专家对中国经济增长的看法 - 2023-12-11


Editor's note: Since the beginning of reform and opening-up, China has been committed to injecting new impetus into the economy. What are the key focuses for the year ahead? Three experts offer their insights to China Daily.

Given the changes in the economic landscape, private enterprises need to change their mindset, too, and understand the characteristics of the new landscape while aligning their thought processes with it in order to achieve their goals.

To discern these characteristics, they need to compare the new landscape (or the "new paradigm") with the previous one or the "old pattern". The old pattern was characterized by a small base but a high growth rate, a vast industrial space where almost any production activity was profitable because natural resources were inexpensive and labor costs were low. It leveraged traditional and comparative advantages, gained from entering low-end and cheap segments of the supply chains or from being a latecomer to a sector. This gave rise to imitation but ensured rapid progress following in the footsteps of established players.

During the "old pattern" period, global conditions were favorable for China's industries, not least because developed countries were adjusting their industrial structures, and transferring their excess capacity which dovetailed with China's economic structural and labor force needs. The era of rapid reform and opening-up witnessed the flourishing of private enterprises, making China the world's second-largest economy with a double-digit growth rate, with labor-intensive sectors' exports being one of key engines.

However, as China transitions to the new normal, characterized by moderate and stable growth, the landscape has significantly changed: while the absolute GDP size increases, the growth rate has slowed, and overcapacity plagues low-end industries and the industrial space has diminished. And with resources and labor costs drastically rising and the cost of environmental damage becoming costlier, the notion that comparative advantages can drive growth indefinitely has come in for severe challenge.

In the new landscape, global conditions have become less favorable for China, with Western countries, led by the United States, resorting to unilateralism and protectionism, and restricting China's access to high-end technologies. Making the situation more complex is the rapid development of some neighboring countries, which are now offering cheap labor and attracting international capital away from China. Amid all this, the global economic downturn has further restricted the once booming foreign trade that propelled China's rapid ascent.

To address these challenges, private enterprises need to recognize that economic development in the new landscape hinges on two key factors: penetrating the domestic market while exploring new international markets; and achieving self-reliance in all sectors of the economy and clearing the technological bottlenecks restraining China's economic progress. The control over high-end technologies is not only an economic imperative but also a matter of national security.

The traditional model of rapid development has not only lent credence to but also consolidated this approach. Some private enterprises remain fixated on gaining the benefits of latecomer advantages, and thus stick to the old development model that is focused on fast growth and high returns, even at the cost of the environment. This fixation has ossified their mindset, causing them to use old methods to address new challenges, stifling their innovation capacity due to their overdependence on comparative and latecomer advantages.

History provides intriguing cases that warrant reflection. For example, after the first Industrial Revolution, Great Britain's development slowed down as the country remained enamored by outdated methods. Regardless of how advanced and effective the beneficial methods once were, they could not lead the way against the backdrop of new developments, and the production and market they created could not foster continuous growth. Yet the British clung on to the old patterns, allowing the ruthless development of the United States and Germany to surpass them.

For the sustainable and healthy development of private enterprises, it is important that the government and society work together to create a conducive environment, while private entrepreneurs ponder whether to continue fueling the economy with outdated products or whether high-tech innovations can help them manufacture products that meet the demands of the changing times and markets.

Analyzing why enterprises led by individuals such as Ren Zhengfei and Li Shufu never lack funds is illuminating: they offer products that the markets demand, ensuring a continuous influx of funds. Without technological innovation and viable projects, money cannot achieve much.

Observing how entrepreneurs in Western market economies thrive amid the ebbs and flows, we have realized that the entrepreneurial spirit is forged through myriad challenges, and success is achieved by adapting to the changes and addressing the challenges. To thrive, enterprises require not just money but also a forward-thinking mindset along with concrete implementation.

For private enterprises to continue to thrive, they cannot rely on equipment, technologies, workforce quality and management capabilities that bore fruit 30 years ago. And rather than considering economic downturns as disasters, it would be more productive to see them as opportunities for transformation and renewal.

The author is a senior economist at Renmin University of China.

Real estate sector needs root-cause reforms

The real estate industry, a pillar of China's economy, has become a focus of attention because it is facing difficulties as the country transitions to innovation-driven high-quality development.

After the China Evergrande Group, one of the biggest names in China's property market, began facing severe financial problems, triggering fears of having a domino effect on the property market, the central authorities introduced an array of policy incentives to help property developers meet the sector's different demands.

But to address the apparent risks to the real estate market and accelerate economic recovery, the government should adopt more tailor-made policies including reducing the percentage of down payment for apartments, lowering the mortgage interest rate and adjusting the eligibility criteria for first-time homebuyers.

In fact, the favorable policies have helped stabilize, to a certain extent, the property market despite some cases of breach of contract. The national transaction volume of both new and secondhand residential properties achieved positive growth from January to September this year, while the completion volume of housing increased by 19.8 percent, which is indicative of improved confidence and expectations.

The central authorities have made it clear that the relationship between demand and supply in the real estate sector has undergone fundamental changes. New mortgage lending-related policies and measures to identify first-home buyers have been adopted in some first-tier cities with the aim of lifting administrative restrictions, while some other big cities have withdrawn property-purchasing and property-loaning limitations.

While these moves will stimulate the real estate market's recovery in more third- and fourth-tier cities, measures such as urban village renovation projects, construction of government-subsidized and affordable housing, and optimized supply-demand mechanisms would further improve the housing sector's structure and ensure low- and middle-income individuals have access to affordable housing. China's risk-control measures in the property sector are therefore likely to be successful.

The real estate sector's recovery, however, will be a wave-like and tortuous process, with different cities and regions facing different problems. Hence, it is necessary to reform more mechanisms by treating the root causes, not just the symptoms, of the socioeconomic diseases, so as to ensure the healthy development of the industry.

For example, it is essential to deepen reform to address the root cause, which includes the land-use rights and land revenue system, the dual housing program, the cooperative system between business finance and policy finance, and the property tax system.

One reason for the real estate sector to go through ups and downs was local governments' focus on the competitive trading mechanism for land-use rights against the backdrop of an imperfect regional tax system. It was very easy for the local governments, as the holders of the land, to "conspire" with real estate developers and sell plots at high prices to the developers. The developers in turn sold the houses at even higher prices to homebuyers to cover the cost of the land. This kind of "land finance" came into being.

The key to addressing the problems caused by the local governments' "land finance" is reforming the related mechanisms by, for instance, levying property tax, which will ensure local governments earn stable and relatively sufficient income annually. This can also boost intensive land use and curb the twists and turns of the real estate sector.

The property tax system could help stabilize the market and provide a steady source of revenue to local governments, which can use the income to optimize public services and improve the investment environment. To levy real estate tax, however, local governments have to provide higher-quality public goods and calculate, between intervals, the tax base, which means the local governments have to improve public services. Besides, levying real estate tax would also help redistribute resources, which in turn will promote common prosperity.

Although the collection of real estate tax has been piloted in Chongqing and Shanghai, the central government needs to gradually expand the pilot areas. It should also make efforts to establish long-term mechanisms to minimize risks to the property market and free local governments of their dependency on land revenue. In other words, the establishment of a modern property tax system would facilitate modern governance and high-quality development.

The author is Jia Kang, chief economist of the China Academy of New Supply Side Economics.

Innovation-driven tech is key to growth

I visited China for the first time in 1994 and was awed by the level of development in cities such as Beijing and Shanghai, in particular their large modernized highways, transportation and buildings. In those years, many of China's friends in the West were worried that China was "allowing" Western financial oligarchs to loot its workforce by establishing labor intensive industries and operating in the many de-taxed industrial parks.

My husband and I had the opportunity to meet with a high-level representative of the Communist Party of China in Shanghai, and in the discussion we had on the issue, he firmly said that China cannot "export the products of cheaper labor forever", intimating that the government had other plans in mind.

Later in the day, he proudly offered to accompany us to a print shop in the city. As we entered a sizable warehouse, our view was blocked by the largest and latest model of the best rotary press Germany had produced in those days. The workers had to climb up on ladders to reach the top of the machine, whose length seemed to disappear in the farther end of the work floor. It took that machine only two hours a day to print all the materials required.

In the almost 30 years since, several of China's scientific breakthroughs in the area of space research, and more generally the economy, have shaken the entire world. In 2019, China became the first country to achieve the first soft landing on the far side of the moon. In 2021, the centenary year of the foundation of the CPC, China landed, on the first try, a vessel on Mars and deployed a rover. At the end of 2020, China succeeded in eradicating extreme poverty from the country.

On the socioeconomic front, China has increased life expectancy from 35 years in the 1940s before the People's Republic of China was founded to 78.2 years in 2022, improved the living standards of the people, and raised per capita GDP from $195 in 1980 to $12,720 in 2022.

These examples show a direct link between innovation-driven high-quality development and improvement of people's living standards. The introduction of high-tech in the production system allows machines to do most of the work, greatly reducing the cost of labor in mass producing goods, which can be sold at relatively lower prices. And the workforce thus displaced can then be engaged in other productive activities.

We see the same model at work in the Xinjiang Uygur autonomous region, which I have had the chance to visit twice, in 2019 and in 2023. The central government intensified efforts in 2000 for the uplift of the region with the "Go-West Policy" and later the Belt and Road Initiative, whose route runs through Xinjiang to Europe. Xinjiang, too, saw the eradication of extreme poverty at the end of 2020.

It was first proposed to upgrade the area by developing the transport infrastructure — railways and roads to and from Beijing to Europe, as well as airports, because profitable trade or sustainable development is not possible without a proper transport infrastructure. And the most audacious infrastructure is perhaps the railway around the Taklimakan desert.

The central government then digitalized the entire area, improving connectivity within the province and facilitating connectivity with the rest of China to conduct trading. It has also digitalized agriculture to promote mass cotton and fruit production, used digital technology to connect to the Beidou satellite system to seed and sow, and use water resources in the most productive way (drop-by-drop irrigation, fertilization and pesticide spraying).

Last August, I visited Payzawat county in Xinjiang where potable water is supplied to households through canals that carry water from melting snow in the mountains, and where drop-by-drop irrigation techniques have also improved the production of fruits. Payzawat is also the largest production base of high-quality plums in China. And the recent introduction of preservation technologies has improved the productivity and the lives of the producers.

Thanks to the introduction of a cold storage system and technologies, the plum-selling period has been extended for farmers, after which the unsold fruits can be turned into dried ones in two to six months. Farmers can then sell them at better prices and thus earn better revenues.

In short, high-tech can promote prosperity for all. A good lesson for the West, which has been focusing on making short-term gains through financial speculation, is that negligence could lead to a financial crisis and to impoverished populations.

The author is Christine Bierre, editor in chief of the monthly Nouvelle Solidarité in France.

Source: China Daily





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