Chapter 32 Section 1 Five Major Trends of China's Economy
Keynes pointed out meaningfully in his book "The Economic Consequences of the Peace Treaty": "The major events in history are often caused by long-term changes in population growth or other fundamental economic factors, but because these changes are gradual, so easily overlooked by contemporaries."
At present, the Chinese economy is facing five gradual long-term trends:
1. The supply revolution represented by information technology and biotechnology is spreading to the world, the nanotechnology revolution is beginning to emerge, and the Chinese economy is facing the test of the productivity revolution;
2. China's labor supply has declined after reaching its peak in 2014, the demographic dividend has faded, and the aging trend is unstoppable. The median age of the Chinese population will gradually increase from an average of 33 years old in 2008 to nearly 45 years old in 2049. Creativity is challenged;
3. The accumulation of human capital in China is constantly increasing, and the economic value of human beings increases accordingly.China has improved from a basic illiterate country at the founding of the People's Republic of China to a country with junior high school education, and this trend will continue. By 2049, China's average education years will reach 12 years, becoming a country with high school education;
Fourth, the financial burden has increased, and many fields need financial support and investment.The social security system has a potential liability, and education requires a financial investment of 5% of GDP.Self-innovation has been comprehensively promoted as a national strategy, which requires an annual financial investment of 4% of GDP.China's medical insurance costs will increase year by year as the population ages;
5. The savings rate dropped slightly while maintaining a high level.With the gradual reduction of domestic investment opportunities in China and the intergenerational update of consumption concepts, "Chinese consumption" will rise moderately.
The first three trends in China's five trends coincide with the three main trends in the article "The Next Society" written by the management guru Drucker for the Economist in 2001: the role of manufacturing in the economy The proportion of young people in society has declined; the proportion of young people in society has decreased; the labor force has transformed into knowledge workers.The fourth trend has both international universality and Chinese specificity.But among the five major trends, the productivity revolution is still the most fundamental and decisive.With the gradual decline of manufacturing investment returns, it is necessary to seize the new productivity revolution and increase effective supply through "innovative country and learning economy" in order to provide investment opportunities, stimulate investment activities, and promote economic growth.As long as China's economy can maintain sound and rapid growth for a long time, it will win enough time and policy space to solve the contradictions such as fiscal burden and structural unemployment.
From the present point of view, after the agricultural revolution and industrial revolution in the world, there may be at least three productivity revolutions in the future: one is the ongoing information technology revolution, which will enter the era of "cloud computing". Like electricity, it has been integrated into people's daily life and is indispensable without knowing it.The second is the burgeoning biotechnology revolution. Bioengineering will make breakthroughs in more and more fields, involving health, medical care, agriculture and environmental protection.The third is the potential nanotechnology revolution, which will reconstruct the microscopic world and display material properties that we cannot imagine.The combination of nanotechnology and biotechnology will produce a "combined revolution" in productivity.
Humans will "grow" nano-wings, driven by bioelectricity, soaring like angels in the blue sky; humans will use nano-micro-robots to continuously clean sediment in blood vessels, and cardiovascular and cerebrovascular diseases will be as easy to treat as the common cold. In 2006, the Chinese government promulgated the "National Medium- and Long-Term Science and Technology Development Program Outline", which briefly summarized and predicted the scientific and technological revolution. The development of information science and technology is still in the ascendant and is still the leading force for sustained economic growth; the rapid development of life science and biotechnology will play a key role in improving and improving the quality of human life; energy science and technology are heating up , to open up new ways to solve global energy and environmental problems; new breakthroughs in nanoscience and technology will bring about a profound technological revolution. Major breakthroughs in basic research have shown new prospects for technological and economic development. The speed of application and transformation of science and technology continues to accelerate, creating new opportunities for catching up and leapfrogging.”
The rise of Made in China is an indisputable fact, but there is still a lot of uncertainty about the rise of Made in China.China's high economic growth will continue until 2029 by relying on the manufacturing industry, but after 2029, can China's new economy break out of the dilemma of diminishing marginal returns of the industrial economy while occupying the main economic resources?Otherwise, the Chinese economy may experience long-term stagnation like the Japanese economy.After the growth from 1995 to 2006, China's information industry has grown from scratch, accounting for 5% of the total economic volume in 2006, which is a rare proportion.China's information industry revolution started from communications. The growth rate of the Internet and mobile phone market is about 20% per year. Among the 1.3 billion Chinese, there are about 600 million mobile phone users and more than 200 million Internet users. They have surpassed the United States and become the world's number one. .After the popularization of 3G mobile phones, the Internet and mobile phone industries will be reshuffled. Whether China's information industry can continue to grow at a high speed has become a key issue.From 2029 onwards, China's new economic industry needs to maintain high growth and become a veritable leading industry.
Since 1840, China has transformed from an agricultural economy to an industrial economy. No one has imagined the length of time and the high cost.A high level of agricultural technology is not a sufficient condition for the occurrence of the industrial revolution. China had a high level of agricultural technology compared with Europe in the 18th and 19th centuries, but it missed the opportunity of the industrial revolution.The success of Made in China does not guarantee the emergence of a new Chinese economy.In the era of innovation, that is, from 2029 to 2049, there are 20 years, and these 20 years are more difficult than all previous periods.China's economy needs to rely on independent innovation to move forward with difficulty.The Chinese economy must be built into an "innovative country and a learning economy" in order to complete the difficult transition from an industrial economy to a "China's new economy". A large amount of structural unemployment in the manufacturing industry is inevitable.Schumpeterian innovation is a long-term and painful "creative destruction process". Only by destroying old industries can new industries have room to rise. After 2029, the information industry, bio-industry and nano-industry may become the new engines of China's economy.
Due to the large fluctuations in the population structure, China's demographic dividend is approaching the end.As shown in Figure 4-1, from 2009 to 2049, assuming that the current family planning policy remains unchanged, according to the United Nations’ forecast of China’s birth rate and death rate, China will successively usher in the total population, working-age population ( 15-64 age group) and the three peaks of the labor force.To sum up, China's long-term population dynamics has three characteristics:
First, the total population will reach its peak around 2030, and then begin to decline slowly; as shown in Figure 4-1, the total population will peak at about 1.4 billion in 2030. In the early 1980s, it was generally predicted that China's total population would reach a peak of 1.6 billion in the middle of the 21st century. At that time, no one thought that China's birth rate would drop so fast.
Second, the absolute number of working-age population reached its peak around 2014.Judging from data such as the birth rate from the 1980s to the present, the turning point for China's total working-age population will be reached in 2014, earlier than most people expected.Although reaching the highest point immediately, China's working-age population is huge and declining slowly, making creating employment and reducing unemployment a major and arduous task at present and for a long time to come.
The third is that the labor force reached its peak around 2014.Assuming that the labor force participation rate of the working-age population remains basically unchanged, the growth rate of the labor force in the next 40 years will suddenly drop from 2% in the 60 years before the founding of the People's Republic of China to 0.7%, basically equal to no growth, indicating that the demographic dividend has gradually faded out.Specifically, the average annual labor force growth rate in the brand era is about 0.8%, and the growth rate in the innovation era is 0.5%.
The fading of China's demographic dividend is a major trend generally recognized by economic circles at home and abroad, but the possibility of long-term continuation of China's education dividend is underestimated by economic circles at home and abroad.
The Chinese government vigorously develops human resources and strives to turn a large population burden into a human resource advantage.According to the "National Education Development "Eleventh Five-Year Plan" Outline", Table 4-1 quantifies the long-term planning of China's education. In 2010, the popularization of high school education will be significantly higher than the gross enrollment rate of 52.7% in 2005, reaching about 80%. The scale of secondary vocational education is basically the same as that of ordinary high schools.After the substantial improvement of higher education in 1998, the "Outline" proposed to properly control the growth rate of enrollment in colleges and universities and stabilize the scale of enrollment. 40%, reaching 55% in 2050.However, the penetration rate of higher education in China is still far from the universal penetration rate in the world. For example, higher education in high-income countries reached an average level of over 60% in 1996.
In accordance with the long-term plan of the "National Education Development "Eleventh Five-Year" Plan", the human capital calculation method proposed by Wang Yan and I at the World Bank is used to calculate the changes in human capital in the future.As shown in Figure 4-2, in 2049, the per capita education years of China's working population will reach 12 years, that is, to achieve the goal of high school graduation.In the brand era, the human capital growth rate dropped from an average of 2.21% in the price era to around 1.22%, and basically remained at around 1.40% in the innovation era.
Figure 4-3 shows the changes in China's human capital structure in the next 40 years.It can be seen that the human capital of universities has risen sharply, close to about 40%. The human capital at the elementary school level will disappear, and the human capital at the university level will account for about 40%, indicating the emergence of a "knowledge society". account for weak subjects.
In 2001, the management guru Drucker described the form of "the next society" and thought: "The 'next society' will be a knowledge society. Knowledge will become the key resource of society, and knowledge workers will become the main labor force. It has the following Three main characteristics: 1. No borders - because the dissemination of knowledge is even easier than the circulation of money; 2. Upward mobility - everyone with formal education has the opportunity to strive for the upper reaches; 3. The chances of success and failure are equal -Anyone can acquire the 'tools of production', that is, the knowledge needed to obtain work, but not everyone can succeed. These three characteristics together will make the knowledge society a society full of fierce competition, regardless of the This is true for both organizations and individuals." In China, where natural resources are relatively scarce and the demographic dividend is fading out, in order to cope with the challenges of the productivity revolution and the advent of the "next society", substantial investment in human capital is in the era of branding and innovation. The key to gaining international competitiveness.
As for the Chinese economy, I think the "anti-barrel principle" can be used for design. The "anti-barrel principle" holds that the longest plank of a barrel determines its characteristics and comparative advantages, and becomes the commanding height within a specific range.What is the longest "plank" of the Chinese economy?There is no doubt that it is an unparalleled potential human capital advantage. On May 19, 1985, Deng Xiaoping said at the National Education Work Conference: "We have said many times that my country's economy may approach the level of developed countries by the time of the 100th anniversary of the founding of the People's Republic of China. One of the bases for our saying this is that in During this period of time, we are fully capable of promoting education, improving our country's scientific and technological level, and cultivating hundreds of millions of talents of all levels and types. The strength of our national strength and the stamina of economic development are increasingly determined by The quality of workers depends on the quantity and quality of intellectuals. In a big country with a population of 1 billion, if education is improved, the huge advantage of human resources is unmatched by any country. With the advantage of talents, coupled with an advanced society We can achieve our goals with certainty.” Like India, which has a large population, China has great potential to produce “knowledge workers”.In the price era and brand era, the low-cost and low-quality labor force of the Chinese economy is one of the core competitiveness of Chinese manufacturing; in the innovation era, hundreds of millions of "knowledge workers" with relatively low cost but high quality will be The core competitiveness of "China's new economy".
In 2008, Premier Wen Jiabao put forward the important strategic task of formulating the "National Medium and Long-term Education Reform and Development Plan Outline" in an article "Education-Based Centennial Plan", requiring education to comprehensively consider population changes and school-age population structure , economic structure, employment structure and social development characteristics, and actively adapt to the new requirements of industrialization and informatization.
Li Guoding, an economist who has made significant contributions to Taiwan's economic development, pointed out the importance of the education system to economic growth: "Science and technology innovation, of course, depends on talents, and the generation of talents must come from education." It lies in the improvement of the education system", "If we still follow the inflexible education system in the past, it will be difficult to cultivate creative young people, and in a new era of technology that has never existed, we really need to drastically revise the original education system." The "National Medium and Long-Term Educational Reform and Development Planning Outline" will have a profound impact on China's human capital accumulation.Measures such as "twelve-year compulsory education" can be considered to increase the number of university-level "knowledge workers" to account for more than half of China's human capital structure in 2049, and to solve the structural problems facing the Chinese economy by establishing a national learning system Sexual unemployment.
The Chinese government is committed to realizing the "China Dream 2.5" in a country with a population of 1.4 billion, which is "care for the elderly and medical care for the sick".From the perspective of fiscal revenue growth potential, China’s fiscal revenue accounts for about 20% of GDP, which is far from the international mark of 30%. However, it is necessary to plan early for the financial burden of the next 40 years and gradually make up for the existence of social pension insurance. There is a huge gap in personal consumption, and there is no fear of excessive social security tax rates that may appear in the future. At the same time, the sustainability of debt and the vitality of the supply of the economic system are maintained, and the grand goal of "care for the elderly and medical care for the sick" is finally realized.
The world's major economies are facing an era of unprecedented aging.The proportion of retirees in Europe and Japan is expected to gradually increase in the total population of the society. After the Second World War in the United States, the "baby boomers" are becoming "silver-haired" and are also beginning to age.The medium- and long-term fiscal policies of many countries have insufficiently anticipated the financial pressures associated with medical care and retirement issues in an aging society. In 2008, the International Monetary Fund warned about population aging in developed countries: "Despite the enormous fiscal costs of this crisis (the world financial crisis), the main threat to long-term fiscal solvency, at least in developed countries, remains from Unfavorable demographic trends.” Although China is not yet a developed country, it is also facing a costly demographic transition, and the concern of the International Monetary Fund is also suitable for the Chinese economy.
Due to the rapid decline in the fertility rate and the extension of the average life expectancy, the population aging rate in China is far exceeding the world average level. This situation was unexpected in the 1980s.According to the international standard of entering an aging society with 10% of the population over 60 years old and 7% of the population over 65 years old, China has already entered the aging society in 1999, with a per capita GDP of only 1,000 US dollars, while developed countries At the threshold of aging, the per capita income is much higher than 1,000 US dollars, so Chinese residents are "getting old before getting rich". In 2008, the proportion of the population over the age of 60 rose to over 11%.The "inverted triangle" structure of population age first appeared in Beijing and Shanghai, which indicates the population development trend of China's large cities.As shown in Figure 4-4, from 2009 to 2040, the proportion of China's elderly population aged 65 and over will rise rapidly, jumping from about 10% in 2009 to about 30% in 2040.It is estimated that after 2040, the aging trend will slow down and a peak platform for the elderly population will be formed. By then, China’s elderly population will reach more than 400 million people, which means that one out of every three to four Chinese people will be over 65 years old.
The pension is a pay-as-you-go system, and the pensions paid to retirees basically come from the contributions of young people.The aging of the population will lead to continuous increases in child support, and a decline in the working population that pays taxes to support the elderly. Due to insufficient accumulation, China will have a cash flow shortage after 2029, and the Chinese economy will face the challenge of a serious shortage of pension funds.At present, China is backed by a huge working population, and pensions are still insufficient to make ends meet. With the aging of the country, on the one hand, the elderly will increase year by year, reaching 400 million people, and on the other hand, the young working population will decrease year by year, so there will be a big gap in pensions.It is indicative that the "Chinese baby boomers" born in 1964 will reach the age of 65 by 2029, and a large number of them will withdraw from the labor market and enter the retirement life of applying for pensions.This potential pension gap is not yet obvious, but it will be fully revealed around 2029.The medium- and long-term fiscal planning should consider this pension gap issue as early as possible. We cannot wait until after 2029 to start dealing with it. Taking precautions will win the initiative.Especially in 2029, China's economy will enter the "medium-speed growth era" from the "high-speed growth era", and the growth of fiscal revenue will inevitably slow down. of.Since the growth rate of about 3% in the "medium-speed growth era" is likely to be higher than China's domestic real interest rate level, there should be no problem with the sustainability of China's domestic debt (see Figure 4-4).
If the social pension insurance tax is imposed, the required tax rate will be surprisingly high, which will definitely reduce the disposable income of the labor force, weaken the willingness of the working-age population to participate in work, reduce the labor force participation rate and enthusiasm for work, and weaken the Chinese economy's response to the productivity revolution and other issues. The supply flexibility and elasticity of external shocks have resulted in insufficient effective supply.The feasible way is to maintain relatively high economic growth, thereby increasing the corresponding wage income, and increase the labor force's contribution to the social security system on the premise of no or less social pension insurance tax.At the same time, rationally operate state-owned assets and national social security funds to obtain a satisfactory rate of return to make up for the pension gap.However, the contributions that wage increases, state-owned asset appreciation, and the effective operation of the National Social Security Fund are still not sufficient for. The retirement age can be gradually extended from the current 60 to The age of 65, and then depending on the situation, can be extended to 70 to fundamentally solve the problem.But delaying retirement is contradictory to the employment difficulties of a large number of young people. "Make bricks without straw".The solution is to create full employment opportunities by maintaining economic growth and flexible labor markets.With the retirement age extended, full employment will be one of the main measures to address the potential gap in China's pensions, and it will also be a major test of the ability of the Chinese economic system to create employment opportunities.
In addition to pension expenditures, there are three fiscal expenditures that must be increased. The total expenditure may account for more than 15% of GDP. It will increase significantly with the aging of the population; second, the proportion of education expenditure in China's finances to GDP needs to be gradually increased to 5%; third, the necessary investment for building an "innovative country". In 2002, China's fiscal investment in research and development exceeded 1% of GDP.In the brand era, the government needs long-term investment in research and development, and after 2029, it needs to maintain a long-term financial investment accounting for 4% of GDP.
China's economic growth is not mainly dependent on exports, and the ratio of net exports to GDP has been maintained at around 10%.But the modest rise of Chinese household consumption will have a profound impact on China's economic growth, and is a magic weapon for China to deal with the lack of domestic investment opportunities.Stimulating domestic consumption will be an important policy fulcrum for China's economic development.
The savings behavior of ordinary households in China is very different from that in the United States. As for the reason, it may be driven by the precautionary motive, or it is said to be the result of the encouragement of China's economic investment opportunities, and it is still inconclusive.As shown in Figure 4-5, the ratio of national savings in China to GDP is as high as 40%, while that in the United States is less than 15%. The difference is so large that it is amazing.There is a joke that an old Chinese lady and an old American lady meet in heaven.The old Chinese lady didn't save enough money to buy a house until she died, and the old American lady had just paid off the loan when she died, but she had enjoyed the house for many years.This joke shows that Chinese old ladies have a stronger propensity to save, while American old ladies have a more obvious propensity to consume. There is a big difference in the propensity to consume between Chinese and American old ladies, which also reflects the difference in propensity to consume between Chinese and Americans. Differs greatly.From the perspective of the world financial crisis that broke out in 2008, the U.S. savings rate was too low, resulting in excessive debt on the balance sheet of the household sector; while China was affected by the financial crisis, and its growth slowed down, indicating that China was still heavily affected by external shocks, and domestic Consumption is still not enough, which means that the domestic savings rate is too high.
Chinese manufacturers produce things that are partly exported and mostly consumed domestically, reducing external shocks.It will be a long-term and arduous task to transform China's economy into a domestic demand-led economy dominated by personal consumption. The "Chinese Baby Boomers" born in 1964 will basically retire in 2029. The "post-80s" and "post-90s" have consumption habits that are obviously different from those of the "post-60s" and "post-70s", and they will reach their lifetime around 2029. The peak income will change China's long-term trend of high savings rate to a certain extent.China's aging also reduces the savings rate to some extent.As shown in Figure 4-5, I predict that China's savings rate will decline from 2009 to 2049, but not too much.In the next 40 years, China's domestic savings rate will gradually decrease from around 40% to 30%.Since the savings rate has been running at a high level for a long time, China's economic development will have relatively sufficient financial support, and the real interest rate can be maintained at a low level, so the sustainability of national debt can be easily maintained.At that time, what the Chinese economy lacks will not be capital, but investment opportunities.But at the same time, the problem of excess liquidity will appear repeatedly in China's macro economy, resulting in lingering risks of high inflation and asset bubbles.RMB internationalization will be an important channel to reduce domestic liquidity.
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