Pan Jiancheng: Overcapacity Is The Root Cause Of Business Difficulties.

For the current economy, we need to recognize three questions. First, how to view the current economic situation. The latest statistics show that China's economic GDP growth is the lowest in 24 years, and industrial growth is the lowest in 20 years. From 2012~2014, economic growth tends to be mild. In the survey of entrepreneurs, we find that entrepreneurs above 3/4 believe that the current situation is normal or better than normal. But prices, PPI and industrial prices continued to decline for 34 months, giving everyone a lot of pressure. However, not all enterprises are operating difficulties, many enterprises are living very well, while enterprises with resource intensive industries are very difficult.

Heilongjiang, Shanxi, Hebei, Liaoning, Jilin The growth of industries such as other places has rarely declined. From the historical average data, these places grew faster before, but this year they fell rapidly, because the proportion of resource intensive industries in these places is larger. In the past, the rapid growth of fiscal revenue and the fast growth of fixed assets investment in these areas were not normal.

The second question is what is changing in China's economy? After China's accession to the WTO, exports are growing rapidly, and 2003~2007 is in a straight up stage. After the financial crisis, China's dependence on exports has declined. This is a manifestation of our domestic dynamism, and the export structure has been significantly optimized. The proportion of general trade continues to rise, and the proportion of processing trade continues to decline.

The tradition of America, Europe and Japan Trade The proportion of China's exports is decreasing, but the proportion of exports to ASEAN and BRICs is rising, especially ASEAN. The contribution of consumption to economic growth has continued to rise, consumption structure has been upgraded, and textile related consumption has been relatively stable.

Economic growth has continued for 3 years. It will still be this way in 2015, and the structure will be more optimized. In 2015, almost the same as in 2014, the severity of overcapacity increased moderately, and there was no sign of recovery in equipment utilization. In the survey of business prosperity, it is found that the judgement of the entrepreneur is relatively stable, but for the future. Expect Not optimistic. Judging from the order situation, although the total temperature and fall of the industrial order quantity, nearly 80% of the enterprises are in normal condition. Because of overcapacity and the spread of machine replacing people, the willingness to invest in industrial enterprises has also gradually declined.

The third question is how to understand the new normal of China's economy. For 4 consecutive years, rising labor costs are ranked first among enterprises' difficult problems. This means that our country's employment is not difficult, and it means that the prices of products will not go up. Because too many enterprises producing similar products cause fierce competition in the industry, and excessive investment growth leads to overcapacity, so the price will not go up, leading to business difficulties. The root cause of the pain is the excessive growth of investment in the past.

Over the years, we have been overly concerned about short-term issues, such as excessive consumption of resources, pollution of the environment, and the sacrifice of the interests of migrant workers.

When the advantages of population and capital investment are not in place, we need to promote growth through industrialization, information technology, agricultural modernization and the structural changes of urbanization, and bring about growth through institutional changes.

In 2014, the enterprises' innovative desire increased significantly. This is a good result. A group of Internet companies represented by Alibaba have led to the upsurge of the whole technological innovation. We expect that such a boom can continue. China's economy is at a critical juncture of "cure". We should not worry about the decline of economic growth. Because too much worry will affect reform, which will affect structural adjustment and affect spanformation.