Guo Shuqing: The Way Of China's Economic Transformation

As banks are about to announce their first half performance to the market, they are now in a "silent period". He laughs and says, "there is no question about the operation of banks."

As chairman of China Construction Bank, the second largest bank of global market capitalization, Guo Shuqing is more willing to go beyond the banking industry and explore China's long and medium term transformation proposition. He believes that there are two main problems in China's economic development. First, whether the industrial structure can be upgraded continuously; and the other is how to change the two element system between urban and rural areas.

Recalling Guo Shuqing's resume, he worked in the State Planning Commission and the National Reform Commission in his early years. economic system One of the participants and designers of the reform, and vice governor of Guizhou province for three years, is well aware of the imbalance, disharmony and unsustainability of China's current existence.

In view of the current market reform facing all kinds of difficulties, Guo Shuqing told reporters that market reform, especially when it comes to factors such as labor, land and capital, and commodity marketization, the problem of asymmetric information is more prominent, supervision is more difficult, possible shocks and fluctuations are stronger, and the state is more cautious. He believes that on the one hand, vested interests have hindered reform; on the other hand, there are obstacles to understanding, and how to weigh the pros and cons, sometimes it is more difficult.

Guo Shuqing has three identities as banker, official and scholar. Besides academics and administrative officials, Guo Shuqing's experience in China's financial system is also extremely rich. First served as vice president of the central bank, Secretary of the safe, and vice chairman of the Central Huijin Company. In 2005, he became the chairman of the Construction Bank and promoted the listing of China Construction Bank.

Banking industry is a barometer of China's macroeconomic regulation and control. Through the adjustment of bank balance sheet, we can re-examine the transformation of China from a new perspective and look at the depth of the whole macro-economy, so as to understand its operational logic. The two branches of Guo Shuqing's long term banking and government are also the institutions that play a decisive role in the short-term growth and long-term development of China's economy.

The government sector is not only the decision-maker of short-term macroeconomic policy, but also the trader of economic reform, which provides a system dividend for the long-term development of China's economy. The determination and strength of government departments to promote a series of deep economic reforms will play a decisive role in the transformation of China's economy.

The dialogue between us and Guo Shuqing is based on the short-term prediction, long-term reform and the linkage of banking industry in China.

　 The possibility of a hard landing is very small.

In 2011, China's macro-economy was faced with multiple tasks of regulating inflation, maintaining steady economic growth and adjusting the economic structure. After the gradual exit of the stimulus policy, there is a variable in how the new growth power source will take over. The investment driven growth path dominated by localities and state-owned enterprises is faced with the torture of quality and efficiency. The United States and the euro area have default risk, and the global economic imbalance is once again prominent. In the face of global economic uncertainty, how can China balance the relationship between short-term regulation and long-term strategy?

Reporter: the high inflation point keeps moving backward, and the trend of slower growth is now. The market is worried about stagflation and hard landing risks. How to analyze and judge the trend of China's macro-economy?

Guo Shuqing: for the growth of China's economy in the future, some people worry that the rate of decline will be stagflation and hard landing. I think it is unlikely.

From the medium and long term background, the basic conditions of urbanization, industrialization and informatization in China have not changed. In the short term, although monetary policy returns to sound and stimulus measures are weakened, loan growth is still more and direct financing is growing faster. The adequacy of capital in China's economy is not comparable to that in foreign markets. For example, the United States implemented quantitative easing monetary policy after the financial crisis, but the total amount of loans in the banking system grew very little. Therefore, considering these factors, China's macroeconomic stagnation or even a hard landing is unlikely.

Seen from the actual economic growth rate, it is obviously slower than the previous two years, but it still belongs to high speed. In the 12th Five-Year plan, the target rate was set at 7%, while in the first half of 2011 it was 9.6%. Beijing was the lowest growth rate in GDP, and remained at 8%.

The evaluation of the future trend of China's economy depends on how to determine the value yardstick of good or bad. At present, the internal imbalance of China's economy is still serious. The future macro-economy should pay more attention to efficiency and quality rather than speed. Once the GDP growth rate is low, it will not be accepted.

Some industries along the eastern coast should be accelerated to the mainland, and some products and enterprises will also be transferred to less developed countries in Southeast Asia. China has a lot of industries to increase its economic growth through high energy consumption and high pollution. In the future, we may have to pay a higher price to solve the problems of environment, resources and structural imbalances.

Reporter: the recent default risk of US Treasury bonds has forced people to reassess the risk of the two global economic downturn, which will have a greater impact on China's economy. How to evaluate the debt risk in Europe and America? {page_break}

Guo Shuqing: the economy of the United States and Europe has a great influence on China. It is China. Macro economy Important external variables. At present, the United States and Europe must carry out their own economic transformation and structural adjustment, but the content they adjust is different from ours. The US economy is actually developing towards a higher level, to a stage of non manufacturing and non-material production, and a more innovative economic transformation. The problems they face now are structural problems. The manufacturing and construction industries are shrinking, resulting in high unemployment rates in these industries. In some cities, more than 20 year old black youth accounted for half of the unemployed. We can imagine how serious their political and social pressure is.

From the state to the company and from the individual to the US, the United States, to a large extent, is borrowing new debts to repay old debts. However, the US dollar and US Treasury bonds are not yet visible. Observing the Fed's balance sheet, it can be found that they have only about two trillion dollars, accounting for only 17% of us GDP in 2010. But the PBC's balance sheet is equivalent to more than 60% of GDP. The US ratio has quadrupled to the current level in China. So even if technically, dollar assets still have much room for maneuver.

Of course, the more fundamental reason is that the US economy is still the most innovative economy. The European economy also occupies the high end of the manufacturing industry, and the service industry is second only to the United States. Some people in our country are not optimistic about the US and European economies, and think that they are going downhill. They are mainly measured by traditional industrial scale. As far as steel, coal and cement are concerned, China is the most powerful, that is, the use of capital and savings. Originality Brand and technology. You see, Apple Corp is coming back from the dead, and it surpasses Microsoft, Intel and Google. It has the highest market value in the world. It changes not only the business mode, but also the economic form and even the way of life. This is an excellent case. It can also be said to be a landmark historical event.

　　 "Upgrading" and "mobility"

For short-term growth, people still have many reasons for optimism. But for the long-term development of China's economy, Guo Shuqing believes that if we want to get an optimistic answer, China needs to launch a deep level reform against many structural imbalances.

In the past 30 years of reform and opening up, China has realized the marketization of commodities, but the promotion of factor marketization reform is rather tortuous, facing many resistance and condensing a lot of systemic risks.

In Guo Shuqing's view, faced with many structural and institutional obstacles, solving the two major problems of "upgrading" and "mobility" is the key to a series of deep-seated reforms.

Reporter: what are the main problems facing China's long-term economic development?

Guo Shuqing: China's long-term economic development faces many difficulties and challenges, and there are many imbalances. However, it can be attributed to two aspects. The first is whether the industrial structure can be upgraded continuously, and the other is how to adjust the special relationship between the urban and rural areas. To some extent, these two problems are related. Due to the two division of urban and rural areas, China's urbanization has lagged behind industrialization for a long time, which will inevitably affect the upgrading of industrial structure. The industrialization of Europe and America is very fast. Especially in Germany, Japan and Korea, 2% or 3% of the population turns into urban population every year.

Over the past thirty years of reform and opening up, China has achieved rapid success in its industrialization. But one problem is that economic growth is concentrated on low value-added products for a long time. Represented by processing trade, the high proportion of low value-added industries last for a long time. Especially in the coastal developed areas, such as Guangdong, Shanghai, Zhejiang and other places, although the development level has been relatively high, but high value-added products are still relatively small. At the beginning of reform, this is the path, but it has been more than thirty years now, and there is still a problem with this pattern.

The special institutional problems in urban and rural areas are left behind by the planned economy. After the reform and opening up, some aspects have changed. For example, farmers can freely go to work in cities. However, the gap and isolation in some aspects are intensifying in the process of urbanization. For example, the absolute level of public services and social security enjoyed by urban and rural residents is even greater. In other countries, the flow of urban and rural factors is bidirectional in the process of industrialization and urbanization. The rich in Europe had a manor in the countryside from the very beginning. The rich people in the city would go to the countryside to build villas and run farms. Agriculture and industry in the United States have been well integrated, and we are not strictly separated from urban and rural areas. Even in Japan and South Korea, the difference between urban and rural areas has not been so prominent since the rapid development of industrialization.

After China's reform and opening up, although farmers can work in the city, they can not enjoy the treatment of citizens at the same time. This problem involves all industries, and even in state-owned enterprises and state-owned banks, it is impossible to achieve equal pay for equal work. At the same time, urban residents can not buy homestead or farmers' real estate in rural areas. Even if they are engaged in agricultural investment, they actually encounter many constraints.

Reporter: structural transformation and optimization is a cliche. Specifically, to upgrade the industry, what are the difficulties behind you? How can we further promote industrial upgrading in the future?

Guo Shuqing: there is a deeper problem behind industrial upgrading. There are factors of unequal market competition. There are factors that the government protects over certain industries and enterprises. There are problems of insufficient incentives for innovation and independent intellectual property rights, as well as education and culture. Without creative talents and ideas, we can not take the lead in the industry. However, the biggest obstacle at this stage is factor price distortion, that is to say, there are still many problems in the formation mechanism of wages, land prices, rents, interest rates and exchange rates, and the marketization is far from complete.

It can be said that China's industrial restructuring is facing a good opportunity today, and industrial upgrading has shown some good signs, showing a prominent performance in regional structural adjustment. Regional differences began to shrink, and economic growth in the central and western regions began faster than in the East, and investment growth also showed an accelerating trend. The added value of some export products has begun to increase.

The trend of industrial transfer has been strengthened. Many coastal manufacturing enterprises are transferring to the mainland. Many electronics factories, textile mills, garment factories and even foreign famous brand foundry enterprises are landing in Chongqing, Chengdu, Wuhan and Henan. Jiangxi, Anhui, Hunan, Guangxi and other provinces and regions in recent years, the industrial development momentum is very good. In a sense, it is normal for some industries in the southeast coastal areas to be depressed, and the cost of government and enterprises is very high. At the same time, the central and western farmers leave their homes, leaving their families to work in the east coast. In the future, industrial transfer among such regions should be further accelerated.

In the process of industrial restructuring, we should continue to enhance the pricing power of China's export products. In the first half of this year, the surplus of imports and exports shrank. This is mainly due to the rising price of imported goods, which is not conducive to the recovery of this balance, nor is it likely to last long. But there is another good sign that export prices have risen more this year. For example, the average price of mechanical and electrical equipment has increased by about 10%, indicating that Chinese exporters have certain pricing power. However, our price management of imported goods is essentially the management of foreign exporters' expectations, but it is far from enough. Iron ore is the most typical case. If we always give foreigners the impression that "China continues to rush ahead and rush ahead", the price rise of the international raw material market is unlikely to come down.

Reporter: reform is the first to start in rural areas. But now we realize that the two yuan division of urban and rural areas is not alleviated, but on the contrary, the imbalance has increased. What is the root cause?

Guo Shuqing: there must be substantial changes in the division of urban and rural areas. The most fundamental thing is to achieve two-way flow of urban and rural productive factors.

To reform the land system, the land system should be more market-oriented and gradually establish a unified market for urban rural construction land. It is possible to ensure that the total amount of cultivated land in 1 billion 800 million mu is not reduced and the quality is not reduced. The reason is that at present, urban and rural land is idle and wasted seriously, and the potential of intensive and economical use is enormous. For example, the rural population has been decreasing, but the total number of farmers' homestead has increased. The total number of villages and towns has been declining, and the number of school hospitals has been reduced, but the rural construction land has not decreased. We can promote the consolidation of land consolidation through the interest oriented mechanism, accelerate the speed increase and decrease link, and achieve multi win. The key is to ensure that the quality of the land should be equal. The shortage should be made up by the quantity. That is to say, we must set the coefficient of the hook accurately and apply the real name system and the lifelong responsibility system to the units and individuals that are responsible for inspection, acceptance and supervision, so that the deceit will be greatly reduced.

The same is true for labour mobility. Equal pay for equal work is also achieved. Now, many industries employ migrant workers, even if they add social security, they earn as much as 1/3 of urban residents. Many units in the city employ a large number of dispatched staff to engage in the main business. This is in itself a violation of the labour law, but it has not been corrected. Just like the land of different ownership can not enter the same market, workers with different household accounts can not enter the unified employment market. Even if they do the same job, the remuneration and benefits will be totally different.

This is also tied to the disunity of public service resources. The children of migrant workers go to school in cities, and compulsory education is basically liberalized. But after high school, they can not go to universities in the city, so many children remain in the countryside or go back to the rural middle schools. These factors have great influence on the unification of factor markets. Therefore, the land system should be reformed, urban and rural social security system should be reformed, and farmers should be included in a unified public service system. These problems have not been solved, which seriously restricts the flow of various factors and is difficult to break the urban-rural segmentation situation. {page_break}

At present, the gap between urban and rural income distribution is very large, and the city is more than three times that of the rural area. If the welfare (including social insurance and education) is included, the gap will be even greater. Only when the real free flow of urban and rural productive factors is realized, will domestic demand continue to grow steadily, and the structure of income distribution will hopefully become more reasonable.

　　 Promoting market-oriented reform

The goal and direction of China's economic restructuring is the socialist market economy. But today, marketization reform is facing many obstacles, such as the hurricane surge and governance in the real estate sector, and the non market management of inflation expectations, making the market reform vague.

Another challenge facing the market reform is how to start the reform of the price formation mechanism including land, capital, foreign exchange and other factors, but progress has been slow and faced with many difficulties. Rural land circulation, urban land price and rent, interest rate liberalization, exchange rate reform and other issues have attracted more and more attention.

Reporter: fairness and efficiency have always been the two focus of market reform. In recent years, the prices of commercial housing in large and medium-sized cities have risen sharply. There are two kinds of voices. One kind of excessive housing prices distorts the market and enlarges the income distribution gap, which is not conducive to the promotion of urbanization and the justice of economic growth.

Guo Shuqing: the housing system is a concern of every country's government. Not only in China, but also in many other countries. Even in the United States with a higher degree of marketization, their government attaches great importance to the housing problem. For example, the Clinton administration and the Bush administration like to win the hearts of the people with housing policies. When they describe the American dream, they will mention that every American has their own house and everyone has their own property. They even regard these words as campaign slogans. President Bush once openly publicized that only the rich could have beautiful houses in the past, and ordinary people could still live there.

The government has done good deeds and promised that everyone has a house, which is an important reason for the US financial crisis. When analyzing the causes of the financial crisis, it is generally talked about that Wall Street is too greedy to create large scale high-risk derivatives. But since ancient times, what businessmen do not want to make money? So there is a special background for such a big crisis. Everyone wants to live in a good house, but it costs money and needs to pay the principal and interest of the loan. It is this oversized housing loan scale and too loose borrowing conditions that have hidden dangers for the financial crisis.

At present, from the perspective of how to further improve China's commercial housing market, we should consider the diversification of housing supply. It is necessary to supply housing with different levels, different areas and different Huxing. In the past, commercial housing area was generally larger, and now more small apartment houses began to appear on the market. This is a good change.

On the other hand, we should constantly promote rationalization and equalization of urban distribution. That is to say, big cities can not be expanded indefinitely, and regional development should be balanced. At present, China's high-quality educational and medical resources are concentrated in a few cities, which leads people to crowded into these cities, and the cost of living will naturally be very high. If the market mechanism can play its full and effective role, the factors of production will naturally flow to low cost areas, and large and medium sized cities and towns will flourish and flourish everywhere, which will become the inevitable result. Of course, mega cities, urban agglomerations and cities have economic advantages, which can not be completely restricted by administrative power, and need to be regulated through the legislative planning of ecological environment.

At the same time, some people in urban employment should be able to purchase, rent and live in surrounding rural areas. The market should achieve two-way flow, and the rural areas should also build and perfect the housing market and open to the cities. With the process of urbanization, the population of rural areas will be less and less. If the urban employment population can be purchased and residing in the countryside, the disease in big cities will be alleviated and the difference between urban and rural areas will be greatly reduced. In fact, whether in Europe, the United States or Japan, the vast majority of the rural population, eighty or ninety of the population, is not engaged in agriculture. Urban and rural living conditions have their own strengths. It is hard to say that cities are generally superior, so that problems such as urban overcrowding, declining rural areas, rising housing prices and suburban areas may become slums.

Reporter: in your opinion, the marketization reform of production factors is advancing slowly. What are the reasons?

Guo Shuqing: first of all, the reform of factor marketization is more difficult. The problem of asymmetric information is more prominent, and supervision is more difficult. Therefore, for the market-oriented reform of production factors, the state is more cautious.

Second, there are still some problems in the marketization reform of production factors. There are still some difficulties in balancing the advantages and disadvantages of these reforms. In addition, the reform of factor marketization involves a more profound adjustment of interest relations, and vested interests will no longer support such a reform.

Reporter: in recent years, the voice of interest rate liberalization and the reform of exchange rate formation mechanism is higher. But now the decision mechanism of the two kinds of fund prices is far from the market, and to a large extent, it forms financial monopoly profits and unreasonable financial resources allocation. How do you view this problem?

Guo Shuqing: it should be said that over the past year or so, progress has been relatively fast. Although the benchmark interest rate is slower, the market interest rate fluctuates very fast. Since the end of last year, the deposit interest rate has been raised four times. Although it is still a real negative interest rate, there has been a very big difference in financial products. In fact, financial products are mostly substitutes for savings deposits. That is to say, the interest rate of deposits has accelerated the pace of marketization through financial products. Loan interest rates are marketization through trust, trust and intermediate business charges.

As for the exchange rate, we should see that in the background of shrinking trade surplus, the total amount of China's foreign exchange reserves is still very large, largely because the degree of marketization of foreign exchange earnings is not high enough. If the exchange rate lacks flexibility, it will have a greater negative impact on the domestic market and foreign market.

For the domestic market, the renminbi is expected to further appreciate in the market. This leads enterprises to sell their foreign exchange funds to commercial banks through various reasonable and legal channels, such as trade channels or other investment channels, and then sell them to the central bank by commercial banks. This has further pushed up our foreign exchange reserves and released more renminbi to the domestic market, which is exactly the opposite of the macro goal of controlling inflation.

In foreign markets, investment is involved. So many foreign exchange reserves need to be invested. How to maintain and increase the value is a very serious challenge. At present, although the US Treasury bonds have a credit crisis, they are relatively safe assets. Although it is not the best asset, nor the most ideal investment product, there are not many other options for global investors. That is the essence of the problem.

Exchange rate can not reflect the basic situation of market supply and demand. The long-term adverse effects are the structural adjustment that hinders the adjustment of industries. The most direct one is the structural adjustment of import and export, because the products that are already very expensive can still be sold, and producers will not have pressure. Industries in coastal areas have long been concentrated in low value-added areas and have great relations with exchange rate rigidity. Of course, it is also very important for people to lower wages and land prices. The price of these factors is distorted. At the beginning, people felt very good. They kept accounts for a long time, but did not expect to suffer a great loss.

Reporter: rural land mobility involves a more sensitive factor in market-oriented reform. With the continuous progress of urbanization, more and more farmers have come out of rural land. Reform needs to ensure the survival and development of this large group of people. There has been controversy over whether the reform of rural land flow should be promoted first or whether the public resources should be covered in rural areas. What do you think of this?

Guo Shuqing: I think the two have no priority and should be carried out at the same time, otherwise the reform will not go ahead. This process must rely on the marketization and monetization of land, because if the urban and rural land market is opened up, the land value-added income will emerge. Through a policy or even a legal method, a certain proportion of land transactions must be used for the construction of the social security system for farmers.

In 2010, China's fiscal revenue reached more than 8 billion, fixed assets investment was 27 trillion and 800 billion, GDP reached more than 40 trillion, we can say that we have the full strength to speed up the construction of farmers' social security system.

Most of the land revenue is currently owned by the government, and some are owned by developers. Some of them belong to rural organizations and farmers. Most of the government's income is spent on demolition and urban infrastructure construction. It is not a waste of money, but land finance is very opaque, much less standardized. Loss is inevitable. China's richest people account for a large proportion of developers. In the final analysis, it is because of the value added of land. It can be predicted that after the unified norms of rural land market, transactions will inevitably become equal, and the income that farmers get will increase substantially. However, due to the differential rent, the consideration will be very different in different areas and different areas. Therefore, a unified deduction of certain proportion for social security will surely have the nature of mutual assistance. The government will still benefit from land appreciation, but management must be standardized.

Our country is very large and there are many differences. Therefore, the opening of the rural land market should be carried out step by step. First, the remote backward provinces, hilly and hilly areas, the latter plain areas, and then the surrounding cities.

In addition, the sources of future urban construction funding should be resolved more by issuing bonds, thus ensuring relatively transparent supervision.

Reporter: land reform has not yet made breakthrough institutional arrangements. On the one hand, China can not see slums, on the other hand, it is the food safety of 1 billion 300 million people. How to understand the relationship between urbanization and land red line?

Guo Shuqing: in the process of land acquisition, 1 billion 800 million acres of red line must be maintained, and there are full conditions to keep it.

On the one hand, the rural population has been reduced by hundreds of millions, but the occupation of homestead has increased. The reason is that people who leave the countryside do not demolished their houses, and many of them will build new houses. The so-called collective ownership is the whole village committee. Actually, several cadres have the final say. This is definitely a "soft constraint" mechanism. When housing is approved, it may give gifts to village cadres or rely on family ties, so that the number of homestead will be increased.

On the other hand, most of the township enterprises, factories or farms that have been established in the rural areas have collapsed, and they can also be used as agricultural production sites. After the urban and rural construction land is unified, there will be great potential for non-agricultural land. If they are restored to farmland, the cultivated land area can reach or exceed 1 billion 800 million mu.

In recent years, various areas have been linked to increase or decrease in order to turn non-agricultural land into agricultural land. This measure is very popular with farmers.

As mentioned earlier, the most important problem is that we must ensure that the land has been sorted out and restored, and the quantity and quality can be equated. Non farm land reclamation for farmland should be linked to all levels of government, especially land and agricultural institutions. If we can guarantee that the quality of the new land will not be reduced or the area with reduced quality will be compensated by the corresponding quantity, and the corresponding responsible person will sign and bear the lifelong responsibility, we can popularize this kind of replacement widely. If we can really do these replacement, the efficiency of reform will come out.