Chapter 35 The fourth section is about China's economic growth forecast (2009-2049)
Generally speaking, I am cautiously optimistic about the development of China's economy.The prediction of China's long-term economic growth cannot be a simple superposition and calculation of numbers. It needs to combine numbers and economic connotations, and also requires a certain amount of imagination to change the "impossible" into "possible" in the "China model".According to the national income accounting method, I calculated the growth of China's production factors and the change of total factor productivity, so as to simulate and analyze the economic growth in the "brand era" and "innovation era".Based on the results of this analysis, Table 4-2 lists the possible average annual growth rates of the Chinese economy over the next 40 years.The most striking phenomenon is the real impact of long-term trends in demographic structure and human capital on China's economic growth.
Labor force growth has dropped from 2.24% in the price era to -0.23% in the brand era and -0.84% in the innovation era, indicating that the demographic dividend is gradually fading.The growth rate of human capital has dropped from 2.21% to 1.22% in the brand era and 1.40% in the innovation era, but still maintains a considerable growth rate, which shows the long-term continuation of the educational dividend.After calculating the growth trend of China's labor force and human capital, we need to discuss in depth the growth rate of physical capital and total factor productivity.Since China's domestic savings rate remains high, the bottleneck that determines the growth of physical capital is not the source of funds, but investment opportunities.The accumulation of capital made in China will eventually lead to diminishing marginal returns. If we want to increase effective supply, we need to build an "innovative country and a learning economy" to seize the new industries spawned by the productivity revolution.
There is an international opinion that the "China model" is similar to the "East Asian model" and concludes that the source of high-speed growth is the consumption of production factors, while the increase in total factor productivity is very small, so the Chinese economy is not yet a miracle. Sustainability Also questionable.According to the empirical research on economic growth accounting in the third chapter of this book, "China's Millennium Changes", the total factor productivity of the Chinese economy was negative in the first 30 years after the founding of the People's Republic of China, that is, in the era of entrepreneurship, which shows the rigidity of the planned economy and the slowness of technological progress. However, the total factor productivity of the Chinese economy did increase significantly in the second 30 years, that is, the price era, which shows that the "China model" is not all the "East Asian model".Total factor productivity depends on economic system reform and technological progress.Under the impetus of the "China model", there is still a lot of room for China's economic system reform; in the process of building an "innovative country", technological progress may transition from imitation to independent innovation.Therefore, China's total factor productivity still has the possibility of long-term growth.
In the brand era, the continuation of China's education dividend will offset the disappearance of the demographic dividend, investment opportunities brought about by "Made in China" and urbanization still exist, and the deepening of material capital will be a major driving force.Urbanization will be a major investment opportunity in the brand era.According to a report titled "Meeting China's 1 Billion Urban Army" published by McKinsey & Company in March 2008, China's urban centers will occupy a more dominant position in the future.From 1980 to 2005, China's urbanization level has more than doubled, to 44%.By 2025, more than 66% of China's population will live in cities.The scale and pace of urbanization in China is expected to continue at an unprecedented rate.By 2025, China's urban population will reach 926 million, and by 2030 it will exceed 1 billion, with an urbanization level of 71%.China will have 221 large cities with a population of 1 million, 23 large cities with a population of more than 5 million, and 8 megacities with a population of more than 10 million, including Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Wuhan, Chongqing and Chengdu.But the report also implies such a conclusion that when China's urbanization reaches more than 70%, that is, after 2029, the potential of urban construction and development as an investment opportunity will be small.
As mentioned earlier, the world is ladder-shaped.The per capita wealth that an agricultural economy can create is one level, and the per capita wealth that an industrial economy can create is another level. The per capita income created by "Made in Japan" is a very suitable reference point, which can be used to predict how high the per capita income "Made in China" can bring.After World War II, "Made in Japan" created a miracle and successfully created a number of international brands.The income of the Japanese is still at a high level in terms of the world, but the income of the Japanese began to stagnate after reaching its peak in 1991.After Japan's per capita income reached about US$40,000 by means of manufacturing, without the strong promotion of the information industry, it would be difficult for the added value of manufacturing to further increase per capita income.As shown in Figure 4-11, the time span of Japan's economic growth is about 40 years (1960-2009).Let’s make a simple analogy. China’s per capita income in 1980 was equivalent to that of Japan in 1960. Since 1980, China has moved towards manufacturing-centered industrial economic growth, and it will reach the manufacturing limit of US$40,000 per capita income. Around 2029.In other words, if China does not enter the information economy, China's per capita income will approach the limit of the Japanese economy of US$40,000 per capita in about 2029.Therefore, if China's manufacturing industry can successfully upgrade from price to brand in the industrial chain, there is still about 20 years of development potential.
The "China model" itself can improve total factor productivity.The report of the Seventeenth National Congress of the Communist Party of China clearly pointed out: to improve the ability of independent innovation and build an innovative country.China's economic system reform aimed at "innovative country and learning economy" will further liberate the vitality of the system.When Chinese manufacturing is approaching the world's frontier, there is still a lot of room for industrial upgrading, and the advantage of being a latecomer is great. It may promote technological progress through imitation as the main innovation and supplemented by innovation.So, total factor productivity growth rate fell slightly to 1.0% per year.
From the perspective of factor contribution, the long-term steady growth of human capital, coupled with the deepening of physical capital driven by Chinese manufacturing and urbanization, may drive an economic growth rate of about 6%.If the two goals can be achieved smoothly, the Chinese economy may grow at an average rate of 7% in the next 20 years.
China's economic output in 2008 has surpassed that of Germany.If it grows at such a high rate, I estimate that around 2015, China's economic aggregate will surpass that of Japan, and around 2029, surpass that of the United States and become the world's largest economy.At that time, China's per capita GDP will further accelerate its rise, which may reach 1/5 of the US per capita GDP at that time. In 2029, the domestic market potential may experience a blowout growth, and the per capita GDP of more than 1.3 billion people will exceed 20,000 US dollars. It has exceeded the standards of moderately developed countries, and the consumption of these 1.3 billion people will exceed half of the total economic volume of the United States.
At that time, China will be in the "National Entrepreneurship Era". Compared with the 7 million enterprises in 2008, the number of enterprises in 2029 may be close to 20 million.
By 2029, China will become the world's largest trading country and become one of the most important importing countries; from the current point of view, China's trade accounts for 70% of GDP, and it is one of the most open economies in the world.China's role in the global market has grown from being the largest exporter to being a powerful global buyer.After the per capita GDP reaches 20,000 US dollars, in the economic structure, the service industry will accelerate development; in the consumption structure, more attention will be paid to the quality of life, and consumption will be diversified.More and more foreign companies have established their businesses by selling goods to China.China's strong economic growth will naturally increase the level of consumption, and the Chinese consumer market will be a coveted big market, inducing a "gold rush" in international business.
2029 is the 80th anniversary of the founding of the People's Republic of China, and it will be a year of historic significance economically: 1. The "Chinese baby boomer" born in 1964 will reach the age of 65 and enter retirement; 2. China's manufacturing has reached its peak , and began to gradually decline; 3. China's urbanization has basically been completed, and the international metropolitan area has risen; 4. China will bid farewell to the 50-year high-speed growth period and enter the "medium-speed growth era"; The largest economy; 6. China's domestic investment opportunities have decreased, the savings rate has begun to decline slowly, and consumption has risen moderately. "Chinese investment" will become a driving force for the world economy; 7. The RMB has become one of the world's major currencies; 8. "Innovation" China" has been basically established, and "China's new economy" has gradually surpassed the contribution of "Made in China" to economic growth.
China will enter the era of innovation from 2029, the technological progress of the manufacturing industry will gradually slow down, and capital accumulation will be hit by diminishing marginal returns. China will bid farewell to the stage of "high-speed growth", and economic growth may drop to about 3%.This era is a more difficult stage than the price era and brand era.If the previous era was to explore the development path of the industrial economy in the agricultural economy, then the innovation era needs to transform the Chinese economy from the industrial economy to the "China's new economy", which is "the second entrepreneurship".In order to cope with the difficulty of structural adjustment, it is necessary to complete the strategic task of "innovative country" proposed by the 17th National Congress of the Communist Party of China in the brand era, so that independent innovation becomes the mainstream, and business models also need to be continuously innovated.According to the law of total supply of Marx-Kuhn, China can no longer maintain high growth by relying on the manufacturing industry, the return on investment in the manufacturing industry will begin to decrease, and the development momentum of investment-oriented growth will gradually cool down.Figure 4-12 shows the changes in the proportion of manufacturing in the economic aggregate.After 2029, this proportion may gradually decrease, from 30% to around 20%.
In the "China's new economy", it is necessary to make progress at the forefront of new technologies and maintain high economic growth rates through corporate R&D activities.China's economy is shifting from investment-based growth to investment-consumption mixed growth, and Chinese consumers will play a more important role in economic growth.Based on my estimates of China's saving rate, consumption will gradually increase as a share of GDP in China, possibly reaching 70% in 2049, as investment slows and income rises.
In the era of innovation, China is in the development stage of rapid economic structure transformation, and will be dominated by emerging industries such as information industry and biological industry.Due to the acceleration of economic restructuring, the manufacturing industry has declined, and the new economy has risen.However, there are still 300 million labor force in China whose education level is lower than that of university education, which may form structural unemployment.Therefore, on the one hand, it is necessary to control the cost of "Made in China" and save more job opportunities; on the other hand, it is necessary to continuously improve the skills of manufacturing employees.These contradictions can only be alleviated by establishing a "national learning system" to meet the growing demand for new skills.At the same time, China's "knowledge workers" group will rise with the "China's new economy", and the number may reach more than 200 million people. It is one of the largest groups in the world, enabling the Chinese economy to absorb new ideas at a faster speed.
During the period from 2029 to 2049, China's consumption power will rise rapidly.American residents consume excessively, spending more than 80% of their income, but Chinese people are "excessively saving", saving more than 40% of their income, and their consumption rate is only about 60%.As long as Chinese residents fine-tune their savings rate downward, the consumption growth of a population of 1.4 billion will bring an important impetus to China's growth.
I have repeated quantitative speculations on China's future growth. There are five main assumptions: 1. China's economic growth rate depends on investment opportunities from "Made in China" and urbanization, education dividends and the growth of total factor productivity brought about by the "Chinese model". Maintain a real growth rate of 7% during 2009-2029; 2. From 2029 to 2049, "Made in China" begins to grow slowly, "China's new economy" emerges, and the growth of total factor productivity brought about by the "China model" is mainly cutting-edge technologies China's consumption has risen moderately, and China's economic growth is around 3%. 3. The US economy has emerged from the current financial crisis, and education reform has achieved results. It has maintained a real growth rate of 2% from 2009 to 2049; 4. China Both China and the United States maintain an inflation rate of 2%. Fifth, China's population will reach 1.4 billion by 2049, and the U.S. population will reach 450 million by 2049.From this quantitative analysis, I got a result that I couldn't believe: in 2049, China's per capita income may reach 60% of that of the United States!China's economic aggregate may be more than three times that of the United States, and it will grow into a super economy.China will become the world's largest super market, and all international companies will come to China to sell products, just like Kenichi Ohmae said, "Let's rent a booth in China!".
What is "China Dream 3.0"? "China Dream 3.0" means that China's per capita income far exceeds the level of moderately developed countries, reaching more than half of that of the United States in 2049, and returning to the relative level of the world that it had before 1840.
If my analysis is true, there are only four reasons why China will not change the world in the "Seven Reasons Why China Will Not Change the World", chief economist of UBS Asia Pacific, and Anderson, namely: 2. China will not swallow the global manufacturing industry; 3. 1. China will not buy up the world's financial assets; 5. China will not become the source of deflation in the world market; 6. China will not cause other developing countries to stagnate.The other three are not true. On the contrary, the three reasons why this is not true are China's contribution to the world.According to my analysis and prediction, the results are: 1. China will rewrite the growth history of the world economy.China emphasizes economic system reform on the supply side, while emphasizing response and management on the demand side. The "China model" is an effective way to deal with the productivity revolution.China will become an "innovative country and a learning economy", constantly innovating in frontier areas of the world economy, sharing frontier risks with other economies including the US economy, and greatly reducing the possibility of a major recession in the world economy; Will become the next world currency.
Like Anderson's view, Paul Krugman also pessimistically predicted, "What I want to say is that when the renminbi becomes the main currency in the world, it will be decades later, and I may not see it in my lifetime." ".The basis of Paul Krugman is that it is difficult for China to have a world-class bond market.Indeed, so far only the US has a deep government and corporate bond market, and efforts in the EU and Asia have been unsuccessful.China is by far the most open large economy, and the orderly and moderate opening of the capital account can be expected, and the scale and depth of the financial sector will rank among the top in the world.Anderson and Krugman greatly underestimated the possibility that China could gradually develop an efficient world-class bond market.Since China's economy can carry out independent innovation at the forefront of world technology, China's financial assets, including corporate bonds, will have a relatively high rate of return.Any rational investor will not ignore this huge investment opportunity. Holding RMB assets will be an inevitable trend to diversify risks and obtain higher returns.The renminbi may not challenge the dollar, but it will become one of the world's major currencies.
World investors have an additional choice of RMB assets among foreign exchange assets such as US dollars, euros, and yen, which is an improvement in welfare; third, China will break the "Washington Consensus".The embryonic form of China's economy was produced at the Third Plenary Session of the Fourteenth Central Committee of the Communist Party of China in 1993, and further discussions on China's economy were produced at the Third Plenary Session of the Sixteenth Central Committee of the Communist Party of China in 2003.China's economic system has not yet been finalized, and there is still huge room for reform. In 1992, Deng Xiaoping pointed out in a talk in the south: "I am afraid that it will take another 30 years before we will form a more mature and more stereotyped system in all aspects. The principles and policies under this system will also be more stereotyped. According to Deng Xiaoping’s plan, China will form a relatively solid socialist market economic system around 2022, 14 years before 2009 today.According to the requirements of the scientific concept of development, its core is people-oriented. Employment is the basic requirement of people's living standards and quality. Therefore, sufficient employment opportunities must be created.At the same time, the continuous improvement of China's human capital level requires the maximum use of human value, which requires full employment and full use of talents.The reform of China's labor market and the reform of the education and medical system will become an important international experience.
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