expectations of private enterprises.
To stabilize the economy, we need to make the following four big moves:
1. Stimulate consumption with large sums of money
From 2009 to 2010, China stimulated the economy with a large amount of "four trillion yuan" and unexpectedly reaped the miracle of high-speed rail.
Today, there is a general surplus of infrastructure. It would be unwise to continue to spend money on infrastructure. Good steel should be used on the blade, and consumption is the blade. In the three years of the epidemic, the consumption and overdraft of residents' savings have been significant, and the marginal consumption tendency of residents has been reduced. In addition, due to the continuous increase in leverage since the subprime mortgage crisis, the debt level of the household sector has become significantly high.
Given the population base of 1.4 billion people in China, the ratio of household debt to GDP needs 14 trillion yuan of consumption stimulus according to the strength of 10,000 yuan per capita. China's GDP is now nearly three times that of 2009, and Professor Mao Zhenhua's suggestion of 10 trillion yuan stimulus should be more appropriate.
In the first half of this year, China's household bank deposits increased by 1191 trillion yuan, a record high in 10 years. This indicates that residents are more cautious in the face of uncertainty and less willing to spend. Considering the fact that the savings rate of US residents is low and that of Chinese residents is high, consumption stimulus should be disbursed in the form of consumption vouchers rather than cash.
Don't worry about fiscal deficits. Consumption stimulus has a multiplier effect, invigorating the economy, broadening the tax base, and thus increasing tax revenues. The actual increase in the fiscal deficit due to consumption stimulus will be much smaller than 10 trillion yuan.
Since the proportion of China's household income is too low, large-scale consumption stimulus is also a reasonable correction. In 2000, the per capita disposable income of residents accounted for 46 percent of per capita GDP7%, down to 43% in 2020. From 2001 to 2020, the proportion of ** consumption in final consumption increased by 45%, the proportion of household consumption fell by 45%。
2. Stabilize real estate with a more resolute attitude
Affected by multiple factors such as the three red lines and the epidemic, the pattern of the real estate market has undergone fundamental changes. There should be no more fears of soaring house prices, but efforts should be made to prevent the danger of a real estate collapse. Real estate has become the number one drag on economic growth.
Shan Weijian: China's economy has the ability to continue to grow, and Barron's must work on both the supply side and the demand side to stabilize real estate. Only stabilize the supply side, and it is difficult to improve demand; Only to stimulate the demand side, buyers will not dare to buy because they are worried that the developer will not finish.
Given the grim situation of real estate, it is recommended that: 1) the purchase restrictions be fully lifted; 2) Full resumption of normal financing for developers. "White list" is not advisable, because it will be unfair to companies that are not included in the white list, and the winner should not be "picked"; 3) You can consider using the mortgage interest to deduct personal income tax.
3. Boost the willingness of private enterprises to invest with substantive reforms
The current lying flat mentality of private enterprises is caused by multiple complex factors: 1) the acceleration of major changes unseen in a century, and the increase in uncertainty in the future; 2) Decoupling and chain breaking lead to the wait-and-see or industrial chain transfer mentality of some enterprises; 3) the chilling effect of the "private enterprise exit theory"; 4) weak profitability of the real economy and lack of investment opportunities; 5) The situation of difficult and expensive financing has not been alleviated; 6) Real estate decline. In the first three quarters of 2023, private investment fell by 06%, but after deducting real estate development investment, private investment increased by 9 year-on-year1%。
*: World Bank).
*: Bank of China Research Institute) "31 Articles of the Private Economy" fired the first shot to boost the confidence of private enterprises. Next, concrete implementation and concrete actions are needed, and one action is better than a dozen programs. This year is the 45th anniversary of reform and opening up and the 10th anniversary of the reform of the Third Plenary Session of the 18th Central Committee. 2) Break the administrative monopoly and let state-owned enterprises and private enterprises compete fairly; 3) Financial institutions should return to market-oriented, and the proportion of loans to private enterprises should be increased from the current 1 3 to a reasonable level of 2 3; 4) Take practical actions to punish those who slander private enterprises and incite private enterprises to be unstable.
Fourth, the implementation of "institutional opening-up", "the next China" is still China
Expanding opening-up is the best way to counter "decoupling and chain breaking".
*: Center for Economic Policy Research (CEPR) In recent years, China has taken concrete steps: allowing Tesla and other foreign-funded auto companies to set up wholly-owned enterprises; Master is allowed to issue RMB cards; Unilateral visa exemption for 6 countries including France and Germany, etc.
On this basis, we should meet high standards such as the CPTPP and the China-EU Investment Agreement, and expand institutional opening-up with the historic courage of "unilateral opening-up". Among them, how to ensure the "competitive neutrality" of state-owned enterprises and private enterprises is a prominent issue.
It is suggested that all departments should seriously examine the "hidden discrimination" that is not transparent enough to foreign-funded enterprises and private enterprises, and clean up the relevant policies and procedures with the courage of self-revolution. In order to join the WTO, China revised more than 2,600 laws and regulations at the first level and nearly 20,000 at the local level.
Steady growth, the speed of soldiers, we must stop the emergence of negative cycles in a timely manner. Only "exceeding expectations" can really boost confidence.
Liu Shengjun
Economists who insist on telling the truth.
Political Economy + Big Historical View.
In 2014, he participated in the Prime Minister's Economic Symposium.
Chief Economist of Tianjushi Group.
Liu Shengjun is the founder of Micro Finance.
Member of the Shanghai Economic Committee of the Zhi Gong Party.
Chief expert of Shandong Provincial Human Resources Development Promotion Association.
He is the author of "The Next Decade".
Shandong Heze Dingtao people.