(Economic Observation) Three misunderstandings need to be clarified to understand the "two cycles" of China's economy
China News Service, Beijing, August 18th, title: Understanding the "two cycles" of China's economy requires clarification of three major misunderstandings
China News Agency reporter Wang Enbo
After the “formation of a new development pattern with domestic and international double cycles as the main body and mutual promotion of domestic and international double cycles” was proposed, discussions on the “two cycles” have continued to heat up, but there have also been some misunderstandings.
——The inner circulation does not stop opening
Facing the complicated external environment, the domestic big cycle is placed in the main position of the "two cycles". Some voices believe that this signifies that China's economy will "stop opening up and turn inward".
Guan Tao, the global chief economist of BOCI Securities, does not agree with this. “This is not to close the country and actively decouple, but to further expand the high-level opening up.” This move is aimed at moving from the openness of commodities and factors to the system. Open the country and open the door to construction.
Guan Tao said that from 2013 to 2019, the ratio of China's total retail sales of consumer goods to the total US retail and food service sales increased by more than ten percentage points, showing that China's domestic market has great growth potential. To this end, it is necessary to continue to promote trade and investment liberalization and facilitation, continuously optimize the business environment, create a new position for China's "world factory + world market" international division of labor and cooperation, stabilize foreign trade and foreign investment, and improve the stability of China's industrial chain supply chain And competitiveness.
Shen Jianguang, chief economist of JD Digital Technology, believes that the "two cycles" actually put forward higher requirements for China's opening up. China will make full use of the huge potential of the domestic market, further open to the outside world, attract investment from multinational companies, maintain the integrity of the industrial chain, and promote the process of globalization.
——Domestic demand supports recovery with confidence
In the external environment of rising protectionism, downturn in the world economy, and shrinking global markets, the domestic big cycle points to expanding domestic demand. However, there are also doubts that the impact of the epidemic is dominated by internal circulation and cannot effectively support the Chinese economy.
In Shen Jianguang's view, although the problem of unbalanced and insufficient development is still prominent, China has entered a stage of high-quality development and its development advantages are also very obvious. Over the past 40 years of reform and opening up, China has become the world's second largest economy, with the most complete and largest industrial supply system, as well as the population and wealth base for the formation of an ultra-large-scale consumer market. It is generally equipped with the conditions for a domestic economic cycle as the mainstay.
Especially since the 2008 international financial crisis, domestic demand has gradually become the main engine of China's economy. In 2019, China's dependence on foreign trade dropped to less than 33%; the contribution rate of consumption to national economic growth reached 57.8%, becoming an important endogenous force for boosting the economy.
"Expanding domestic demand is the core of the domestic cycle." Guan Tao said that China's local epidemic prevention and control has achieved major strategic results, and has the advantage of taking the lead in economic recovery. In the future, it should make better use of domestic industries with a complete range of industries and broad market potential. Advantages, stabilize the basic market of enterprises and employment, and reduce the challenges brought by external shocks.
-Will not return to short-term stimulation
Facing the arduous task of economic recovery, whether the old method of stimulating domestic demand with real estate is used or not is also the focus of outside attention.
In this regard, the "China Monetary Policy Implementation Report for the Second Quarter of 2020" issued by the People's Bank of China made it clear that it insists not to use real estate as a short-term economic stimulus, insists on stabilizing land prices, housing prices, and expectations, and maintaining the continuity of real estate financial policies. Consistency and stability, implement the real estate financial prudential management system.
Peng Wensheng, chief economist of China International Capital Corporation, noted that recent fiscal and monetary policies have shown two major characteristics: one is to focus on structural influence in the horizontal, precise drip irrigation, and guide social resources to support the real economy. The key is to protect people's livelihood and employment; Second, the vertical aspect emphasizes cross-cycle design and adjustment, and avoids short-term demand stimulus at the cost of exacerbating medium- and long-term imbalances.
"Both dimensions require that housing is not speculated. Expanding domestic demand cannot rely on stimulating real estate demand. Because housing prices and credit promote each other, it seems to expand domestic demand in the short term, but high leverage risks are not sustainable." Peng Wensheng said.
Instead of relying on short-term strong stimulus, what can we rely on to open up the domestic cycle? Wang Yiming, former deputy director of the Development Research Center of the State Council, pointed out that more attention should be paid to relying on reforms to stimulate market potential. For example, speed up the clearing of outdated and overcapacity and zombie companies, allocate the accumulated production factors to more efficient areas; create a market environment where the property rights of the private economy are equally protected in accordance with the law, and stimulate the enthusiasm of private enterprises to invest. (Finish)