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How bad is the Chinese economy?
The macro data in July was weak, smashing many optimistic judgments that economists expect the bottom of the economy to rebound in the middle of the year, and major institutions began to adjust their expectations for an annual growth of 8% to 9%. How bad is the Chinese economy? In July, the year-on-year increase in CPI fell to a two-and-a-half-year rate. At the same time, both import and export growth rates fell, and the growth rate of exports was 1%, far lower than the 11.3% level in June, while the import growth rate was 4.7%, which was also lower than that in June. 6.3% increase; at the same time, key figures such as industrial added value and fixed asset investment are also lower than market expectations. The lack of figures is only the beginning. When everyone argues that the macroeconomic hard landing or soft landing, the central policy level is still hesitant, and the hard landing on the physical level has begun. At the same time, all localities began to use the "stable growth" as a self-rescue operation for signs. They planned various types of projects, and Ningbo, Nanjing and Changsha introduced different versions of the stimulus plan. Among them, Changsha announced that it plans to invest more than 800 billion yuan, and rumors that Guizhou will introduce a development plan of up to 3 trillion yuan, which the outside world calls "local version of four trillion." Compared with the previous 4 trillion in 2009, what is the difference between the local version of 4 trillion? In the year of 4 trillion yuan, the central government out of part of the total GDP of 5% of the year, mainly through government finance and bank financing to support the source of funds; in contrast, the local version of the four trillion funds source is not clear, and the stimulus is high It is awkward. It should not be overlooked that local governments are also the main players in the market. Under the depression, the local government's days are not good, the fiscal revenue growth slows down, and there are many local government bankruptcy rumors. According to the Ministry of Finance of China, the national fiscal revenue in July was 1,067.2 billion yuan, an increase of 80.8 billion yuan, an increase of 8.2%. The growth rate continued to slow down from 9.8% in June. The Ministry of Finance also slowed economic growth as low tax revenue. One of the main reasons for the increase. Compared with last year's revenue growth of more than 24%, if it is separated from the world, especially considering that the local government's mobile financial resources are half of the land transfer fees, this year has seen a sharp decline. Money is not omnipotent. No money is impossible. The lack of tax revenue is the driving force of the local version of 4 trillion yuan, and it is also the shortcoming. Recently, in addition to the four trillions of local versions, we have heard more about the news related to taxes and fees. From Shenyang to Wuhan, it is also logical to close the door because of fear of counterfeiting by merchants. In contrast, Changsha, compared with the target of 800 billion yuan in its stimulus plan, the total local fiscal revenue of Changsha City in 2011 was 66.811 billion yuan, and the city's GDP reached 561.93 billion yuan. According to media reports, the completion of key projects in Changsha in the first half of the year was only 31% of the annual plan, and the cumulative investment in major business projects was only 21.78% of the annual plan; according to incomplete statistics, as of the end of June, major projects were completed in 2012. The investment amount is only 5.604 billion yuan. Looking further, without the clear support of financial systems such as banks and bond markets, it is suspicious that the current local 4 trillion can get enough financing. It is not difficult to see that the local version of the 4 trillion starting point is still a political achievement, and the investment impulse is packaged in the name of “stable growthâ€. The local government has drawn a big pie under the tight financial resources. The local government’s wishful thinking is nothing more than: to combine the regional policy and industrial policy to obtain project planning. Once approved by the National Development and Reform Commission, it will attract investment and various preferential conditions. Foreign funds, the government itself can not get much real gold. In other words, the local government drew a pie and tried to obtain policy and financial support from all parties as a blueprint. The problem is that if the overall policy is not enough, the local version of the four trillions is likely to be difficult to become a big climate, just the illusion of "the curse of others." The author has written many times to analyze the many shortcomings of 4 trillion yuan (see "One 4 trillion is enough"), and the local version of 4 trillion also has similar problems. Investment pulls quickly, but local governments do not have the ability to select projects with the most market potential and do not have the ability to operate projects. After investing heavily, it is often just adding new capacity to industries that have already had overcapacity, or betting on the wrong technical direction. Even if there are private enterprises involved in the project, it is often because the relationship with the government is too close, similar to the community of government and business interests. In the meantime, the corruption is often irrelevant, and its failure is often difficult to clear out quickly. After the mistakes are superimposed, it is often difficult to correct. Finally, it is deliberately brewing into a global collapse. The recent collapse of the photovoltaic industry is devastating, and the government behind it is tangible. The hand pushes the "credit". Looking back, what happened to the Chinese economy? From the perspective of classical growth theory, growth is often directly related to technological progress, capital investment, and labor conditions. As a result, China’s past economic growth momentum has come from cheap labor, reform and opening up, and accession to the WTO. The time has passed, regardless of demographic dividends or institutional dividends, which have been exhausted in the past three decades of rapid growth, even when the current liberalization Population policies are also hard to bring substantial momentum to economic growth. The real world does not believe in miracles, and the old days have become a yellow flower yesterday. The slowdown of China's economy will be a long-term trend. The recent deterioration of the external environment has only made this process ahead of schedule. Today's economic downturn is only the beginning. In the traditional analysis framework of investment, export and consumption traditional “three carriagesâ€, the proportion of investment is too large, relying too much on exports, and the lack of household consumption is often criticized; for this reason, once the export goes down, the sound of economic “tune-control†is endless. Economics is an exotic product. In the last 30 years, it has become a domestic scholarship. In reality, there are often disputes between “problems and doctrinesâ€, such as inflation and currency overshoot, such as excessive investment and insufficient consumption, Keynesianism and the Austrian school, and even Markets, governments, etc., not only gradually drift away from the original definition, but also become a dispute of nouns and even ideology. In fact, excessive investment in China is only an appearance. Even if investment is excessive, it is also a false problem. From the perspective of per capita capital stock, China is far lower than the United States and still needs investment, but the problem is that it requires efficient investment. As pointed out in a report by HSBC, China's per capita capital stock in 2010 was about 10,000 US dollars, less than 8% of the US, and about 17% of South Korea. China’s excessive investment is actually just an investment overturn. China’s investment is excessive. In fact, it’s just an investment error. What is the crux of the problem? Under the system of long-term financial repression, people are abnormally saving, interest rates are artificially depressed, industry access is restricted, and capital allocation is different from "state" and "people". The administrative hand's forced interference with the natural decline of the economic cycle will inevitably lead to economic imbalance. Under the push of 4 trillion yuan, most of the bank's funds entered local governments and state-owned enterprises projects, which not only caused inflation under the impetus of high-priced credit, but also caused a lot of wrong investment. Ineffective investment can only create excess capacity, and also squeeze profits of private enterprises. . Therefore, one of the root causes of the current decline in China's return on investment is precisely the government's dominance of investment. In recent years, huge amounts of credit have been placed, and the exchange of GDP has been guaranteed. The investment and financing system reform has been said for 30 years, but there is no fundamental progress. The administrative monopoly on financial resources must be broken, so that it is possible to regain growth momentum in the long run. It can be seen that no matter whether the local version of 4 trillion or the central version of 4 trillion, it is not necessary to solve the economic difficulties. China does not need four trillion yuan and needs further reforms. Future economic growth depends on the improvement of the total factor growth rate. In the short term, counter-cyclical regulation policies, such as structural easing monetary policy and overall tax reduction, may be used in the medium and long term. The road to reform should start from defining the boundary of government power, let the government withdraw from the arena, return to the role of rule-makers, and strengthen the institutionalized constraints on its own power. In other words, if the local version of 4 trillion is to be effective, unless the local government starts from the appeal clause seriously, the rule makers pursue it. Further, there is a further differentiation between the localities. If the incentives are properly guided, the local governments with strong future rights protection and high credibility will win other regions in attracting investment. Otherwise, it is difficult to impress the hearts of private enterprises, such as certain areas that once forcibly reclaimed coal in the hands of coal bosses, by policy concessions. It is believed that it is difficult to recapture capital in the short term. Once the government establishes the credibility of the commitment, it will certainly help create a good market economy. For example, allowing private enterprises to use financial resources to enter into the protection of monopoly industries will inevitably help private enterprises to make long-term plans, and will also contribute to the overall improvement of total factor productivity, which will constitute a strong support for future growth. The so-called Chinese national enterprises love to make quick money. It is just a helpless response to the change of the dynasty.