What Is The Complexity Of China'S Economy?

Always full of confidence.

The stock market is a mirror of the macro economy. Because of the credit crunch and economic slowdown, the Shanghai and Shenzhen stock markets have recently fallen sharply, and the cumulative decline has ranked first in the world.

At the same time, it reflects the increase in the dilemma of macroeconomic regulation and control, and the future of uncertainty will perplex China's economy.

Just a month ago, people were worried about soaring property prices, soaring exports, and how to manage inflation expectations. Now, things seem to turn the other way around.

From the June PMI index released last week, manufacturing industry has begun to slow down.

Meanwhile, since the end of May, the Baltic dry bulk index has been declining sharply, and China's exports are slowing down, which will drive the overall contraction of China's economy.

Last Friday, the National Bureau of statistics revised the economic growth in 2009 from 8.7% to 9.1%. In this way, according to the statistics of the same period, the growth rate of the second half of the year will be lower than the previous expectations because of the rising base, and the sensitive stock market reflects this expectation.

At the beginning of last year, China's macroeconomic situation was not good. However, the fiscal stimulus package to be implemented and the huge credit scale that it was going to bring to the market led to a flood of market liquidity and investor confidence, and the Shanghai and Shenzhen stock markets soared.

To this day, the 4 trillion stimulus funds have basically been used up, and the intensity of policy stimulus is gradually declining, and is drawing to a close.

You know, last year's economic growth target was mainly the result of financial pfusion.

If the fiscal fund does not cause multiplier effect, in other words, that is, a piece of fiscal expenditure can not lead to consumption or investment of a few private dollars, that is, when stimulus funds are used up, that is, the day when economic growth is stagnant.

Why then?

The problem is that those who rely on blood pfusion can survive.

Many people say this is because of the shortage of residents.

Yes, residents' consumption is the fundamental force to stimulate economic growth, but the foundation of consumption is disposable income.

Increasing the disposable income of residents requires changing the distribution pattern of national wealth determined by institutional factors. This is a long-term task, which is not easy.

Household appliances to the countryside, which stimulate residents' consumption, are only expedient measures, but the effect is not obvious.

Because for the needy class, it may save 100 yuan for buying household appliances, but it can save 1000 yuan without buying.

Under the condition of incomplete social security, consumption is bound to be weak.

What is more serious is that China's income gap has reached the edge of differentiation.

And the income gap is too large, the total consumption of society is bound to be inadequate.

News reports often say that the total volume of retail sales of social consumer goods has increased. However, how much of it is the spontaneous consumption of residents, how much is group consumption and government purchase, it is hard to say.

Therefore, consumption is the economic pulling force that we can not expect in the short term.

The more effective economic driving factor than consumption is investment.

If private investment can be further opened, no matter employment or GDP, there is no need to worry.

Now, in the field of money making, private capital is not allowed to enter the market. The only way to buy money is to buy houses.

Houses are consumer goods, but they are also investment goods.

When buying new housing, when GDP is counted, investment is included rather than consumption.

In the past thirty years, the only way for residents to accumulate wealth is to buy houses.

Buying houses has led to an increase in consumption, which is much more than the contribution of home appliances to the countryside.

This also proves the importance of private investment from the opposite side.

The real estate policy has been going on for three months, but housing prices in major cities have not dropped significantly, but turnover has shrunk sharply, and capital has not returned to the stock market. The reason behind this is that there is no other better way for residents to invest.

It is worth noting that reducing the excessive housing prices will not help the ordinary low-income families to buy houses, but it will be a great blow to economic growth.

The solution lies in further opening up private investment.

The existing provisions of the "anti monopoly law" on the "national economy and people's livelihood" have been discussed and revised.

The word "national economy and people's livelihood" is commonly used in the planned economy period. It is the truth of monopoly and the forced acceptance of monopoly.

It can be seen that in the depth of consciousness, there is still much doubt about the role of the market.

Under the condition that consumption and private investment are not expected, another export member of China's economy will be responsible for export.

But now that exports are increasingly constrained by international factors, exports and manufacturing are likely to slide at any time, which is a natural thing to cause market concern.

In this way, under the existing framework, the support of economic growth will be left behind by government expenditure and the investment of state-owned enterprises based on this.

In the long run, the author thinks that we should not be too concerned about the GDP without employment growth. Instead, we should exert the strength of the market mechanism, liberalize investment, allow private capital to enter the original monopoly areas as well as foreign capital, and adjust the pattern of national income distribution. These reform measures are the right way to solve the dilemma of regulation and control.

(the writer is director of the government and economic research center of Central University of Finance and Economics)