On several hot issues in China’s current economy

Guest: Liu Yilei, Chief Consultant of China (Shenzhen) Research Institute for Comprehensive Development and Chairman of China Tongzheng Digital Economy Research Center.

Editor’s Note: At the beginning of 2020, Liu Yilei, a famous economist, chief consultant of China (Shenzhen) Comprehensive Development Research Institute, president of China Western Economic Development and Reform Research Institute of Xinjiang University, chairman of China Tongzheng Digital Economy Research Center, former chief economist of China Investment Consulting Company, and former deputy secretary-general of Xinjiang Corps, was interviewed by Pan Ying, a reporter from Xinjiang Branch of Xinhua News Agency, and analyzed several hot issues in China’s current economy.

Judging from the current economic situation, some opinions and suggestions at that time have been verified. The following is the main content of the interview.

I. Views on the national economic situation in 2019

Not long ago, the Central Economic Work Conference was just held. It made a penetrating analysis of this year’s economic situation, talked about achievements, difficulties and problems, and the downward pressure was still great, which was objective and accurate.

From the current point of view, the current economic situation is still relatively difficult, with four obvious characteristics:

First of all, the traditional "troika" that drives economic growth is actually very weak and is at the lowest point since the reform and opening up. From January to November, the total retail sales of social consumer goods increased by 4.9% at comparable prices, equivalent to one-third of the speed during the period of rapid growth; Investment in fixed assets increased by 5.2%, equivalent to one-fifth of the speed during the period of rapid growth; The volume of import and export trade increased by 2.4%, equivalent to one tenth of the speed during the period of rapid growth.

Second, the problem of "three-phase superposition" that has been talked about for several years still exists in fact. That is, the transition period of economic growth from high-speed to medium-high-speed growth, the painful period of structural adjustment and the digestive period of negative effects of previous stimulus policies are superimposed. The old problems and contradictions have not been fundamentally solved, and many new problems have emerged, some of which are new contradictions of non-economic factors.

Third, economic downturn and inflation occur at the same time, which was rare in the past. In October this year, the CPI was as high as 3.8%, which caused the macro-control measures to be in a dilemma.

Fourth, the gap between regional economic development has the risk of rebound, and the difficulty of regional coordinated development has increased.

Second, views on the downward pressure on the economy in 2020

It is still very difficult to ensure that the economy will operate in a reasonable range in 2020, and it is necessary to have practical measures to ensure 6.

Affected by the Sino-US trade war, world trade tensions have not been fundamentally resolved, international policies are highly uncertain, business confidence is weakening, and global economic growth is experiencing an overall slowdown. In response to the current economic situation, the central banks of major countries in the world have gradually relaxed their monetary policies to hedge the economic downside risks brought about by trade frictions. Influenced by domestic and foreign factors, it is difficult to change the long-term global economic slowdown, and the growth prospects of all major developed economies and most developing regions are weakening.

In the face of the still grim domestic and international economic situation, I believe that the focus of economic work in 2020 should continue to exert its strength in stabilizing policies and structural reform on the supply side.

The first is to stabilize the policy. In the uncertain and uncertain economic environment, our policies must be continuous, and we must be stable, stable and strive for progress, giving market players a stable expectation. We will continue to implement a proactive fiscal policy and a prudent monetary policy. However, finance should not increase the deficit too much, but should make a fuss about expenditure, reduce general expenditure, and protect people’s livelihood, operation and wages. Monetary policy should be flexible and moderate, and on the basis of ensuring the rational operation of the economy, it should guide the flow of funds to the manufacturing industry with large growth multiplier and promote high-quality economic growth. The general principle is that leverage can no longer be added, and the prevention of systemic risks should be put in the first place. Do everything possible to stabilize the financial market, improve the quality of listed companies, promote the reform of the Growth Enterprise Market and the New Third Board, and find reasonable investment channels for social funds. It is suggested to try to establish some "capital preservation funds" to go public and guide social funds to enter the stock market, so as to boost market confidence and help enterprises alleviate the problem of difficult and expensive financing. According to the annual household income of 600,000-500,000 yuan, it is conservatively estimated that there are about 500 million middle-class people in China, and the amount of idle social funds is huge. We should guide these idle funds into the real economy. Guaranteed funds are raised by finance or enterprises.

Then continue to deepen the structural reform of the supply side. The supply-side structural reform has been proposed by the central government for many years, and it has been implemented vigorously in recent years, and some achievements have been made, but I think the results are not remarkable. The main reason is that the theoretical circle does not pay enough attention to it and local leaders do not understand it enough. There are many contents about how the government can grasp the supply-side structural reform, but I think five points should be highlighted:

First, self-revolution, deepening government reform, increasing the construction of service-oriented government, improving administrative efficiency, clarifying the boundaries of government behavior, reducing the interference of non-economic factors on the economy, improving the business environment, ensuring the equal market position of enterprises with different ownership, and giving full play to the decisive role of the market in allocating resources.

The second is to help enterprises, especially central enterprises and state-owned enterprises, establish a modern enterprise system, or to separate government from enterprises and improve their management level and innovation ability. Cultivate entrepreneurship and give play to the leading role of entrepreneurs in new technologies and new economies.

The third is to implement tax reduction and fee reduction, effectively reduce the burden on enterprises, focusing on the vast number of private enterprises and small and medium-sized enterprises, so that these enterprises have a sense of gain, stimulate the vitality of market players, and promote the healthy development of the real economy.

The fourth is to do a good job in people’s livelihood, put the people-centered thinking into concrete work, do a good job in the field of people’s livelihood with the bottom line thinking, especially in employment.

The fifth is to step up legislation. I think it is not enough for the CPC Central Committee to issue 28 articles to support the development of private economy. Legislation is also needed to objectively rebuild the confidence of private enterprises and entrepreneurs, and the principle of competition neutrality is indeed implemented in the implementation of specific policies.

Third, the economic development of the western region will face new risks and challenges in 2020.

I believe that the "Guiding Opinions on Promoting the Development of the Western Region in the New Period and Forming a New Pattern" issued by the state has provided great opportunities and favorable conditions for the western economy to plant advantages and accelerate development. At the same time, however, some new policies and measures adopted by the state to deepen reform and expand the field of opening up in response to the severe and complicated development environment at home and abroad have aggravated the regional development gap to some extent and objectively compressed the development space of the western region.

The recently promulgated Outline of the Development Plan for Regional Integration in the Yangtze River Delta echoes the East-West development of the Guiding Opinions on Promoting the Western Development in the New Era and Forming a New Pattern, which was promulgated at the beginning of the year. However, in view of the frequent initiatives of the country in regional development in recent years, including the Yangtze River Economic Belt, the Beijing-Tianjin-Hebei development strategy, the Guangdong-Hong Kong-Macao Greater Bay Area construction strategy, the establishment of xiong’an new area, the approval of the free trade pilot zone, and the support for Shenzhen’s construction of the Socialism with Chinese characteristics Pilot Zone, it gives people the feeling that the development of the western region has not yet warmed up, and it has been submerged in the tide of competing development. Before the preferential policies of the western region can play a role, it will be offset by the new preferential policies of the regional development strategy, and it will become more and more felt. In particular, the six important measures to promote the development of the western region to form a new pattern are compared with the strategic positioning of "one pole, three regions and one highland" in the Yangtze River Delta. It is not difficult to see that there is a huge gap in the development level between the western region and the eastern region. The development of the western region is still in the remedial stage, and the eastern region has made progress towards demonstration.

4. The Sino-US trade war may escalate in an all-round way after the US election in 2020. Will it bring us more pressure then?

I believe that the trade tension between China and the United States will not change whether Trump is re-elected or not. Moreover, the tension between China and the United States is not limited to trade wars, but has extended to many fields such as politics, military affairs, science and technology, and diplomacy. The Trump administration pursues "American priority", engages in unilateralism and protectionism, and has reached the biggest consensus in its country. No matter whether the president is replaced or not, the tension between China and the United States is doomed to remain unchanged.