Chapter 39 1. Suggestions on economic policies to deal with the world financial crisis

2001 is the first year to implement the "Tenth Five-Year Plan" and the third step of strategic deployment.Due to the basic establishment of the socialist market economic system, my country's economy has entered a new stage of development.Over the past few years, the Chinese government has unswervingly implemented the macroeconomic policy of expanding domestic demand. In the case of slowing global economic growth, my country's economy continued to grow rapidly and healthily in 2001, creating favorable conditions for economic development in 2002. Maintaining sustained and high-speed economic growth is the overriding goal of my country's macroeconomic policies and a prerequisite for resolving all economic and social contradictions in our country.In the face of many challenges, whether my country's economy can maintain sustained and stable growth in the next few years depends to a large extent on the direction, strength and perseverance of economic policies.

Over the past 20 years, my country's economy has experienced turbulent waves in its healthy development.Premier Zhu Rongji has clearly pointed out that it is necessary to "advance despite difficulties", and the Chinese government has taken and is taking resolute and forceful countermeasures.From the trend point of view, the adverse impact of China's weakening foreign demand will continue, and the possibility of strong growth of the national economy in the short term is unlikely. To maintain rapid economic growth requires long-term support from macro policies.I fully agree with the policy orientation of the Chinese government to insist on structural adjustment as the main line, expanding domestic demand as the means, and economic reform as the driving force.I boldly suggest that in 2002, the sixteen-character policy of my country's economic work is: "Be firm and calm, fight a protracted war; when two armies meet, the brave will win." In 2002, although there are many uncertainties in the world economy, I predict that the US economy will start to recover from the recession, and the world economy will still grow slowly.my country's foreign trade and exports are sluggish, but domestic demand continues to rise, and the scale of foreign investment and fixed asset investment maintains rapid growth, which offsets the decline in external demand to a considerable extent. In 2002, my country's national economy continued to maintain a high-speed growth trend, and the annual GDP growth rate was about 7%.

Proactive fiscal policy and prudent monetary policy are the main tone of economic policy in 2001.If the policy continues to be implemented in 2002, I will predict the trend of my country's economy in 2002 from the aspect of total demand. (1) Domestic consumption continued to grow, with insufficient stamina. In 2002, the actual growth of urban residents' consumption expenditure was lower than the actual growth of income, and the widening income gap made the contrast between urban and rural consumption obvious.Residents' income continues to increase, but my country's social security system is still in the stage of improvement, and people have strong expectations for future expenditure increases.

The growth of consumer demand is not only related to the permanent income level of residents, but also has a lot to do with the ideal value of wealth accumulation of residents.When residents face uncertain future, the ideal value of precautionary wealth must become higher.When the ideal value of wealth is not reached, the willingness to save is rigid.A strong willingness to save will certainly weaken the marginal propensity to consume, and at the same time lead to a large amount of currency precipitation.In terms of consumption, domestic residents will face the difficulty of "insufficient liquidity".

(2) The export situation is severe and there may be a trade deficit.The analysis of my country's import and export is inseparable from the judgment of the development trend of the world economy in 2002.In the absence of economic growth, the structural adjustment of the Japanese economy will be difficult, slow and risky; the recovery of the East Asian economy will slow down;But in the past few years, when the economy grew fast, the reform efforts were not strong enough, and the re-emergence of high unemployment in the EU will put pressure on reform and integration.In the case of an unsound international monetary system, the euro is of positive significance.In my opinion, the period from 1983 to 2001 in the United States was a transitional stage of the old and new economies (the brief recession from 1990 to 1992 was caused by the Fed’s monetary policy mistakes). Not a "new economy".The slowdown and possible recession of the US economy will help it improve its balance of payments. The circulation of the euro in 2002 brought uncertainty to the adjustment of the US dollar, and the direction of the US dollar will not depreciate significantly.

It can be seen from the world economic downturn caused by the US economy in 2001 that the US economic situation has become the most important external factor of my country's economy at present and in the future. Since 2001, the Federal Reserve has lowered interest rates 10 times in a row, showing the Fed's firm determination to use interest rate measures to stimulate economic recovery.However, the step-by-step reduction of interest rates has increased the effect of the "liquidity trap".The U.S. government's fiscal stimulus plan has played a role, and the revival of the U.S. economy can be expected.It is expected that the US economy will begin to recover in 2002 and will completely bottom out in 2003.This means that the pulling effect of external demand on my country's economic growth will be weak in the next two years, and the persistence of expanding domestic demand will increase.

(3) Investment in fixed assets continued to be strong, and it was difficult to increase the issuance of long-term treasury bonds. Since 1998, under the background of weakening external demand, the strong growth of investment has partially made up for the lack of external demand and has become the main force driving rapid economic growth. In 2002, the investment in fixed assets of the whole society continued to grow.From the perspective of economic types, the growth of state-owned and other fixed asset investment accounted for the majority, the growth of collective investment accounted for the middle, and the growth of social and individual investment accounted for a small proportion.Since the real interest rate in our country was too high due to previous deflation, the growth of individual investment was restrained.

In terms of investment, on the one hand, the country’s investment has not diminished; on the other hand, after several years of continuous adjustment, civil society investment has entered a period of steady recovery.If there is a fundamental change in the follow-up effect of deflation, the profit margin of enterprises will increase, and the growth rate of private investment may increase significantly. In 2002, the international capital market had no choice but to be optimistic about the Chinese market, especially the business opportunities brought by China's accession to the WTO, and sought investment opportunities in China one after another.Foreign investment continues to grow, which will be a bright spot in economic development.

(4) The upward pressure on prices has weakened. In 2002, the national consumer prices and the general level of consumer goods prices rose slightly.From the point of view of development trend, the factors leading to the price drop in 2002 were mainly weak market demand, and the contradiction of oversupply was prominent.The situation of sluggish prices is difficult to reverse in the short term, and the upward pressure on prices is not high. According to the above analysis and prediction, in 2002, my country's economy will face many contradictions and difficulties, especially: the continuous growth of effective demand is still uncertain, the tendency of residents to save is enhanced, and consumption behavior is limited by "lack of liquidity"; the labor market Oversupply makes it more difficult to find a job, and the actual unemployment rate rises; private investment is not strong enough in the fixed asset investment of the whole society; the growth rate of bank loans has slowed down; the growth rate of my country's exports has declined, and may encounter greater difficulties.For this reason, it is necessary to adjust the economic policy in 2002, especially the monetary policy.In terms of specific operations, based on what I have learned and limited experience, I propose the following 10 economic policy suggestions for the reference of relevant parties.

First, continue to unswervingly implement a proactive fiscal policy.China's per capita GDP is only about 1,000 US dollars, and it is in the early stage of development. The risk of investment mistakes in a large number of public facilities is small, and the social benefits of investment are sure.The ratio of national debt/GDP is not high at present, even if it reaches 100%, it is not afraid; my country's interest rate has not yet been liberalized, and the effect of "fiscal crowding out" is not obvious.Now we don't spend a lot of money on infrastructure construction, such as the construction of the Beijing-Shanghai high-speed railway, when will we wait?With the improvement of China's economic level, it will be much more expensive to do these projects in the future.Beijing's successful bid to host the 2008 Olympic Games is a timely blessing, as well as the development of the western region.Our country has money (high savings rate of residents) and good projects. Even if the world economy is in recession, we don't panic.

Second, the monetary policy quickly changed from prudent to moderately active.The current monetary policy in our country has led to an excessively high real interest rate, which has seriously inhibited the rapid growth of private investment.The effective start of the growth of social private investment is the purpose of proactive fiscal policy, and monetary policy should be coordinated.Low real interest rates don't necessarily trigger investment, as the US economy's current struggles do.But real interest rates will definitely suppress investment.The high real interest rate is mainly due to deflation in the past three years and the lackluster price recovery in 2001.With limited room for lowering loan interest rates, the People's Bank of China should substantially increase the money supply and lower real interest rates to lay the foundation for the initiation and growth of private investment.Between "high inflation-low real interest rate-high economic growth" and "deflation-high real interest rate-low economic growth", one should rather take the risk of the former than the risk of the latter.my country has successfully managed the high inflation in 1993 and accumulated valuable experience.Therefore, we should have the confidence to fight against high inflation. The People's Bank of China should continue to give full play to the flexible and timely characteristics of open market operations and moderately increase the money supply.However, open market operations have limited effectiveness in China's national conditions.The implementation of monetary policy must be suitable for my country's national conditions and cannot imitate the policy tools of mature market economy countries. Third, under the condition of adhering to the long-term stability of the RMB currency value, according to the market, increase the floating range of the RMB market. After 1994, my country implemented a managed floating exchange rate system.At present, my country's economy is affected by external shocks and exports have declined, so it is necessary to adjust domestic prices.The exchange rate fluctuations in the foreign exchange market is also a cheap and important way of currency adjustment. Fourth, unswervingly continue to stimulate domestic demand and fight a protracted war.Education, home appliances, housing, automobiles and tourism consumption will continue to be the main sources of China's domestic demand expansion.Education, in particular, is a "big loophole" in the potential consumption expenditure of ordinary people in our country.Grasping education consumption, one grasp will work.It is feasible to substantially increase the salaries of civil servants and realize paid vacations for employees.In the long run, increasing the income of farmers and transferring the rural labor force to small and medium-sized cities is the most important thing to ensure the continuous growth of consumption.At present, it is necessary to effectively reduce the burden on farmers, promote agricultural industrialization, promote the construction of small towns, and increase farmers' income through multiple channels. Fifth, do everything possible to expand foreign trade exports, fight tough battles, survive the cold winter, and wait for the recovery of the US and world economies. "Winter is here, can spring be far behind?" At present, we guarantee timely and full tax rebates for enterprises with high export earnings and good reputation.The optimization of export product structure and the diversification of export regions, accession to WTO will be a big boost. Sixth, unswervingly rectify the domestic market order, break industry monopoly and regional blockade, vigorously promote the growth of domestic inter-regional trade, and build an integrated and orderly domestic market. (According to my research work, the unsmooth trade between regions in our country is an important factor for the widening national income gap. After the Second World War, the increase in trade among EU countries led to rapid convergence of EU countries' income.) Domestic market Consolidation and development of the western region are the two magic weapons for our country to solve the widening regional income gap, and it is the long-term road to expand domestic demand.Shanghai's economy has taken off, and it will be of strategic significance to expand the radiation effect of Shanghai's economy on the whole country by opening up the national market meridians. Seventh, unswervingly promote the reform of state-owned enterprises, and at the same time make great efforts to accelerate the development of small and medium-sized enterprises and solve the difficulties of township enterprises.Both the reform of state-owned enterprises and the development of small and medium-sized enterprises should aim at establishing a modern enterprise system.Without enterprise system innovation, everything else is unstable.Due to the flaws in the system, township enterprises have not developed fast in recent years. This is a profound lesson.On the basis of getting rid of difficulties for three years, we will continue to take the establishment of a modern enterprise system as the main direction of attack.Moreover, all enterprises should try their best to create employment opportunities and assist the government to actively implement and expand reemployment projects. Eighth, the reform of the labor market is easier and much safer than the reform of the financial system. my country's labor market reform should be placed at an unprecedented strategic height, and the household registration system should be gradually and steadily abolished.The unemployment rate in my country is uneven among regions, allowing the labor force to move more freely across the country, which will help reduce the overall employment pressure across the country.The transfer of rural labor to cities is the fundamental way to increase the income of these farmers and expand domestic demand in the long run.While further improving the basic endowment insurance system for urban enterprise employees, implement the minimum living security system for urban residents.In the long run, the life of urban residents depends on their jobs. Finding a job requires hard work. If the benefits are too high, they will reduce their enthusiasm for finding a job (this is very common in the European Union).Farmers have the lowest incomes in China, so it is necessary to create favorable conditions for farmers to work in cities.At present, financial reform has attracted too much attention from the economic circles in my country, so that insufficient attention and research has been paid to labor market reform.In world economic integration, labor force and human capital are China's absolute advantages.If the economics community does more research on how to reform and build a world-class labor market, I believe the investment return will be the greatest. Ninth, the reform of the financial system must seek steady progress and not be in a hurry.China's financial system cannot be dominated by banks, but must be based on a sound capital market, so that it can respond flexibly to the world economy and technological revolutionary innovations, and carry out timely economic structural adjustments. Japan's economic structure has stagnated due to its slow response to information technology The lesson is too deep for us.The world's financial system is not yet sound, and it is impossible for my country to open its capital account in the short term. The bad debts transferred from the four major state-owned banks must be absorbed within 10 years, which cannot be done overnight.From the sharp drop in the stock market in mid-2001, it can be seen that my country's stock market is very fragile, and there is a possibility of bubbles, and it needs to continue to develop and improve.The GEM should be launched as early as possible, and gradually accumulate experience through "learning by doing", but the threshold must be high. Tenth, the experience of my country's reform and opening up proves that reform is the fundamental driving force for overcoming economic difficulties.Today, when the socialist market economy has been basically established, we should begin to study and design the blueprint of "advanced socialist market economy".According to the spirit of "Three Represents" put forward by President Jiang Zemin, my country should take building an "advanced socialist market economy" as the next goal of economic reform.The goal of economic reform has always been important. In 1984, the Third Plenary Session of the Twelfth Central Committee's "Decision of the Central Committee of the Communist Party of China on Economic System Reform" provided an economic system guarantee for the realization of my country's first strategic goal; The Decision on Several Issues provides an economic system guarantee for my country to basically complete the second-step strategic goal; the third-step strategic goal of my country's economic development is to reach the level of a moderately developed country in terms of per capita gross national product by the middle of the 21st century, and the people's life is relatively affluent .Deng Xiaoping pointed out that the third step is much more difficult to realize than the first two steps.I earnestly hope that the so-called "learning economy" thought I put forward in a short article can be helpful to the design of the goal of "advanced socialist market economy".

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