Wu Jinglian: Changes In Driving Forces "Drive Away" The Days Of Making Quick Money

The topic I want to talk about today is called "facing the new normal".

The new normal is the most popular word nowadays. Especially at the recent central economic work conference, leaders of the party and government elaborated on the contents of the new normal, the guidelines put forward by the party and government, and how to lead the new normal.

The mainstream newspapers have published a lot of articles, but I always feel that this question deserves further in-depth study.

I would like to make four points:

The first point is that the old normal can no longer be extended and no longer exists. This is an objective fact before us.

The old normal is 30 years after our reform and opening up.

An economic development that has been maintained for a long time.

The general trend of economic development can be summed up in this way: high investment and high growth, that is to say, the annual average growth of about 10% achieved under the support of massive resources.

This is certainly not unique in the world, but it is a miracle for us to have such a large population and large scale long-term stagnation and backward state for about one hundred or two hundred years.

But this old normality began to decline at the beginning of this century.

By the third quarter of 2010, the growth rate has gone down to a level, especially in the last three years. The growth rate has reached the level of 7%-8%, from 10% to 7%.

During this period, some stimulating policies have been adopted to stimulate economic growth.

From last year to this year, it became very obvious that this old trick was becoming increasingly ineffective.

Its economic growth is becoming shorter and shorter.

If 40000 billion investment and loans in 2009, the economic growth has maintained a growth rate of more than 8% over two years.

The stimulus in the second quarter was not very bad, but it was only 0.1 percentage points higher than that in the first quarter.

It fell to 7.3% in the third quarter.

In November October, the NDRC approved projects to reach about 1 trillion.

Of course, is there so much money that can actually be put into practice? Maybe not so much.

But there was no sign of growth.

What does this mean? What is the problem? The speed of growth has declined. It is determined by some objective and decisive factors, not by people's wishes.

The decline in growth rate is due to changes in the driving force or momentum that supports economic growth.

What drives the old normal driving economic growth at high speed?

There are three driving forces for economic growth, one is labor input, the other is capital input, and the other is productivity growth.

In the old normal state, these three powers are very powerful.

In the labor force, the Chinese Academy of Social Sciences, Professor Cai Fang said, the demographic dividend, we have a large demographic dividend, and the other is the bonus of reform: reform and opening up to increase productivity, in this regard, the reform has made our urban and rural markets open, so the inefficient use of labor resources and land resources can be inflow into the city and has been used more efficiently.

On the other hand, opening up has enabled us to make use of the simple introduction of foreign equipment and the technology of foreign countries under the condition that there is a big gap between our country's technological level and developed countries, so that the general technological level of China's processing and manufacturing industry has been raised to a similar level with that of developed countries.

Productivity has been raised.

Another third factor is investment.

This is an old method in the era of planned economy.

But after the reform and opening up, we mobilized some new resources to enter our economic activities, so the scale of investment can not be compared before our reform and opening up.

For instance, the total amount of resources brought by land and land from an immobile resource to economic activities is at least tens of trillion.

So we can use massive investment to support high growth to a large extent.

Of course, there is another old way to issue money, which is government led investment.

The basic driving forces of economic growth have changed in the early stages of this century. In 2006, Professor Cai Fang proposed that the Lewis inflection point is about to appear, and the demographic dividend is shrinking or even disappearing.

The efficiency of opening up is improved. Because the process of this structure changes into the later stage and the general technical level of China is close to that of the developed countries, it is very small to improve the technical level by a simple way of learning foreign technology and introducing foreign equipment.

Another is the most important factor supporting the rapid growth. After massive investment, after many years, the sequelae of various aspects have been accumulating more and more.

The most outstanding performance is the accumulation of debt in our country's balance sheet, which makes our leverage ratio very high.

If the debt ratio of the balance sheet is too high, then there will be some interruption of the capital chain in some links.

This is a great danger.

Because the total debt in the national balance sheet, including the government balance sheet and the company's balance sheet, is about 250% of GDP.

Under such a high leverage ratio, there are bound to be debt repayment and "run away" phenomena in some sectors.

But if there is a chain reaction and the spread of debt difficulties will lead to a crisis in the whole economic system.

There have been many systemic crises in the world, such as the systemic crisis in Japan in 1990.

We must avoid this happening, so we can not use massive investment to support high speed growth.

In short, because the driving factors have changed, the old normal can not continue.

This is an indisputable fact that no matter how strong your wish is, it is impossible to keep it going.

The second point is to deepen our understanding of the new normal.

From last year to this year, party and government leaders have repeatedly said China's economic development has entered a new normal.

Especially after this year's central economic work conference, there are many interpretations published in the mainstream media, but I always feel that this problem has not been thoroughly studied.

The central economic work conference has said a new paragraph about the characteristics of the new normal: China's economic development has entered a new normal. It is changing from high speed growth to medium and high speed growth. The mode of economic development is shifting from the extensive growth of scale speed to the intensive growth of quality and efficiency. The economic structure is shifting from incremental expansion to the adjustment of stock and the coexistence of excellent and incremental growth. The driving force of economic development is shifting from the traditional growth point to the new growth point.

In short, the central economic work conference has made such a definition for the contents and characteristics of the new normal.

It is from four aspects: speed, development mode, economic structure and development motive force.

In my view, the above four characteristics can be reduced to two basic aspects: one is that the growth rate of the economy is changing from high speed growth to medium and high speed growth.

On the other hand, the latter three points can be contained in the pformation of the mode of economic development.

The mode of economic development has shifted from extensive growth of scale to intensive growth of quality and efficiency.

If we carefully observe these two turns, we can find that the progress of the two turns is different.

The turning of the previous growth rate is already a reality.

The best way to say the best way of economic development is only to enter this direction.

So the question is coming: what is our focus? I think our focus should be to acknowledge that the decline of growth rate is an objective trend. At the same time, the growth rate of high speed or medium speed is supported by higher and higher productivity.

If we are caught in a medium speed growth or a slower growth of low efficiency, all kinds of economic and social contradictions that have been overshadowed by high speed growth will be exposed.

In short, the growth of low efficiency and medium speed is a trend that we do not want to see. We hope to see a normal and desirable normalcy, which is a relatively high efficiency growth at medium or high speed or medium speed.

This is what we need to do to achieve it, not to say that we can do nothing. The first change is already there. We can only admit that we can only adapt to it.

The second change requires our efforts to achieve it.

The third point is that only by comprehensively deepening reform and establishing a system conducive to innovation and entrepreneurship can we achieve the second change.

It is necessary to pform from extensive development to intensive development. It is not a new problem raised only now. This problem has been mentioned for nearly 20 years, and it is said that this is the beginning of reform, but it has not been realized.

Why is it not implemented? The reason is that the system has not changed and the pformation of the economic development mode is hard to achieve.

From the beginning of reform and opening up in 1981, the ten principles of economic development put forward by the State Council approved by the National People's Congress clearly pointed out that the ten principles were put forward around the center of improving economic efficiency.

By the time the ninth five year plan was formulated in 1995, the State Planning Commission raised a major issue of our economic development, that is, extensive growth mainly driven by investment.

In order to achieve sustained and stable development of the national economy, it is necessary to pform the mode of economic growth from extensive to intensive.

The CPC Central Committee discussed the formulation of the "95 plan proposal" and later the "95 plan" when the people's Congress discussed the "95 plan", which was put forward by the Soviet Union in 60s. However, the Soviet planned economic system was considered to be a natural right of socialism and could not be changed until the collapse of the Soviet Union did not realize the pformation of the mode of economic growth.

Summed up the lessons of the Soviet Union, put forward to achieve the two basic changes, one is to achieve the pformation of economic growth from extensive growth to intensive growth, the second is to achieve the economic system from planned economy to market to commodity economy, and clear second fundamental changes are the basis for the first root change.

The "95 plan", because of the relatively good progress made in the market orientation reform under the guidance of the "50 decisions" in the third Plenary Session of the 14th CPC Central Committee, has made some achievements in the pformation of the mode of economic growth in the period of the 95 plan.

But during the "fifteen plan" period, the situation reversed.

During the "fifteen plan" period, because the government's leading role in the allocation of resources became bigger and bigger, the mode of economic growth became worse and worse. Massive investment was used to build "achievement project" and "image project", which caused great hidden trouble in 11th Five-Year when it was formulated in 2005.

Therefore, in the course of the formulation of the 11th Five-Year plan, there was a big debate about whether we should continue to use the government led investment to stimulate economic growth, or to realize the pformation of the mode of economic growth.

Therefore, the "11th Five-Year plan" stipulates that changing the mode of economic growth should be the main line of economic work.

Many specific measures have been laid down for this purpose.

When I came to the meeting, I would like to give you a book entitled "the choice of China's growth mode", which I summed up in the "great deal of controversy" in 11th Five-Year, but I can't buy it at the bookstore in Kunming. I regret to say it later.

"11th Five-Year" was well established, but with an American economist who gave advice on 12th Five-Year in 2010, "you have worked out a good 11th Five-Year plan, but I don't think anything has happened."

This unsatisfactory state led the CPC Central Committee to put forward the slogan "speeding up the pformation of the mode of economic development" in the last year of 11th Five-Year, that is, 2010.

The experience mentioned above tells us that the pformation of the mode of economic development is of vital importance to China, but whether or not it can be achieved depends on reform. It depends on whether we can pform the existing system into a system conducive to entrepreneurship and innovation through reform.

What kind of system is this system? In my view, it is the market system established in the third Plenary Session of the 18th CPC Central Committee that can make the market play a decisive role in a unified, open, competitive and orderly market.

Only we realized this plan in the third Plenary Session of the 18th CPC Central Committee.