Chapter 30 Chapter 29 "Alternative Cry" in the Financial Crisis

On May 12, 2008, a major earthquake occurred in the Wenchuan area of ​​Sichuan, causing heavy casualties, and the whole country fell into unprecedented grief. Almost at the same time, the macroeconomic situation at home and abroad also suddenly reversed.The subprime mortgage turmoil on Wall Street in the United States detonated the financial crisis sweeping the world, and the European and American consumer markets suddenly became weak and depressed. The scene that Wu Jinglian worried about from 2004 to 2006 finally appeared. China's export-oriented economy characterized by extensive growth suffered a severe setback.Since the beginning of 2008, hundreds of thousands of small and medium-sized enterprises have closed down one after another. In particular, the implementation of the new "Labor Contract Law" has made many labor-intensive foreign trade factories in the southeast coast unsustainable, and a large number of them have moved out or closed down.The Shenzhen and Shanghai stock markets have plummeted since January, from a peak of 5499 points all the way down to 3?433 points at the end of May. In June, the central bank and the China Banking Regulatory Commission promulgated the "Notice on Financial Promotion of Economical and Intensive Land Use", which was called the "Lending Restriction Order", which shut down the credit floodgates for real estate companies. Land auctions are frequently aborted, and those local governments that rely on land transfer fees to maintain administrative expenditures complain endlessly.In the atmosphere of domestic and foreign difficulties, the Chinese economy, which was plagued by overheating a year ago, suddenly fell into a terrible Great Depression, and the "troika" of investment, consumption and export almost all stopped.

Facing the sudden and major changes, the government, academia and business circles are obviously not ready to deal with it. In mid-to-late July, Wu Jinglian and Li Yining expressed their views on the current economic situation in Shanghai and Beijing respectively. They gave two different "prescriptions". On July 22, Wu Jinglian participated in the cultural forum of "Liberation Daily" in Shanghai. Entrepreneurs on the same stage included Liu Chuanzhi from Lenovo, Jack Ma from Alibaba, and Nan Cunhui from Chint Group.In his speech, Wu Jinglian warned that China’s economy is at a delicate crossroads. He suggested that on the one hand, we should insist on tightening the aggregate monetary policy, and on the other hand, we should improve and improve the efficiency of enterprises from the mechanism. Austerity and the shrinking markets facing difficulties, he called for tax cuts for businesses.In his view, China's tax revenue has maintained an average annual growth rate of more than 20% for 18 consecutive years. "Now is the time to cut taxes."At the same time, he suggested that the non-government financial industry should be revived and the transformation of "underground banks" legalized.

His warning from the pulpit appeared to have serious concern among entrepreneurs.On the evening of July 23, Ma Yun sent an urgent e-mail entitled "Winter's Mission" to internal employees, asking employees to be alert to the huge risks brought about by the cyclical ups and downs of the macro economy, "Don't think too much about stock price fluctuations, It's about shouldering a greater responsibility than ever before and not letting yourself fall."This is the first Chinese entrepreneur who proposes to "prepare for the winter". Almost at the same time, Li Yining analyzed the current macro situation at a symposium in Beijing. He believed that the current anti-inflation measures were inappropriate and took too long. The priority for the second half of the year was to prevent inflation from turning into stagflation.Therefore, he suggested loosening monetary conditions and expanding the scale of credit.

At the end of August, Wu Jinglian was interviewed by "Southern People Weekly", and then proposed to use supply-side policies to stimulate the economy. The economist, who is very skilled in policy design, knows it well.In his view, both monetary and fiscal policies are short-term policies, and the key lies in the timing and intensity. Once the best time is missed, one may be passive at every step and make mistakes in every move.He told reporters: "The biggest hidden danger is that some people are unwilling to listen to it. People have no foresight, and immediate worries will come. This has been said three or four years ago. Relying on factor input and export orientation will definitely cause serious problems... In my opinion, monetary policy cannot be loosened, but finance should be invigorated, such as small business loans and private banks.” Wu Jinglian has always disagreed with the rescue plan of extensive investment, and pinned his hopes on the reform of important systems.Regarding the calls for credit loosening, he warned: "There is a time lag between the issuance of bills and the rise in prices. According to Western sayings, it is at least 8 months. When the bills were issued, they were extremely happy, saying that they were unprecedentedly prosperous. What will you do when prices go up?"

Just half a month after this interview, on September 15, Wall Street suddenly reported that Lehman Brothers Holdings, one of the four major investment banks in the United States, went bankrupt. The biggest shock ever.In the afternoon of this day, China's central bank announced the reduction of the benchmark loan interest rate and the deposit reserve ratio. In the next 100 days, the interest rate was lowered five times in a row.At the same time, the State Council announced a "four trillion rescue plan" that caused a sensation in the world's financial circles, and the opening of credit suddenly widened.

During this period, Wu Jinglian was inexplicably involved in a "spy door" storm. Just at the end of August, Wu Jinglian had just attended the office meeting of the State Council Informatization Expert Advisory Committee. When he returned to Beijing from other places, a text message was quickly circulated on the mobile phones of various domestic media editors: "Wu Jinglian is suspected of betraying national intelligence. He was taken away from the investigation by the relevant department on the charge of espionage." This is really amazing news, and almost everyone is skeptical.On the morning of August 28, the American news website Boxun.com released a message that seemed to confirm the truth of the rumor. The website stated in a news article without the author’s signature that Wu Jinglian, a famous Chinese economist, was suspected of serving as a representative for the United States. Espionage work, investigated by state security.Boxun.com claimed that the source of the news was a "revelation" from a reader in China, and because there was no phone number of Wu Jinglian himself, "there was no way to verify it, so we had to send the news first."By noon, some overseas websites had reproduced the news one after another, and added a "secret story", saying that Wu Jinglian was a "beauty trick" and had leaked some secrets to a Chinese-American woman. At noon on August 29, Taiwan's "Central News Agency" also forwarded it immediately.

For a time, public opinion at home and abroad was in an uproar.In various versions of the rumors at the time, some people linked the "spygate" with another financial event not long ago.On August 19, Gong Fangxiong, Chief Economist of JPMorgan Chase China, suddenly revealed that the central government is holding a meeting to study and "will invest 200 billion to 400 billion yuan to stimulate the economy." Up nearly 180 points.Rumors said that JPMorgan Chase made huge profits during the period, and Wu Jinglian leaked Gong's news to him, and Wu was convicted for this. On the afternoon of August 29, the Development Research Center of the State Council published a statement on the homepage of its official website, saying: “Recently, some false rumors about Professor Wu Jinglian have been circulating on the Internet, and many people have called to inquire about Professor Wu’s current situation. We just communicated with Wu Jinglian The professor said through the phone that he is currently working and living normally, and will attend relevant academic conferences as scheduled on August 30, 2008."

The next day, Wu Jinglian appeared at a venue in Shunyi, a suburb of Beijing, to participate in the "30 Years of Reform and Opening-up Symposium" jointly organized by the Unirule Institute of Economics and the Guangdong Humanities Association.So far, the "spygate" incident that occurred in Pingdi has been subsided. In the oral history a year later, Wu Jinglian did not comment on this in more detail, but he obviously believed that this was intentional by "people with a heart".On the other hand, Zhou Nan said some meaningful words in a telephone interview with reporters on the day of the incident. She said: "Wu Jinglian's character may be the incentive for the rumormongers. He said that he can't violate his conscience and rules, and say some flattering and catering words. So it may have offended some people, there is a possibility."

Such absurd rumors can be spread in a grand manner, and the target of the attack is Wu Jinglian, who has always had a very positive image. From this, we can indeed read the complexity and turbulent undercurrents of the conflict of interests.Hu Yong, an associate professor of media studies at Peking University, commented: "This is a typical Internet incident created with the motive of inverting black and white and spreading with binary thinking of black and white." Some commentators believe that "the interests of all parties Driven by appeals and interests, the rumors of Wu Jinglian's "spy case" finally came out, which is also the fundamental reason why the rumors that the bull's head is wrong with the horse's mouth will intensify."

On September 20, 2008, Wu Jinglian, who escaped from the "Spygate" incident, appeared at a forum held by CEIBS Lujiazui Institute of International Finance. After careful consideration, for the first time, he described in detail his understanding of the financial crisis. systemic view.At that time, the haze was thick and the hearts of the people were shaky. Even Greenspan believed that this was the biggest financial disaster since 1929.People are eager to hear the voice of the experienced Wu Jinglian. At the beginning of his speech, he said three sentences - "Frozen three feet, it is not a day's cold", "People have no foresight, but they must have near-term worries", "Strengthen the body and seek happiness for themselves".The first sentence refers to the United States, the second sentence refers to China, and the third sentence refers to the way to deal with it.

He analyzed that there is a big problem with the world's financial system today. The most basic problem is the United States. The most basic problem in the United States is that the savings rate is too low. The savings rate has never exceeded 10%. How to maintain the operation of the economy?It takes advantage of the characteristics of the U.S. dollar as an international reserve currency to issue a large number of U.S. dollars, and uses this method to borrow money from all over the world to invest and consume, and maintain a high standard of living, which has caused a flood of liquidity around the world. Regarding China's current predicament, he disagrees that it is a "sudden disaster".He said: "Now there is a saying that no one thought that such a situation would happen in China in 2008, and it suddenly broke out. Some people in the government said this, and some economists said this. In my opinion, this is not the case. I just talked about a question that has been raised since the beginning of this century, that is, such a growth method will definitely cause internal and external imbalances, and now these two internal and external imbalances meet. This growth method has two characteristics, one is that it depends on factor input. Supporting growth, another feature is relying on export demand to make up for the lack of domestic demand. The former has caused a lot of negative consequences, such as increasing investment rate, declining consumption rate, and declining investment efficiency. Potential non-performing assets in the financial system have accumulated a large amount Get up. The latter is a large amount of commodity exports, supplemented by the depreciation of the domestic currency.” Then, he repeated the analysis he made in 2006: “After the foreign exchange reform in 1994, the RMB depreciated deeply, which marked a comprehensive shift to export-oriented policies. Like other countries and regions that adopted such policies, after 10 successful implementations After many years, there will inevitably be a large accumulation of foreign exchange reserves, increased pressure on the appreciation of the local currency, and increased trade friction. The way to solve this problem is to realize the liberalization (marketization) mechanism of exchange rate formation. Our reforms in this area There has always been a lot of controversy. By June 2007, China's foreign exchange reserves exceeded 1 trillion US dollars. The results of a large number of currency issuance and the flood of liquidity are nothing more than three situations. One is the formation of asset price bubbles, and the other is CPI. The (consumer average price index) rise induces inflation, and the third situation is a combination of both. As a result, real estate prices and stock prices rise sharply. At the beginning, we regarded it as a good situation, but later found that it was out of control Now, the CPI is under control in various ways. Now, the CPI is under control, but the stock market and the real estate market are shaky. In addition, the enterprise product price index (PPI) is upside down, and the overall real economy is depressed. There's an intractable disease." After analyzing the situation at home and abroad, Wu Jinglian put forward the solution of "treating both symptoms and root causes": "The standard is to use our fiscal policy and monetary policy to stabilize the market, not to let it collapse, and try to keep most small and medium-sized enterprises able to continue to operate." , but the fundamental problem is to realize the transformation of the growth mode.” Here, Wu Jinglian returned to his consistent proposition—"The transformation of the growth mode is to strengthen the body and seek happiness for ourselves. It is impossible to have a major change in the world economic structure. At least we should not be taken advantage of. Ask for happiness The most important way is to change the growth mode, and the crux of the growth mode change lies in institutional obstacles, so to truly realize the transformation is to carry out reforms and eliminate institutional obstacles.” The facts that happened in the future showed that Wu Jinglian's suggestion did not become the mainstream opinion and was adopted by the policy department. On October 28, the Shanghai stock index fell to 1664 points, and the market lost all confidence.From November, under the instructions of the central government, the four major commercial banks began to lend aggressively, and the new loans increased exponentially every month. The new loans in November were 476.9 billion yuan, followed by 740 billion yuan, 900 billion yuan, 1.07 trillion yuan, and an unprecedented 1.89 trillion yuan was released in March 2008.In the eight months from the end of 2008 to June 2009, the total amount of new loans was nearly 8 trillion yuan, setting off a torrid investment frenzy.More than 80% of these loans are obtained by large state-owned enterprises, and the investment direction is railways, roads and various infrastructure facilities, which is nicknamed "Tie Gong Ji" among the people.In the case of a sudden and huge relaxation of funds, the stock market took the lead in becoming active. In the first half of 2008, the Chinese stock market fluctuated in large volumes, sweeping away the previous downturn, and the growth rate ranked first in the world.The performance of real estate is even more astonishing. It has recovered at an unexpected speed, and land auctions in major cities have set jaw-dropping "land king" prices one after another. Driven by China's investment boom, global energy prices also immediately rebounded, and the prices of iron ore, oil and non-ferrous metals soared.In the eyes of many people, under the shadow of the financial crisis, the Chinese economy has once again "miraculously" rushed out of the crisis first. For such a scene, Wu Jinglian was not happy.In his view, two issues are worthy of attention.First, where is the boundary of macroeconomic intervention in microeconomics? Second, how to shift from emergency short-term policies to long-term development issues. The policy orientation from the end of 2008 to 2009 was, in fact, another solidification of the macro-control policy in 2004.It finally presents three characteristics; first, "macro-control is dominated by administrative control" has become the main axis of policy, and the "visible hand" has become stronger and stronger; second, economic growth mainly relies on huge investment, while Instead of focusing on changing the growth model and industrial upgrading; third, state-owned enterprises, especially large central enterprises, receive paranoid support, while private enterprises are marginalized. At the most turbulent moment of the financial crisis, the governments of European and American countries took measures to save the economy one after another. Even Britain, the oldest capitalist country, nationalized some banks in crisis. As a result, the domestic economic circle once again saw the strong return of nationalism. sign. On March 3, 2009, Wu Jinglian wrote an article "How to Locate the Boundary between the Government and the Market" in the "Economic Observer", refuting this point of view from the perspective of economic history.He believes: "It should be noted that the debate between the two schools of economics (New Keynesianism and Neoliberalism) is carried out within the scope of the free market mechanism, that is, the price mechanism plays a fundamental role in the allocation of resources, This does not mean that there is any school of thought that advocates going back to the old system of planned economy where the government does everything. Even if they support the nationalization of certain enterprises, it is only a short-term contingency measure, not a long-term system Arrangements. The basic context of social and economic system changes in the 20th century reminds us that within the scope of the market system, wisely and rationally defining the appropriate boundary between the government and the market is a major issue in the stable operation of the economy and long-term growth, and must be adjusted according to specific conditions. Sure." Furthermore, he returned to his reflection on the current policy: "Another problem we must pay attention to is that in China, people often confuse macroeconomic management (macro-control) with the government's micro-intervention in economic activities. False macro In the name of regulation and micro-intervention, it is actually tantamount to restoring the command economy. This will not only lead to misallocation of resources and activities that damage the economy, but will also bring about adverse consequences such as strengthening the rent-seeking environment and making corruption rampant. This is a must resolutely stop it." On October 23, at the "2009 Pujiang Innovation Forum" in Shanghai, Wu Jinglian criticized in his speech that the 4 trillion yuan economic plan actually suppressed private enterprises, not only did not play a role in stimulating private investment, but also produced The crowding out effect has produced "the country advances and the people retreat".Citing survey data, he said that more than 70% of new technological innovations come from small businesses. "If we are enthusiastic about innovation, we must help small businesses come up and give them confidence." In addition to warning about the way of macro-control, Wu Jinglian's other concern is how to solve the long-term growth problem of China's economy.As he predicted in his interview with "Southern People Weekly" in August 2007, a large number of banknotes will definitely form "unprecedented prosperity", and then asset (real estate, stock) bubbles and inflation will follow.If none of the institutional contradictions are resolved, new and greater crises will follow and arrive as scheduled. On June 30, 2009, he wrote in an answer to a questionnaire sent to the General Office of the Central Committee of the Communist Party of China: “The current differences in views on the direction of macroeconomic policies are largely due to the reasons for the difficulties in my country’s economy in recent years. Different analysis. The mainstream opinion attributes the cause of the difficulties to the collapse of the US financial bubble and the resulting reduction in export orders of Chinese companies, and believes that we only need to use the government's fiscal and monetary policies to create enough demand to maintain an economy of more than 8% growth, and when the economies of western countries get out of the predicament and increase exports, the Chinese economy can fully recover.” Faced with the above opinions, Wu Jinglian thought that "it does not conform to reality".He still insists on the conclusion given at the Shanghai Forum in September 2008, and believes that it is the result of the interaction between the expansionary monetary policy of the United States and the extensive growth model of China's economy.He then corrects two very popular views. First, some commentators place great hopes on the recovery of Western economies, believing that as long as they resume imports, China's extensive development mode can continue to operate with the support of export-oriented policies.He felt that this wish might not be realistic.Because, after the financial crisis, the savings rate of the United States has increased by 7%, which means that at least in the near future there will not be as much net imports as in the past; secondly, many countries, including China, are working to change the US dollar as the only The status of reserves and the establishment of an international monetary system subject to international supervision.The evolution of these two aspects shows that the economic development mode supported by export demand is unsustainable and should be changed on its own. Second, he takes issue with what is often called the "troika" (consumption, inputs and exports).He believes that the analysis of the "troika" is a deformation of the short-term analysis framework of Keynesianism, and Keynesianism, which focuses on the study of short-term economic policies, has never said that it can be used to analyze long-term economic issues, which can be said to be short-sighted , to put it more seriously, is a misleading.If the "troika" is used to predict the future trend of China's economy, it means that no matter what method is used, as long as the aggregate demand can be increased, the steady upward trend of GDP growth can be maintained.Misuse of the theoretical framework for analyzing problems can easily lead to deviations in macroeconomic decision-making. Wu Jinglian finally pointed out that the two major problems existing in my country's economy are low efficiency, heavily polluting production methods, widespread corruption, and disparity in distribution between the rich and the poor. The extensive growth model that has already been abandoned... The solution is to resolutely implement the "Eleventh Five-Year Plan" and the "17th National Congress" decision on changing the economic growth model while adopting short-term fiscal and monetary policies to maintain market stability , stimulate the vitality of enterprises, especially small and medium-sized enterprises, extend the industrial chain, increase added value, realize industrial upgrading and growth transformation, so as to eliminate the deepest root of the economic crisis. The thrilling year of 2009 entered history amidst the joy of the success of the "Guarantee Eight", but facing the future, there are still many possibilities for the Chinese economy. In January 2010, Wu Jinglian once again fully expressed his views on China's economic performance over the past year in his article "Concentrate on Solving Problems in Long-term Growth" written for "Financial Annual".In his view, "the most urgent task of China's economy, and the biggest difficulty, is how to shift from emergency short-term policies to long-term development problems." He wrote that it is now generally acknowledged that China's economy achieved a "V"-shaped recovery in GDP growth in 2009, and the question now is whether it can be guaranteed that the future economic trend will not be another one in the longer term. The "V" character, the second bottom, appeared the so-called "W" trend.In my opinion, the crux of the problem is whether we can solve the long-standing problems of the Chinese economy. The so-called "long-term problem" is that China's economy has adopted an extensive economic development model driven by resource input and net exports (excess), which has led to problems such as excessive currency issuance, flooding of liquidity, and the formation of asset bubbles.In Wu Jinglian's view, it is impossible to continue to use the short-term policy of injecting liquidity into the national economy to ensure the long-term stable growth of the Chinese economy, and to increase demand by increasing massive investment and loans. The huge investment and moderately loose monetary policy implemented in 2009 have triggered the formation of residents' inflation expectations, currency circulation is accelerating, and the national economy is facing the double danger of asset price inflation and inflation. Therefore, Wu Jinglian warned that if we only focus on short-term economic policies and inject liquidity to rescue the market while ignoring the solution of long-term problems, it will affect the long-term stable growth of China's economy.If it is not done well, others are "deleveraging" and eliminating bubbles, but we are "re-leveraging" and setting off bubbles, which will plant another time bomb of asset liability crisis and high inflation. So what is the key to looking at the long term?Wu Jinglian's answer is that it is necessary to promote residents' consumption, and there are two basic methods for this. One is to increase employment, and the other is to promote technological progress and increase the added value of products.In other words, efforts must be made to transform the mode of economic development, optimize the economic structure, and ensure sustained and stable growth. Wu Jinglian wrote worryingly that a question needs to be raised here: Realizing the transformation of the mode of economic development is not a slogan that has just been raised now.As early as in the Ninth Five-Year Plan from 1995 to 2000, the task of realizing the transformation of the growth mode from extensive to intensive has been stipulated. The "Eleventh Five-Year Plan" from 2006 to 2010 not only brought up this topic again, but also listed specific ways to change.But so far, with few exceptions, the results have been modest. Why is this happening?Wu Jinglian believes that there are two reasons: first, this transformation has encountered many institutional obstacles; second, an economic environment and legal environment conducive to innovation and entrepreneurship have yet to be established.He summed it up in one sentence, "everything is ready, only the east wind is owed". What is Dongfeng?The reform of marketization and rule of law is also true.