"The Chief Economist at Fudan University Forum", New Economics Research Center of Peking University Professor Justin yifu Lin speaking.
On October 16, at the Fudan University School of Economics, school of Economics, Fudan University Global Alumni Association's "Chief Economist at Fudan University Forum", new structural economics professor, Director, research center of Peking University, Honorary Dean of the National School of development at Peking University Professor Justin Lin pointed out that the speech, the main cause of decline in China's current economic growth is more external, cycle. China's economic growth to more domestic demand, in the context of a modest expansion of aggregate demand, to carry out structural reforms. Lin proposed that it should expand its active fiscal policy in order to provide the demand. The Central and local governments should invest more in "make" investment in industries, such as advanced manufacturing, infrastructure, urbanization, and so on.
Questions from the audience, often see the capacity can increase capacity vengeance, to take a simple example, such as excess cement plant, I'm going to capacity, and to capacity, we can export, investment, widening the cement demand, results in cement plant and increase the capacity, the problem how can economics explain, is there a way?
Lin replied, this is a big mistake to understand above, I talked about earlier investments, if under the concrete already you invest's concrete production capacity will increase that capacity runs counter to. But I just make investments is the investment, all of our industry are in the low-end, that we invest in high-end, imported 1.2 trillion dollars of manufactured goods, but cannot be produced in our country, we don't have the capacity. If you go to invest, that concrete how could productivity be increased? And I have talked about, it will not increase excess capacity will be reduced, because when you invest to build factories, steel, cement, plate glass, aluminum, you will create a demand for it. Supply with demand of so-called excess capacity is not supporting the concept of supplying too much, too little demand, excess capacity would be too much. If I increase the high-end industry the investment in our economy, or our investments in infrastructure bottlenecks on, it will increase demand. You without increased investment on the supply side, excess capacity is not reduced.
The following speeches:
Teachers, students, and friends in the business community, and good morning, everyone. Chief Economist at Fudan Forum to talk about today-China's economy at the crossroads: opportunities and challenges. Chinese economists, what are the biggest challenges? How to understand after 2010 China's economy steadily declined. The Shenzhen regulatory Bureau after close of
We know that in 2015, China's economic growth rate is 6.9%, which is since 1990, the lowest growth rate. And it was the first time since 1979 China's decline in economic growth for six consecutive years, but downward pressure continues. First half of the year, economic growth was only 6.7%. Such a situation of declining economic growth, attracted the attention of domestic and international. Chinese people to speak "right to cure", so for Chinese economists, is concerned about China's economic future is key to understanding why this decline in economic growth for a long time.
Now domestic with foreign academics, common view that China's economic growth is their own internal institutional mechanisms, growth caused by model, structural problems. So-called system means that the proportion of State-owned enterprises is still too high, low efficiency of State-owned enterprises. Mechanism is the so-called market forces play a decisive role in allocating resources, it's just an 18-session's goals, but has not been fully implemented, there is too much government intervention. Growth model is that the proportion of investment in China is too high, resulting in consumption growth, this model is not sustainable. So-called structural problem is structural reform of the supply side capacity too big capacity, overstocked inventory, enterprises leverage is too high reduce leverage, corporate operating costs too much, to reduce costs, there are many other matters.
Such problems exist is a fact, and does have an impact on the efficiency of China's economy, but this is not the main cause of decline in China's current economic growth? Personally I'd think not. I personally think that more external, cycle. And as long as we have the whole world, you will find that this view is not hard to prove, as we can see with our level of development of other emerging market economies, economic performance in the same period.
China's growth rate in 2010 is 10.6%, 2015 is the 6.9%, actually declined. But you can see Brazil in 2010, when growth is 7.5%, in 2015, when the growth rate was minus 3.8%. With us and decline, but the decline was larger than we are. Russia in 2010, growth is 4.5%, 2015 growth rate was minus 3.7%, as we fell, fell more sharply than we have. India, in 2010, when growth is 10.3%, 2015, when growth was higher 7.6%,7.6% than we 6.9%, but it is also from 10.3% to 7.6%, is the same with us. We were all the same, notes must be a common externality, cyclical.
Most can prove my point is Asia those with high incomes and high performance of economies. Singapore growth rate in 2010 is 15.2%, in 2015, the growth is 5.92%, like us, are falling, and falling more sharply than we. Korea in 2010, growth is 6.5% 2015 growth only 2.6%, like us, are falling, and falling more sharply than we. They are the so-called high-revenue, high-performance economies, which means that we say Chinese institutional mechanism for internal structure it is not, but it manifests itself in the form of us exactly the same. That only the external factors that can explain is common, and is cyclical.
That fact again is understandable, because we know that the developed countries from the economic crisis of 2008, it is still not fully recovered. Developed countries average annual growth rates of the past is more than 3%, to now is 2%, or 2%, the United States better, is 2.7%, and is in a situation of high unemployment. United States statistics is 5%, but its labor participation rate is still less 3%. Families in developed countries in the past eight years, and little growth, and we know the United States, and the main reason is the financial crisis in Europe caused by household debt is too high. After the crisis, did not increase their income situation, to increase their savings, consumption growth is very slow, very little demand.
We know that in 2008, before the international financial crisis, the growth of international trade is generally in international GDP growth more than twice times. Now the international economic slowdown, growth in international trade than the slower international economic growth. In this case, of course, affect our exports also affected exports from other developing countries, affecting as those with high income, high performance of East Asia, but exports than the larger economies export, a major reason for this is the economy has slowed down considerably.
The second was in 2008, when there was the sudden international financial and economic crisis. The end of November 2008, all resolutions at the first Summit of 20 heads of State, back to take some of the proactive fiscal policy, to support investment to jump-start the economy. These investments, but after five years, six years, seven years, projects were completed, but the economy does not recover, in this situation, private investment is not high, if there are no fiscal policy taken by the Government-backed investment, that investment growth rate decline. Our society is so, other national economies is the same with us.
National economic growth by three components, one is export growth, consumption growth from consumption growth, we are better, because our employment situation is better, increase in family income is relatively high. Such as gross domestic product growth last year was 6.9%, but social growth is 7.5% maintain consumption growth at around 8%, this means that we can maintain the 6.9%, about 7% of the reason for the increase, family in other countries, the employment situation is not good, family income is not good, that slower growth in household consumption, the extent of the downturn faster than us.
I think I am being pragmatic about, as a developing country in transition, there must be institutional mechanisms of structural issues of general interest, but for the past six years, this year is the seventh year in a row, the main cause of the decline in economic growth, should be external, periodic. Looking ahead, the developed countries are likely to be in Japan for 15 years, or 20 years longer the slowdown in economic growth, because of political considerations, they carry on structural reforms, there is no way.
Looking to the future of China's economy from external demand, that part is not optimistic. China's economic growth is
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