Recently, Martin Wolff, a well-known British economist, told ** during a seminar on "Globalization and China's Economic Outlook" held by the Center for Globalization (CCG), "Today is a crucial moment in China's economic history, and perhaps it will determine China's economic development prospects in the next 10 to 20 years." ”
Compared to Japan in the 1990s, China is still some way from a high income level, which means there is more potential for growth. In addition, the single reason for Japan's productivity decline has left it with fewer things to do. In these senses, if there were the right policies, China would not be like Japan in the past. ”
Wall's remarks mean two things.
First, China's economy is currently facing a similar situation to Japan, and real estate has become an important factor affecting economic development.
In the 90s, Japan's economy was at its peak, and at its craziest, housing prices in Tokyo alone could buy the whole of the United States.
In 1985, Japan overtook the United States as the world's largest creditor, and Japanese-made products flooded the world.
At that time, Japan became the main target of economic suppression by the United States, and a piece of "Plaza Accord" directly exposed Japan's economic myth and directly caused Japan to lose 30 years.
At that time, the United States deceived Japan by saying that Japan's economic development was overheated, and the appreciation of the yen could help Japan expand overseas markets and establish joint ventures. After the Plaza Accord was signed, the yen appreciated sharply, the domestic bubble expanded dramatically, and eventually the bursting of the real estate bubble caused a long-term stagnation of the Japanese economy.
Looking at the development of the Japanese economy over the past three decades, the Plaza Accord of 1985 was a turning point.
Some analysts have pointed out that after the Plaza Accord, Japan's export competitiveness was hit hard by the appreciation of the yen, and the economy collapsed for more than a decade. Even in the economics community, a considerable number of people believe that the Plaza Accord is a shocking plot laid out by the United States to bring down Japan.
Second, China's average economic level is still not as high as Japan's 1990 level.
Wall believes that the main reason for China's solution to its current economic problems is that we are still not at the per capita level of Japan in 1990, and China still has huge growth potential, and we can avoid falling into the "Japanese dilemma" through development.
Many people may not be happy to hear this, but this is the reality.
In 1990, Japan's GDP per capita was 2540,000 US dollars, according to the latest data, China's per capita GDP in 2023 is 1$270,000. That's nearly double the gap from Japan in 1990.
And there is a huge gap between the purchasing power of the dollar in 1990 and the purchasing power of the dollar today.
There is a huge difference in the economic development of our country, which is why we are still a developing country, and if our per capita level reaches the per capita level of developed countries, we can buy not only the whole of the United States, but even the whole world.
The reason why we have recently focused on promoting common prosperity is because it is the only way to avoid falling into the "Japan dilemma".
Third, deflation is the main problem facing China's economy at present.
Wall warned, "It's very important not to let deflation begin, otherwise prices may persist, and when people expect it, monetary policy will become ineffective and the state will have to adopt a massive fiscal policy, which means a high price." ”
It was because of the bursting of the real estate bubble that Japan's economy fell into a long-term deflation, causing the Japanese economy to lose 30 years.
Wolf thinks:
First, most of China's infrastructure has already been built, and real estate will no longer be able to play an important role in investment.
Second, some parts of China have built unused high-rise buildings in the past, which needs to be avoided in the future.
Third, it is necessary to produce "valuable GDP", that is, GDP that can actually bring benefits to the Chinese people now or in the future.
I have to say that Wall's research on China's economy is still very in-depth, and the suggestions he gives are also pertinent.
Wall is an active advocate of "globalization," and the current US approach is very "embarrassing."
As a Western economist, Wall has been a vocal advocate of globalization. Now the situation has changed.
"One of the ironies in my life is that since the 70s of the 20th century, my main job has been to persuade emerging economies to join globalization, when many developing countries thought that globalization was a conspiracy of developed countries to 'exploit' them, and I spent a lot of effort until the success of South Korea, Singapore and other countries, and the attitude of emerging economies towards globalization changed in the first decade of the 20th century," Wolf said. But now everything is turned upside down, and now it is the developed countries, especially the United States, that are beginning to oppose globalization. ”
In the past 30 years, we have been actively advocating globalization, but the United States is in a small circle.