(Dongxi Question) Sheng Songcheng: How should a "grown up" China deal with external pressure?

　　China News Agency, Beijing, February 23rd: Sheng Songcheng: How should a "grown up" China deal with external pressure?

　　China News Agency reporter Xia Bin

　　In 2021, China's macroeconomic operation will come to a solid conclusion, and new development goals will be set at the National People's Congress in 2022.

When China's total economic volume is advancing at one trillion yuan, economic reform has also reached a crossroads. Can the "China Model" that supports China's economic miracle continue?

How should the "China Model" be adjusted and reformed?

How to deal with external blows and challenges in the process of "growing up"?

　　Sheng Songcheng, a professor at China Europe International Business School and former director of the Investigation and Statistics Department of the People's Bank of China, recently said in an exclusive interview with China News Agency "Dongxiwen" that some external suppression will have limited short-term impact on China's economy, and the key to future development is still to do well own thing.

Combining the characteristics of the current stage of China's development with changes in the overseas environment, it is imperative to establish a long-term and effective mechanism to encourage innovation and promote consumption.

The following is a summary of the interview transcript:

China News Service reporter: The outside world has been concerned about when China's GDP will surpass that of the United States. In your opinion, in this process, how should China's economic development develop its own path?

How to deal with some external pressures in the process of "growing up"?

Sheng Songcheng:

China's economy has experienced rapid growth for more than 40 years. It is generally believed that China's GDP will surpass the United States in about 10 years and become the world's largest economy.

At present, the leading position of the United States in economy, science and technology, military and other aspects has not changed, but the relative gap with other countries is narrowing, especially the rapid development of China is regarded as a threat by the United States.

　　Some external pressures have limited short-term impact on China's economy, but in the long run, the factors that determine China's future development are still at home, and the key to future development is still to do one's own thing well.

We need to be soberly aware of China's current position in the world economy, weak links and development direction; we must recognize the gap, adhere to reform and opening up, promote structural adjustment, enhance innovation capabilities, and create more institutional dividends for China's economic development .

I believe that with the realization of China's reform, innovation and industrial upgrading, the economic growth rate will also enter a new stage.

　　At present, the world economy is sluggish and the trend of anti-globalization is on the rise, but it does not mean that globalization has fallen into a bottleneck period.

With the gradual rise of China, a diversified international order will gradually be established.

China and the West will form a new cooperation system in an information-based and intelligent world to further achieve a win-win situation for both parties.

Overlooking the Beijing CBD area.

Photo by China News Agency reporter Jiang Qiming

China News Service: Since the late 1970s, China has embarked on a modernization journey, creating a miracle of economic growth that is rare in human history.

What do you think China has done right?

Sheng Songcheng:

Timely and in-depth system reform is the core driving force of China's economic development, not just the investment-driven economic growth that everyone usually says.

Since the reform and opening up, China has implemented a series of institutional reforms and opening-up measures, which have had a profound impact on long-term productivity.

　　These institutional reforms can be classified into supply-side reforms and demand-side reforms. The former includes reforms at the factor and production ends, while the latter includes reforms in consumption, investment, and export systems.

Institutional reforms are bound to have a huge impact on China and will promote and drive economic growth.

The 2018 National New Farmers New Technology Entrepreneurship and Innovation Expo was held in Nanjing International Expo Center.

The picture shows the "Big Wild Goose Pagoda" in Xi'an made of apples, which attracted the attention of the audience.

Photo by China News Agency reporter Yang Bo

　　Since the reform and opening up, the scale of China's foreign trade has grown significantly, the capital account has been gradually opened up, and the opening-up process has accelerated significantly after joining the WTO in 2001, which has brought a new round of rapid growth to China.

Opening to the outside world allows China to participate in the division of labor and cooperation in the world economy, which is conducive to giving full play to the comparative advantage of China's economy.

　　In addition, by taking advantage of the "late-mover advantage", we can achieve technological progress and industrial upgrading at a lower cost and less risk, and achieve faster economic growth than developed countries. This is also the most rapid economic growth in China after the reform and opening up. one of the important reasons.

　　In addition to institutional reform and opening to the outside world, China has also adjusted its short-term macro-control policies according to changes in the situation.

Recently, in order to resist the downward pressure on the economy, China has accelerated the implementation of its proactive fiscal policy, and its prudent monetary policy has been steadily loosening.

These all reflect the balance between stabilizing growth and preventing risks, and between short-term and long-term goals in China's economic development.

　　Few large economies have experienced such rapid growth in history. Policy guidance and institutional reforms have been guiding the Chinese economy and shortening the process of constant market trial and error.

As economic development becomes more "mature", China and developed countries can have equal exchanges, and the role of the market in allocating resources will become greater and greater.

China News Service: Has a "China Model" different from other countries in the world formed in this process?

What are the main differences between this model and the development model of other countries such as the West?

Sheng Songcheng:

Our history and culture and the international environment we face are very different from those of Western countries. Different initial conditions lead to different paths.

In my opinion, the so-called "Chinese model" means that we have not followed suit or copied the Western model, but have evolved and developed along our own unique trajectory.

　　Taking the monetary policy that I am familiar with as an example, China has always emphasized financial support for the real economy and weak links in the economy, emphasizing that the fundamental task of finance is to serve the real economy.

The social financing scale indicator can precisely reflect the situation of China's financial system supporting the real economy, measure the tightness of funds, and demonstrate the multi-channel financing structure.

The creation, compilation, statistics and improvement of social finance indicators is one of the most important, time-consuming and deeply felt tasks during my tenure as Director of the Investigation and Statistics Department of the People's Bank of China.

The theoretical basis of the social finance indicator was proposed by Western countries, but it did not take root abroad, but became a unique and first created indicator in China.

　　The difference between China's development model and that of other countries such as the West, I think, is mainly reflected in three aspects.

　　First, the government promotes.

Governments at all levels in China intervene in a wide range and depth of economic activities, and play a vital role in commanding, managing and supervising the entire economic life.

This is in stark contrast to the traditions of "big economy", "small government" and the so-called "invisible hand" that European and American countries have always advocated.

　　China's socialist market economy is a dynamic system that is constantly evolving. Institutional changes, economic transformation, changes in the direction and strength of fiscal and monetary policies, and the development of financial intermediaries have all brought about economic efficiency that cannot be simply estimated by traditional economic models. Variety.

　　Second, the non-public ownership and the public ownership economy coexist.

Private enterprises aim to maximize profits. Excessive marketization and liberalization will lead to the crowding out of many low-profit basic manufacturing industries, resulting in industrial hollowing out.

　　China has a large number of state-owned enterprises that do not put short-term interests first, and invest heavily in infrastructure, logistics, communications and other fields.

We all know that the marginal utility of consumption is diminishing, and these investments without return in areas with weak foundations will drive and create more consumption and wealth in the future.

The Guizhou Du'an Expressway Yunwu Bridge was built by the large state-owned enterprise "Guizhou Bridge Group".

Photo by China News Agency reporter Qu Honglun

　　Third, special historical and cultural factors.

For example, China's savings rate is generally as high as 35% to 40%, much higher than the average level of less than 20% in European and American countries.

In the nearly 30 years since the reform and opening up, China has basically been in a cycle of "high savings rate - higher investment rate - high economic growth rate - high savings rate".

　　For another example, China takes advantage of its comparative advantages of relatively abundant labor and low prices to encourage exports and actively participate in international market competition.

The new crown epidemic has severely impacted the world economy, but China's exports have grown strongly against the trend, which can be seen as a bonus for the Chinese government's successful control of the epidemic.

China News Agency reporter: What kind of lessons can the "China model" provide to other countries in the world?

Sheng Songcheng:

To develop a country, it still has to proceed from its own national conditions.

The Chinese government can unify various principles and policies, concentrate the financial and material resources of the whole country, and promote the rapid development of the economy of an industry, a region, or even a country in a short period of time.

This is a time-saving and effective means of development for developing countries with relatively backward economies.

　　In the government-driven economic development, because the government is inextricably linked with the economy, corruption is easy to occur, and China will also find problems in time and make improvements.

But at the same time, as the economy develops, the level of government intervention in the economy is decreasing, which means that the degree of marketization is increasing.

If the government intervenes too much in the enterprise, and the enterprise relies too much on the government, it will make the micro-subject lose its vitality, initiative and competitiveness, like a "child" that will never grow up.

　　Therefore, the government's promotion must also conform to the economic laws, especially the investment efficiency, and improve the supervision and restriction mechanism.

The "China Model" does not go to extremes, but implements diversification, diversification and hybridization, and correctly handles the relationship between reform, development and stability.

China News Service: Facing the future, what further reforms are needed for the "China Model", and what are the top priorities?

Sheng Songcheng: In

recent years, China's economic growth rate has dropped significantly, the working-age population has passed its peak, the capital output efficiency has weakened, and the uncertainty of the international environment has increased.

These all mean that establishing a long-term effective mechanism to encourage innovation and promote consumption is a top priority.

　　China needs to further deepen market-oriented reforms and optimize resource allocation.

The property rights system is an important incentive, but at the same time, we must also pay attention to the anti-monopoly issues brought about by intellectual property rights, so as to avoid hindering the innovation of latecomers.

　　The establishment and reform of the system must be forward-looking, balance short-term and long-term interests, and achieve sustainable innovation.

In addition, market-based innovation needs to understand consumer preferences and trends, create new growth points for consumption through supply enhancement, and lead supply innovation through consumption upgrades to achieve a high level of positive circulation and supply-demand balance.

　　At present, the situation at home and abroad has changed greatly, and the Chinese economy is facing downward pressure. It is necessary to properly handle the relationship between reform and development, the relationship between short-term and long-term, the relationship between stabilizing growth and structural adjustment, and preventing risks.

Short-term downward pressure on the economy cannot be dealt with simply through long-term reform measures, because without short-term economic stability and development, long-term structural reforms will be impossible.

　　Infrastructure investment is an important starting point for China's steady growth this year.

Infrastructure investment is more controllable and can promote economic stabilization and improve market expectations in a relatively short period of time.

At present, China's infrastructure investment has a lot of project reserves.

China's per capita infrastructure capital stock is only 20% to 30% of that of developed countries, and the gap between urban and rural development and regional development is still large. The per capita investment in public facilities in rural areas is only about one-fifth of that in urban areas.

The potential of China's infrastructure development should not be underestimated.

On February 19, 2022, the Lanzhou Second Venue Meeting of the Gansu Provincial Major Project Concentration Commencement Mobilization Conference in the first quarter and the Lanzhou Major Project Concentration Commencement Mobilization Conference in the first quarter of 2022 were held in Dinglian Park, Lanzhou High-tech Zone.

Photo by China News Agency reporter Li Yalong

　　This year, the issuance of local government special bonds has moved forward. At the same time, there are various sources of funds such as fiscal surplus funds from previous years, government guidance funds, and urban investment bonds, and infrastructure investment funds are also relatively abundant.

We should correctly understand the positive role of infrastructure investment in stabilizing growth.

Of course, infrastructure must pay attention to benefits, but not only direct benefits, but also driving benefits; not only short-term benefits, but also long-term benefits; not only local benefits, but also global benefits.

(over)

Interviewee Profile:

　　Sheng Songcheng, professor, researcher, doctoral supervisor, enjoys special government allowances from the State Council, and is a deputy to the 11th National People's Congress.

He is currently a professor of economics and finance at China Europe International Business School, executive vice president of China Europe Lujiazui Institute of International Finance, director of China Chief Economist Forum Research Institute, professor and doctoral supervisor of Shanghai University of Finance and Economics, and doctoral student of PBC School of Finance, Tsinghua University. tutor.

He served as Director of the Investigation and Statistics Department of the People's Bank of China, President of the Shenyang Branch of the People's Bank of China, Counselor of the People's Bank of China, and Counselor of the Shanghai Municipal People's Government.

The main research directions are monetary and financial theory and macroeconomic regulation.

Over the years, he has published more than 100 professional papers in important journals such as "Chinese Social Sciences", "Economic Research", "Financial Research", "China Finance", "Frontiers of Economics in China" and "China Economic Transition", and published many books. And made outstanding contributions in the research, compilation and promotion of social financing scale indicators.

He has won a series of awards including the Pushan Policy Research Award.