The Cost Of China's Contribution To The World Economy

In recent years, The world praises China as the global economy. The voice of making great contributions is endless, and China seems to enjoy it. In recent days, President Lagarde of IMF praised the country with the stint of the world economic crisis. China was the first country to launch economic stimulus policies in the group of 20. China's leading role in global institutions also reflected the success of the economy.

Indeed, China's contribution to the global economy has increased rapidly in the past ten years. According to the World Bank statistics, China's contribution to world GDP increment has increased from 4.6% in 2003 to 14.5% in 2009, making it the second largest economy and the largest contributor in the world. In the most severe financial crisis in 2009, although global trade fell by 12.9%, China's imports still increased by 2.8%, and imports exceeded 1 trillion dollars. According to Goldman Sachs Research Report, from 2000 to 2009, China's cumulative contribution rate to the world economy exceeded 20%, which is higher than that of the United States. The Ministry of commerce also statistics that, since China's accession to the World Trade Organization in the past 10 years, the average annual import of US $750 billion is equivalent to creating about 14000000 jobs for our trading partners. In the next five years, China also claims that the total import volume will reach US $8 trillion, making greater contribution to the global economy. The American Chamber of Commerce has said that China's purchasing power will increase from 5% to 14% in 2015.

In our view, China While contributing to global economic growth, we must also examine the cost of economic contribution. Examine the excessive expansion of fiscal policy, credit policy, and the high cost of consumer stimulus. At the moment, though we reflect on the former two, we have no scruples about consumption stimulus policies.

First of all, over expansionary fiscal policies continue to distort the economic structure and cause huge debts. 4 trillion the fiscal stimulus plan not only shelved the economic restructuring plan, but also led to the continuous expansion of the real estate bubble. The construction of the "tie Gong Ji" not only led to the spread of platform lending around the country, but also caused the local people's complaints about "going back to the country" and four complaints.

Second, investment driven policies drive overcapacity and urbanization. China consums only 1/6 of the US and is unable to digest world-class manufacturing capacity in China. The excessive urbanization of maintaining rapid economic growth is actually based on the false prosperity created by occupying farmland and obtaining GDP increment through land reform. The survey by the China Urban Development Research Institute also shows that the high level of economic development has not correspondingly brought about a high level of urban public services and residents' actual sharing of achievements.

The three is asymmetric income between China and foreign countries. According to the Ministry of Commerce, the total profit of foreign invested enterprises invested in China in the past ten years after joining the WTO was 261 billion 700 million US dollars, with an average annual growth rate of 30%. The Federal Reserve Bank of San Francisco says that "made in China" accounts for 55% of the contribution of American businesses and workers. That is to say, "made in China" products sell for 1 dollars, and 55 cents are imported into the American pocket, while the average value of imported products is only 36%.

Four, the consumption stimulus policy overdraws the purchasing power of residents. In China, where investment and export growth are limited, policymakers are also making the biggest structural adjustment in order to maintain rapid economic growth. The "12th Five-Year plan" also explicitly expands consumer demand. The Ministry of Commerce has made it clear that the first priority in 2012 is to "expand the consumption of residents". As a result, after the expiration of the policy of home appliances to the countryside, the replacement policy of furniture to the countryside was launched again, but the central bank's recent survey has shown that the expected future income of residents is decreasing. In fact, the growth of total retail sales of consumer goods in 2011 was lower than that in 2010. In November 2011, the consumption of social goods decreased, but the policy of household appliances going to the countryside continued, while the trend of luxury consumption comparisons was rising.

At the same time, in Social basic pension At present, 1 trillion and 700 billion of arrears are not fully covered. Stimulating consumption growth is likely to scour away future growth prospects. The expansion of domestic demand, like home appliances to the countryside, has greatly reduced the purchasing power of rural areas, and its subsequent expenditure on high energy consumption appliances has not ended. Without industrial development, it is impossible to have long-term and sustainable sources of consumption funds; imperfect social security, just by creating convenience to stimulate consumption, not only the effect may be temporary, but also a great sequela.

While enjoying the praise of the world economic contribution, China should also carefully examine the cost of contributing to the rapid growth of the world economy, reflect on the thinking and change of the sustained high growth of the economy, and expand consumption to contribute to world economic growth, which should be based on improving people's livelihood and structural adjustment, rather than artificially stimulating consumption in advance and drying up.