王潇/首都经济贸易大学
trillioninvestmentplan
Attheendof2008,theStateCouncilintroduceda4trillioninvestmentplantostimulateChineseeconomyandoffsettheeffectfromthesubprimecrisisofAmerica.ThisinvestmentplanindeedbroughtabrilliantfigureonthegrowthrateofChineseGDP,andtheattendantresultisthefull-blowninflation.Tocoordinatetheinvestment,thePROBtookamoderatelyloosemonetarypolicy.So,largeamountmoneywasreleasedintothemarket.In2009,thegrowthrateofM2is29.7%.ComparedwiththeCPI,Ithinkthisindexismoreintuitive.Withthelargeinvestment,agreatcredittiderushedtheChinesemarket.Indidn’ttakealongtimetomakechina’seconomyoverheated.TostabilizethespeedofChineseeconomy,thePROBlaterraisedthedepositreserveratiofor8times,from13.5%to21.5%.Itledtoaseriousresult----whichthecapitalchainshrankmoreandmoretightly.Then,sufferedaseverefundsstrandbreak,hugeamountofsmallandmediumprivateenterprises(especiallyinWenzhou)wentbankruptoneafteranother.
Inthisprocess,whatIwanttosayisthatIdidn’tseeanyself-governedmeasurefromthePROB.Allthingstheydidweretocoordinatethefiscalpolicyandusethemonetarypolicytoeliminatetheadverseeffectofthefiscalpolicy.Ifthecentralbankisindependentofanygovernmentmechanism,justlikeFED,beforefacingthiskindofsituationalongperiodshouldtheytakeothermeasures,suchasraisingtheinterestrate.Becausethisphenomenonmeansthatthepriceofthecapitalishigherandhigher.Thesupplyofmoneyisfarbelowthedemandofitinthemarket.ButthePROBcontinuednevereasethemonetary,themajorityofsmallandmediumprivateenterpriseseventuallywenttotheirownway----usury.Unfortunately,theusuryalsocouldn’tstopthoseprivateenterprisesgoingtodie.AftertheclosureinWenzhouhappened,theactuallyaverageusuryinterestratehadraisedto39.19%.
Tosomeextent,Idon’tthinksomepartofthefiscalpolicyisconsideredthoroughly.Thelargeamountofinvestmentfromthegovernmentinthisperiodhasmadeagreatcrowdingouteffecttothewholeprivateenterprises.Fromthepointoftheaggregatedemand,ifthegovernmentexpandstheinvestmentdemand,theinterestratemustraisesoon.Then,it’llmuffletheprivateinvestmenttoweakentheexpansioneffectfromthegovernmentinvestment.However,inchina,themacro–controlmadethePROBfailtoraisetheinterestrate,andtheinflationwasalsoseriousatthattime----theCPIoncecrossedthewarningline.So,itwasaninevitableresult.Withthisresult,therisingpriceoftherawmaterialbecamethelaststrawthatbreaksthecamelforthemajorityofprivateenterprises,”stoppingproducingmeansdeath,continuingproducingwillmakeusdeadsooner.”Aprivateentrepreneursaidthat.
However,allthesesacrificesdidn’tmakeagoodresult.Facingthisgrimsituation----theindustrialisunprofitable,andthefundsdevaluedeveryday----alargenumberofcapitalrushintootherbusinesses,especiallyintotherealestate.Fromthatperiod,thehousepriceincreasedrapidlyinnearlyeverywhereinchina.Andnow,everyonecanseethenegativeconsequencesofthiscrazyspeculative----theWenzhourealestategroupfinallyescapedabroad,andtheresidentialareainOrdosnowiscalledthe“ghostcity”.Moreover,thehotmoneydidnotonlyrushintotherealestate,butnearlyeverywhere.Suchastheancientantique,tea,etc.,evenagriculturalandsidelineproductslikethegarlic,thebeans,theginger,etc.Whatismore,manygovernment-investingprojectsnowappearitsmalpractice----manyrailwayprojects,highwayandairportwerebuiltexcessively,especiallyinthoseinsomesecondorthird-tiercities.Theinvestmentwhichwasfromourtaxmayonlyrecoverthecostafterseveraldecades.
Althoughthegovernmenttookalotofmeasurestocurbspeculativebehaviors,theseentirephenomenonpointedoutthemostimportantproblem----china’seconomicstructurehasbeenseverelopsided.Thismightbetheworstnewsforchina’seconomy’sfuture.ExceptalargenumberofGDP,wedidn’tcultivateanyemergingindustrywhichwillleadtheworld.Thatmeansthepisionoftheworkforusintheworldwon’tchangeinthefuture.JustlikewhattheWallStreetJournalistsaid,thefundamentalflawinChina'seconomyisthatitdoesn'tserveitsconsumers.Thisgetseconomictheorybackward:Weproduceinordertoconsumeandweinvestinordertobeabletoproducemore.Acountrycannotincreaseitsinvestmentrelativetooutputforever.Ultimately,China'seconomicstrategyisadeadendbecause,afterawhile,suchinvestmentbecomesunprofitable.Theirprofitsslumped.Itdoesn’tmeanthateverythinginthisplaniswrong.ButwhatImostwanttosayistheseseriesofpolicymakeschinaintostrategicmistakesforoureconomy’sdevelopmentinthefuture.
Thoughit’satoughsituation,stimuliplanalsohasitsmerit.ThoseamongtheChinabullswhoacknowledgewastefulinvestmentstillsuggesttheconsumertakeupthebaton,andensuredecentgrowth.Butifcompaniesaretoslashinvestment,it’llhurtconsumerincomesasunemploymentrises.Thatrisksademanddeflationspiralwhichissuretoincreasethedebtburdenandsharplyslowdowngrowth,nottomentionthefinancialsystem’sstress.
Thisyear’sfiscalandmonetarypolicy
Since2012,China'seconomicgrowthcontinueditsdeceleratingtrend,butwiththe“keepinggrowth”policiesmakingitsefforts,theeconomyranslowlyintoasmoothtrend,thenumberofpositivefactorshasincreased;wecanachievetheexpectedgrowthtargetsduringthewholeyear.ExpectedannualGDPgrew7.7%,andtheCPIrose2.6percent.China'seconomyhasslowedsharplyoverthepastseveralquarters.Inthethirdquarterof2012,GDProse7.4%comparedwiththeyear-earlierperiod,theslowestpaceofexpansionsincetheglobalfinancialcrisisof2009.Whilemanufacturingandhousinghavereboundedsincethenandmostanalystsexpectthecurrentquartertoregistergrowthofaround8%,fewexpectareturntotheyearswhenChinaregularlyregistereddouble-digitgrowth.
Andbythethreemajordecelerationfactorsdraggeddowntheindustrialproductioncontinuedslowdown,andtheyarethedeclineinexports,investmentininfrastructureandrealestateinvestmentfatigue.Fromthemacro-controlpolicyshifttosteadygrowthsincethefourthquarterof2011,emphasizedthecombinationofsteadygrowthandadjustthestructure,stablegrowthandcontrolpricestakingintoaccountthemorecomplexoperationofmacro-controlpolicies.Bythefinancialinstrumentsofthereserveratio,openingmarketoperationsandchangetheinterestrate,withthestructuraltaxcutsandtaxincentivesfortheSMEs,China'seconomicgrowthshowingastabilizationsituationintheslow.
There’sstillahighlightinthisperiodwhichissodifferentwiththesametimeinotheryears.Since2012,theemploymentandresidentincomecontinuedincreasing.Itdidn’tdeclinewiththeeconomicslowdown.Inthefirsttothethirdquarters,10.24millionurbanjobscompletedthefullyeartargetof114%.Fromthespecialsurveyoftheflowofmigrantworkers,thegrowthrateofthefirstthreequartersoftheflowofmigrantworkerswhowereoutofmorethansixmonthsinthecentralandwesternregionshadanincreaseof5.5%and5.6%.Respectively,itwasabout4percenthigherthantheeasternpart.
Long-termaccumulationofChina'seconomicstructuralproblemsandperiodicdecelerationissuesareintertwinedwithsomeoftheoutstandingissuesintherunningoftheeconomy,mainlyinthefollowingaspects.Firstofall,theinternationalenvironmentfortheeconomicoperationisgrimnow.Foreigninvestmentandtradearefacingheavierpressurenow.Manycountrieshadaslowdownin2012withdifferentlevels.Facingthelargedebtintheirownnations,especiallythosewhoweretheheaviestbuyersofChinesegoodsinthepast,thewestcountrieswon’tplacethesamenumberoforderlikethepast.Whatismore,thereisaratraceintheinternationalmarket,somecountriesdriftintotheprotectionism,suchasthePolysilicon.Then,alargeamountofquantityandstructuralintensificationgoesworsenow,andtheindustrialenterprisesbusinessisextremelydifficult.Fromthisyear,industrialenterprises’businesseswereinthetrendofdeterioration.Inthefirsthalfoftheyear,loss-makingfirmsraisedto54236forabout360billionYuancausedbythedeclineofexport,thefactorcostpressureandfacingthedoublepressureofde-stockingandde-productivity.Whatismore,theprivatelending’sriskwasexposed,theamountofbanks’badloanscontinuouslyincreasedfromthelast3quarters.Everycreditorintensifytopressforpaymentofthedebt,sostrugglingdebtorswerejustlikebeingaddedinsulttotheirinjuries.Also,housingprice’sstabilityortheexpectationofeconomicgrowth?Ithasbeenamoreandmoredifficultproblemtochoose.Intermsoftheeconomicpressure,therealestateisthepillarindustryofthedomesticeconomy.Itsdevelopinginvestmentdrivesmanyheavyandlightindustries,andtherevenuefromlandsalescanhelplocalgovernmentstofacetheirdebt.Buteverycoinhas2sides.Becauseofthedramaticriseofthehousepriceinlastfewyears,theresidualincomeratewasfarbelowit,thecommonpeople’scomplainsforthehigherandhigherpressureforbuyingahouseareheardeverywhere.Last,butnottheleast,inthenextperiod,theslowdownofeconomymaycauseamoreseriousemployenvironment.Manylaboroutputprovinceshadsporadicphenomenonthatsomepeasant-workerswentbackhomeinadvance.
Allthesephenomenonmeansthatchina’seconomy’sfuturewillnotsoexpectedasin2007.
Lookingforwardtothefuture
Standingonthealternatingperiodoftheoldandthenewgovernmentteamandseeingthehugechangeinchina’spoliticalstage,Ihavetosaythatuncertainfactorsinthefuturearestilltoomuch.Anewpoliticalcirclealsomeansaneweconomiccircle.Facingthecurrentsituationofchina’seconomy,Ithinkthegovernmentneedstopreparealotofmeasurestokeepchina’seconomyrunningcontinuously.Atpresent,therearemanyproblemswhichhavehinderedchina’seconomy’sdevelopment,suchasgovernmentofficials’corruptions,thelowqualityofGDP,andtheheavytaxonthemajorityofsmallandmediumprivateenterprises.WiththeCPCnationalcongressmeeting’sopen,Ithinkthegovernmentpolicymayturnthepointfromexportgoodstoboostingthedomesticconsumption.
Fewdaysago,thenewleaderssenttheirstrongestsignalyetthattheirtopeconomicpriorityistoremaketheeconomysoitreliesmoreondomesticdemandandlessonexportsandinvestmentincapital-intensivestate-ownedcompanies,evenifthatreducesshort-termgrowth.Theywantedtoboostimportsandspeedtheintegrationofruralmigrantsintocitiesaswaystoboostdomesticconsumption.Chinaneededtoshow'morecouragetoreform,'thestatementsaid.
Whatismore,governmentshouldencourageandguidetheprivateinvestmentdevelopinginahealthyenvironment.Yearsago,whengovernmentneededtodevelopthecoalmining,ithadconvenedmanyprivateinvestments.However,aftersomemineownerexploitedsuccessfully,thegovernmentretrievetheminebylegalmeans.Obviously,thegovernmenthastherightandtheobligationtomanagethenaturalresources,andIalsoagreewithitsnecessary,butitindeeddebilitatedthewillingofprivateinvestmenttoexplorethenewindustry.Atthistimewhenchina’seconomywentslowdown,itwillimpedeChineseenterprises’explorationonthenewindustry,justlikeshalegas’sexploration.So,Ithinkprivateinvestmentwillbealsosignificantforchina’seconomicdevelopmentinthefuture.
Thegovernmentmaycontinueitspro-activefiscalpolicyandmoderateeasingofmonetarypolicy.Fromthemeeting,theM2mayincreaseabout14%,butIthinkthedirectionoftheinvestmentwillbechanged.
Conclusion
Throughoutthefiscalandmonetarypolicyinrecentyears,whatisobviousforusistheguidancemadeagraveconsequenceinchina.ThereasonwhythegovernmentishotfortheamountofGDPisthatthehigherGDPgrowthratemeanshigheramountoftax.Butnow,theheavytaxhasbeenthelaststrawforSMEsintrouble.
Unfortunately,theheavytaxdidn’tgetaconvenientlifeforus.Thegovernmentusedourtaxtoinvestalot,butitsometimesseemstobringaterribleresult.Therearemanysunsetindustrieswhichreceivedlargeinvestment.Thismadethattheproductiveefficiencywasextremelylow.Chineseindustries’developmentwasbackoff.Whatismore,themostflagrantproblemisthatthismeasurehasencouragedlargeamountofcorruptionbreeding.Becausethattheinvestmentwaspushedfromthetoptothebottomofthegovernment,theofficialsactuallygotvastopportunitiesfortherent-seeking.WhatIalsowanttosayisthatfromthecentralgovernmenttothelocalgovernment,therewasamultiplierfortheinvestment.So,theamountwasmoremuchmorethan4trillions.Whatismore,becausethatalltheseprojectswereinthechargeofofficials,thecommonpeoplecan’tgetanychancetogettheseprojects.Thefinallyresultobviouslyshouldbethatthestateadvancesastheprivatesectorretreats.
JustlikewhatwassaidinProfessorAndrewWedeman’snewbook,DoubleParadox:RapidGrowthandRisingCorruptioninChina,thecorruptioninChinaresemblessomeoftheworstpredatoryformsfoundincountrieswhererampantgrafthaswreakedeconomichavoc.OneofthedirtysecretsofhighspeedgrowthintheEastAsianTigersisthatthedevelopmentalstatesrestedonafoundationofcorruption.Moneyflowedfrombusinesstotherulingparty,whichredistributedittopoliticalstalwartsandvoterstoforgestablerulingcoalitions.
ChinaisdifferentbecausetheCommunistPartydoesnotdependoninjectionsofcashfromtheprivatesector.Asaresult,whereasdirtymoneywasanintegralpartofthedevelopmentalsuccessinSouthKorea,Taiwan,andJapan,inChinacorruptionfitstheclassicdefinition─themisuseofpublicauthorityforprivategain.Strippedtoitsbarestessentials,economicreforminChinainvolvesthetransferofpropertyrightsfromthestatetothemarket.Thenominalvalueoftheseassetsisoftenwellbelowtheirmarketvalue.Soifthebuyercangettheassetatitslowstate-setvalue,theycanearnwindfallprofitsoftenbysimplyresellingcontrolrightstoathirdparty.Theexistenceoflargewindfallprofitscreatesstrongincentivesforofficialstodemandbribesfromrecipientsandforbuyerstokickbackashareoftheexpectedwindfallprofit.Farfromstimulatingrapidgrowth,corruptioninChinafeedsoffrapidgrowth.Inessence,corruptofficialsarestrippingoffashareoftheprofitscreatedbyreform.
Inthelongterm,graftwillharmtheChineseeconomy─wecanreadilyseetheharmfuleffects.Ifcorruptionwerenotcontrolledthenitwouldbegintobecomemoreofadragongrowthrates,particularlyastheextentofassettransfersdecreaseandoverallgrowthratesslow.Butcorruptionalonewouldnotpushtheeconomyintocollapse.IhavemoreconfidenceinChina’swaroncorruptionthanothers;notbecauseitwillsignificantlyreducecorruption,butinthemuchmoremodestsensethattheyhavemanagedtopreventtheproblemgettingsignificantlyworse.
So,thekeypointforchina’seconomicandpoliticalmechanisminthefutureistheunfairdistributionofbenefits.Theofficialsaresorichthattheirconsumingwillingisfarlowerthantheirwealthproportioninthiscountry.China’snexteconomycycleneedsnotonlyproperfiscalandmonetarypolicies,butalsostrictimplementationsystem.
Reference:
Thechina’seconomy’sannualdatawasfoundonChinaStatisticalYearbookandAlmanacsofchina’sfinanceandbanking.
标签：贸易大学论文; 首都经济论文; Acountrycannotincreaseitsinvestmentrelativetooutputforever论文;