At the beginning of recovery, what "passes" do China's economy still have to break through?

Original title: (Economic Watch) The recovery has started, what "passes" do China's economy still have to break through?

Beijing, March 3 (ZXS) -- In 21, China's economy began to fully emerge from the impact of the epidemic and return to normal operation. In the first two months of this year, a number of economic indicators showed positive changes, and China's economic recovery began. However, at present, the global economy is facing geopolitical conflicts, supply chain restructuring, high inflation and other problems, and China's economy is also facing challenges such as strengthening uncertainty about external demand and confidence still to be restored. In 2023 and even in the future, what "passes" do China's economy still have to break through?

At the "2023 Peking University Guanghua Two Sessions Economic Situation and Policy Analysis Meeting" held recently, a number of Peking University Guanghua professors gave analysis. Color Color, associate professor at Peking University's Guanghua School of Management and deputy director of Peking University's Economic Policy Institute, said it is necessary to see that confidence restoration may be a long-term process, consumers put a lot of money into savings because of lack of confidence, and at the same time, business confidence also takes a long time to repair. In addition, it is also necessary to pay attention to whether the real estate recovery can be sustained and export uncertainty strengthened.

Color pointed out that China's GDP growth of 2022.3% in 0 is lower than the target of 5.5%, of which weak consumption and negative real estate investment growth have a greater impact, so stable growth has become the main target in 2023.

To stabilize growth, we must first promote consumption. This year's government work report emphasizes that the recovery and expansion of consumption are given priority. In addition to various policies to boost consumption, Zhang Zheng, professor and deputy dean of the Department of Finance at Peking University's Guanghua School of Management, reminded that the impact of housing prices on consumption cannot be ignored.

He pointed out that according to the calculation of the research group, the current value of China's commercial housing stock is about 400 trillion yuan (RMB, the same below). In the past three years, the overall house prices in the country have shown a certain degree of decline, with an estimated decline of about 20% based on the transaction prices of second-hand houses in a sample of cities across the country. According to the area of housing stock at the end of 2019, the national commodity housing value loss on the book was nearly 70 trillion yuan, forming the perception of residents' wealth damage and inhibiting residents' consumption to a certain extent. Therefore, stabilizing house prices plays an important role in restoring confidence and promoting consumption.

Export pressure is another major challenge for China's economy this year. In the past three years, China's foreign trade has bucked the trend and become a bright spot for the economy. However, the global economic and trade situation in 2023 is severe and complicated, and China's foreign investment and foreign trade are under pressure. Tang Yao, associate professor of Guanghua School of Management of Peking University, said that under the influence of the Fed's rapid interest rate hike, world growth expectations are weak, international financial risks are exposed, and the risks faced by enterprises have increased, resulting in a lack of increment in international economic and trade activities and intensified competition to attract direct investment. At present, China's advantages in foreign investment and foreign trade are a complete industrial chain and a large domestic market, but as the downstream production links shift to Southeast Asia and other places, China must stabilize the industrial chain by forging ahead.

Tang Yao suggested that we should seize the opportunity to promote high-level institutional opening up and provide a more stable and predictable environment for enterprises. Specifically, the government should provide a stable environment for the industrial chain by focusing on large enterprises located at the core of the industrial chain, and do a good job in institutional opening up for key foreign-funded and private enterprises.

This year's government work report set the economic growth target at about 5%. Overall, it is entirely possible for China's economy to grow by about 5.5% or even higher this year. Because the base effect has a strong impact, and the economy has a natural recovery process, market confidence has also been repaired.

Chen Yuyu, a professor at Peking University's Guanghua School of Management and director of Peking University's Economic Policy Institute, also pointed out that the short-term negative shocks superimposed in the past three years will be greatly alleviated this year after policy adjustments. Data for January and February this year suggest that the economy has achieved some modest recovery. The full-year growth target is achievable with hard work.

However, in the medium and long term, he proposed that economic growth comes from an increase in factor inputs on the one hand, and an increase in total factor productivity (TFP) on the other. To achieve high-quality growth and achieve Chinese-style modernization, TFP growth needs to contribute a larger share of economic growth.

Since 2008, China's TFP has declined. In response to this problem, Chen Yuyu believes that while solving the problem of economic recovery, greater attention should be paid to the package of medium- and long-term structural reforms.

Professor Liu Qiao, Dean and Professor of Guanghua School of Management at Peking University, is also highly concerned about TFP growth. He believes that through the improvement of resource allocation efficiency brought about by reindustrialization, new infrastructure, major industry construction, carbon neutrality, and more thorough reform and opening up, China may also achieve a reversal of total factor productivity growth after completing the industrialization process - from the current level of less than 2% to 2.5% or more.

How can this reversal be achieved? Liu Qiao suggested that fiscal policy should lead and increase the issuance of long-term government bonds or special bonds with greater intensity; Accurately apply the foundation and core areas with active policies to help China's economy return to the track of medium-to-high-speed growth; Build an innovative investment mechanism under the new national system, and vigorously promote investment in basic sciences; Launch of a new round of reform of the housing provident fund system, rental housing and the "trinity" of REITs. (End)