Lin yifu held in Peking University "at the first national forum on the development of" speech. National School of development at Peking University
2015 China GDP grew 6.9%, is the lowest growth rate since 1990, falling 6 years in a row for the first time since the reform and opening up. What is the reason behind it?
On December 18, at Peking University's "first national development forum", Honorary Dean of the National School of development at Peking University, Justin yifu Lin tried to solve the problem.
Lin believes that from the perspective of global change this downlink of China's economy, international externality of environment, cyclical problems cannot be ignored. Internal impetus to China's future economic growth, mainly in expanding consumption demand and investment demand.
Lin believes that world economy downward is a major cause of this round of economic downturn in China.
He listed the BRICs, Southeast Asian countries, developed three sets of data to prove his point. China's 2010 GDP growth rate was 10.6%, 2015 to 6.9%. But Brazil in 2010, when growth is 7.5%, 2015 growth rate is-3.8%. Russia 2010 growth is 4.5%, 2015 growth-3.7%. In Southeast Asia, Singapore 2010 growth is 15.2%, in 2015, when growth rate is 2%. China Taiwan 2010 growth is 10.8%, 2015 growth only 0.7%. Korea growth in 2010 6.5% 2015 growth rate is 2.6%. Developed in the United States's economic performance seems good, but 2015 when the economic growth rate is only 2.4%.
Lin stressed that "these are so-called high income economies, we say these institutional mechanisms within them are not, but behave exactly the same and worse than us. Analysis is certainly a common external factors and cyclical factors. "
Justin yifu Lin said the overall weakness in the world economy affecting China's exports. "From 1979 to 2014, our export growth per year is 16.4%, in 2015, when we export not only growth, but also dropped by 2.8%. Our export growth in the first half of this year dropped by 7.7%. This situation, of course, affect our economic growth. "
Lin summarizes, for 6 consecutive years China's economy continued to slide this year, from 6.9% to 6.7%, there is a considerable factor in externalities, is caused by cyclical factors.
Looking to the future when China's economic recovery, Lin stressed the need to study world economic recovery and China's growth in the domestic economy. "Economic growth in the next few years, General external environment can be quite bad. "Justin yifu Lin said.
Justin yifu Lin, believe that growth momentum is to expand domestic demand, including consumer demand and investment demand. "With the growth rate of investment will create jobs, employment remains at a relatively high level. Good conditions of employment, family income growth will be faster, the faster income growth to support consumption growth would be better. Investment and consumption are maintained at a reasonable level, I believe that we can achieve the ' Thirteen-Five ' programme average annual growth of more than 6.5%. "
Following is a speech by Justin yifu Lin:
Teachers, friends, good morning. Very pleased to be able to serve as a member of the National School of development at Peking University, run by the National School of development at Peking University hosted the first national forum on the development, the theme of this forum is China in the era of global change. As an economist, I would like to talk to you about the global change in China in the era of economic development. Gree shareholders no applause Dong mingzhu mad
On China's economic development, both at home and abroad, we are most concerned about is whether we can achieve a question "Thirteen-Five plan" put forward from 2016 to 2020, an annual average of more than 6.5%. That 6.5% per cent of the growth in China is important, this is related to the 18 put forward by 2020 when the US gross domestic product could double in 2010, based on our urban and rural incomes by 2020 could double in 2010, based on. It is also very important for the world, because from 2008 after the international financial crisis, China's annual economic growth for the world economic growth more than 30%. The global economy has not fully recovered, China can also become the engine of world economic growth? This is the reason why everyone 6.5% this indicator is concerned.
From 2016 to 2020, an annual growth of 6.5%, our reform and opening up, than from the 1979 to 2015 average annual growth of 9.7%, have downward adjustments in the 30%. That logically speaking the adjustments is not small, room was quite large, logically speaking shouldn't have too much trouble to implement. But why did you still have no bottom. Whether at home or abroad, the main reason is China's economy from 2010 onwards, year on year. Everyone knows 2015 growth is 6.9%, which is the lowest growth rate since 1990. And this is from the reform and opening up after falling for six consecutive years of economic growth for the first time, speak with an average annual growth of 9.7% in the past, and of course each year fluctuated between, but general economic decline for two years, a maximum of three years, economic growth will pick up. From 2010 to 2015 has been slipping for six years, you know 2016 the growth rate of the first three quarters of this year was 6.7%, down 0.2% than 6.9%. 2016 now growth which is at 6.7%, and continued their downward slide.
Under such conditions, as introduced in today's story, where the bottom of the downturn in China, will break through the "Thirteen-Five" plan by 6.5% about? So to answer this question, of course, we must first understand why from 2010 onwards, our economic growth is declining year by year, what are the reasons behind it. Of course we talk about very much, in the transformation of China, as a country, a developing country must have its own internal problems, these internal issues, including the economy, for example, the proportion of State-owned enterprises is still quite high, and General poor performance of State-owned enterprises, a lot of people think this is the main reason for our economic decline. In addition, we are in a transition country, the market mechanism is not yet fully in place, of course, third plenary session put forward a comprehensive reform, but there are a lot of measures have not yet been fully implemented. Now that the market is not fully functional, resource allocation will have problems, some people feel that this is the main reason for our economic decline.
Recent structural problems on the supply side, this is the real problem, solve the problem they are paying the price. View was also expressed that this is the seventh consecutive year, the main cause of the downturn. I personally think that all these problems are real, have also affected our economic performance, but look at China's economy must be as theme of today's Forum, global changes in China's economy. Because China is now the world's second largest economy, according to the exchange rate. If calculated according to purchasing power parity, China today is the world's largest economy. While China is the world's largest trading nation, China's economic growth will affect the world, but also more important world economic development also influenced China.
So when China economy after 2010 year, we would like to see how other countries in the world economy. With our same developed countries of BRIC countries in the world, and in 2010, when growth is 10.6%, 2015 growth is 6.9%, but Brazil in 2010, when growth is 7.5% 2015 growth rate is-3.8%, as we fell, fell more sharply than we have deep. Russia, in 2010, when growth is 4.5%, 2015-3.7% growth, as we fell, fell more sharply than we are. Other BRIC countries India, India 2010, 10.3%, and 10.6% in the same level with us, in 2015, when his growing 7.6%, 6.9% seems a little higher than we, but he was also dropped from 10.3% to 7.6%, exactly the same situation with us. And India 7.6% growth in 2015, we should also consider two factors, 1th in 2012, when the economic downturn is deeper than we, we 2012 is from 10.6% to 7.7% in 2010, India is from 10.3% to 5.1%, this so-called bottom factors exist. Second was India at the end of 2014 when the method of adjusting the national statistics, which makes India the annual economic growth rate by 1%. If these two factors into account, then India in 2015, the growth rate is below 7%, exactly the same with us.
These BRIC countries he proportion of so-called State-owned enterprises is too high is not an issue, some of them were market economies, like India, and Brazil, have a good time in the 90 's had carried out a thorough market, nor does he exist structural reforms in our domestic supply side problems. But his economic performance tell us exactly the same, even worse than the us. It must have a common external problems, common recurring questions. To prove my point of view is East Asia and how these so-called high-revenue, high-performance economies, such as Singapore, in 2010, when growth is 15.2%, in 2015, when growth rate is 2%. As we fell, fell more sharply than we are deep. Our Taiwan in 2010, when growth is 10.8%, 2015 growth only 0.7% like us down, down the same ratio we are. Look at neighbouring Korea, growth in 2010 6.5% 2015 growth is 2.6%, the same decline, deeper than us decline. These are so-called high income economies, we say these institutional mechanisms within them are not, but behave exactly alike, and we also increase. Analysis is certainly a common external factors and cyclical factors.
Anyway, if the analysis is, as long as we have the whole world is not difficult to understand, because from 2008 after the outbreak of the international financial and economic crisis, still more than half of the countries in the world economy, and their economy has not fully recovered. Developed countries average growth over the past year is between 3% and 3.5%, but by 2015 when the crisis is over the seven years. In 2015 the EU growth rate only 1.3%, by more than two percentage points lower than the 3% to 3.5%. Japan is an economic recovery in Japan's economy, but in 2015, when the growth rate was only 0.5%. In a State of slow economic growth, his unemployment will remain at high levels, family income growth is slow, weak spending growth will return. He was a main source of world demand in developed countries, so that the whole world demand is weak. In developed countries of United States economic performance seems good, but 2015 when the economic growth rate is only 2.4%. United States unemployment rate seems to be better now with pre-crisis levels of about the same 4.9%.
But considering the United States unemployment rate when understanding United States statistics unemployment United States is if a workers losing jobs, with one month time to find a job, so workers leave the labour market, he is not in the unemployment statistics. To understand the United States reference to indicators of employment status to another, is the labour force participation rate. Current United States labour force participation rate of the working-age population, 3% lower than before the crisis, these people he was able to work, but why doesn't he get a job? Because they cannot get work, simply do not go. If you take this factor into consideration, United States present, unemployment is at a record high of 8% to 9%. In this case, family income growth, from a variety of statistical indicators, compared with before the crisis is no different. And we know that the crisis in the United States outbreak, one of the main reasons is to heavy household debt. Family to repair balance sheets after the crisis, his income growth also to save a debt, so in this case his consumption is very weak.
These weak consumption leading to weak world demand in the developed world, we know that before the crisis the world trade growth is more than twice the growth rate of the world economy, but slowing world growth after the crisis, but now the world trade growth rate lower than the growth rate of the world economy. That we know this, of course, will affect every like China, like the other BRIC countries, and East Asia, these high-revenue, high-performance, but exports export-heavy economy. We know that export growth is one of the three components of economic growth. In our country, from 1979 until 2014, our export growth per year is 16.4%, in 2015, when we export not only growth, but also dropped by 2.8%. Our export growth in the first half of this year dropped by 7.7%. This situation, of course, affect our economic growth.
Investment growth is the second component of economic growth, investment growth when we know that in 2008 the international financial and economic crisis, each country has taken a number of proactive fiscal policy to start the demand, creating jobs, stabilizing the economy. We have 4 trillion, but other countries have more or less active fiscal policies to support investment to start the demand and to stabilize the economy. But these positive financial policy support project, after five years, six years, seven years have passed, but the international economy hasn't recovered. In this case if there are no new positive fiscal policies to support investment projects that investment growth will decline. In our country, for example, in the "Eleven-Five" plan period between 2006 to 2010, our average annual investment growth is 25.5%. In "Twelve-Five" during 2011 to 2015 during, average annual of investment growth is 18.8%, declined has 7%, and in "Twelve-Five" during is more back declined of more more, like last year 2015, we of investment growth only 10%, consider to investment products of price fell this factors, real of investment growth also but on 12%, that with whole "Twelve-Five" during average 18.8% also declined has 8%. This situation will of course affect economic growth. In this case, stimulating our economic growth depends mainly on consumption growth, domestic consumption growth is still relatively good, is because we have good employment, family income growth is relatively good. Last year, for example, gross domestic product growth last year was 6.9%, growth in family income was 7.5%, up 0.6%. In this situation our consumption growth remained at around 8%, which lets us economic growth last year, to reach 6.9%, his decline in exports with other countries like us, declining investment, like us, that income growth than the us, consumption has declined more sharply than most of us, so their economic performance were worse than us.
From these factors, six years of continued economic downturn, as well as to the economy also fell from 6.9% to 6.7% this year, a significant factor is the external nature, caused by cyclical factors.
Looking to the future development of China, of course, depends on whether his economic recovery in developed countries, and to look at our domestic economic growth really. Seen from the outside, developed countries are likely to fall into a long-term stagnation now abroad, often in discussion. Why foreign can be plunged into a long period of stagnation? Because we know that a financial crisis in the country, then he must have internal structural problems. You want to make structural reform of the economy to fully recover. Developed countries should carry out structural reform of the economy to fully recover, it is a developed internal consensus, we all are aware of the fact that in the world. But developed countries, from the 2008 crisis and now they have a seven-year period, each year all this talk about structural reforms, structural reforms have been implemented without it. Most important is what structural reforms in developed countries, is to reduce benefits, financial deleveraging, to urge the Government to reduce the fiscal deficit. Reduced benefits is to cut spending, reduce the leverage of financial institutions is to reduce financial support for family of investment and consumption, if leverage reduced investment and consumption will decline. To reduce the Government's fiscal deficit, which is used to support investment and consumer spending, deficit reduction, investment and consumption will be reduced. If the developed countries to implement structural reforms, he must invest less and reduce spending, economic growth will be down to adjust. But economic growth in developed countries is very low, if you want to downgrade growth again, unemployment will increase, the unemployment rate is already very high, the situation from the political as it is hard to implement structural reforms. That is why Japan since 1991 after the collapse of the bubble economy, and now has 25 years of time has passed, his structural reforms have been implemented without it. Abe, Abe proposed economics want to revitalize Japan economy, Abe's three-arrow economics, first with a loose monetary policy to reduce Japan's exchange rate, and the second is in a positive financial policy for starting domestic demand, and the third is structural reform. Already three years since Abe came to power, two arrow went ahead, the third arrow shot out. So rich countries are likely to fall into Japan as weak long-term economic growth.
Now United States after Trump took office, want to learn about China's experience. We the great rejuvenation of the Chinese nation, he said United States rejuvenation he also studying Chinese experience, want to use the infrastructure to launch domestic demand. Even if he had these policies, United States economy may be better, but the United States economy just slightly better, the United States will raise interest rates after the rate hike could lead other countries to finance the economy greatly with pressure above.
So on the whole, we have to gauge the economic growth in the next few years, General external environment can be quite bad. In this situation you want to talk about China's economic growth as long as China's economic growth is not enough. From internal growth is our central economic work Conference referred to in a few years, to expand aggregate demand. But compared to our domestic with foreign words, are expanding aggregate demand can be combined with the structural reforms in our country, we all know that structural reforms now on the supply side, also talk of deepening reform. In the structural reform on the supply side, there are five major elements, to production, to inventory, to leverage, reducing costs, fill the short Board. We can expand domestic demand while supply side structural reform among the five with the complementarity. And just make together forward, will also create favorable conditions for the supply side structural reform.
We first of all expand domestic demand have two parts, one is consumer demand, investment demand. If combined with the need to make investments, we know that there are still many problems China's economy. A we on the industry was now on a lot of excess, but excess of reinforced cement, plate glass, in the low-end industries, we can upgrade and industrial upgrading is a lot of space. In 2015, when we imported manufactured goods reached $1.2 trillion, that $1.2 trillion to import manufactured goods, it's higher quality than our domestic, we will import, or cannot be produced in our country will we import. We can be on top of these industries to industrial upgrading, upgrade investment. The second infrastructure, all these years we did do a lot of infrastructure, compared with other developing countries the infrastructure that is better, but in this case our infrastructure here at home there are a lot of gaps, such as inner-city traffic is very heavy, on behalf of our traffic traffic is still grossly inadequate. In addition, in June or July this year following heavy rains, flooding more than 1000 cities throughout the country, lack of underground pipeline network on our behalf. This is a very good place to invest. The third is environmental, economic development over the years, but the environment is more and more serious, like the smog in Beijing today, to launch a green development, which of course also have to invest. Fourth is urbanization, our proportion of urban population to total population is 56%, developed countries proportion of urban population to total population of more than 80%, so we are still in the process of urbanization. Farmers coming to town, and homes, farmers coming to town to provide public services, these are an investment. And that the return on investment both from economic and social returns are very high. This is in see China economic of growth prospects with foreign developed compared up maximum of different points, developed in economic weak of when also should to make investment, but developed of industry has in world most frontier, dang he has capacity excess of when hard found investment opportunities, even has d print, and electric, one or two items investment insufficient to pull whole economic, but China can industry upgrade of space very big, foreign of based facilities General are has has, is nothing more than is old is, Old infrastructure investments is to dig a hole is a hole, is inefficient. Generally well developed environment, urbanization in the developed world was completed, so it's hard to find good investment opportunities in developed countries, we still have a lot of good place to invest.
Need money to investment, in terms of money, in terms of our relative advantages. We now that the Central Government to local governments accumulated deficits per cent of our gross domestic product 57%, 17% Central, 40% is the place. So they developed or other developing countries generally 100% the Government's accumulated fiscal deficit, on behalf of the space available to us fiscal policy is much greater than in other countries, can use some positive fiscal policies to leverage investments. Not only that the Government's financial situation is relatively good, and our civil savings and accounted for nearly 50% per cent of GDP, which is one of the countries with the highest in the world. You can use government money to leverage private investment money. Third is investing in technology imports of machinery and equipment raw material, our foreign exchange reserves, we still have a bit more than more than 3 trillion in foreign exchange reserves, most in the world is. To use these resources, we can keep investment growth, which is the largest in China and other developing countries are different. And we also have good investment opportunities in other developing countries, but he may have poor financial conditions, private savings are too low or insufficient foreign exchange reserves.
So in this situation, I believe we can maintain a suitable investment, with investment growth will create jobs, employment remains at a relatively high level. Good conditions of employment, family income growth will be faster, the faster income growth to support consumption growth would be better. Investment and consumption are maintained at a reasonable level, I believe we can reach the "Thirteen-Five" plan proposed average annual growth of more than 6.5%. And, to make the investment as a starting point, it will also create good conditions for the supply side structural reform. Make investments in steel, cement, plate glass, we now excess capacity is mainly that several parts, increased investment and an increase in demand, excess capacity is reduced, that capacity will be easy. From the point of view of deleveraging, now most leveraged those places where serious excess capacity if demand increases, prices will rise, business conditions are good, companies make money will pay, that leverage will decline. Lever's task easier. To be inventory, inventory is mainly real estate inventory. Real estate demand a large degree determine the family for future employment and income growth, employment and income growth, and the demand for real estate, this inventory will decrease. So, we can on the premise of a modest expansion of aggregate demand to supply side structural reform, we will improve the quality of economic growth.
So on the one hand 6.5% per cent growth target to achieve 18 proposed doubling the two goals can be achieved. Sustain growth of 6.5%, we are now the size of GDP share of world is the growth of 15%,6.5% represents an annual contribution to the world of 1% growth. World growth is nothing but 3%, our annual contribution to world economic growth will always be in 30%, so China's economy will be the driving force for economic growth throughout the world, engines of economic growth around the world, thank you.
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