Chapter 12 Macro-control and State Advance and Private Retreat

Public opinion generally believes that "the country advances and the people retreat" is once again on the rise, and it is menacing. A survey conducted in March 2009 showed that most middle and high-level executives of enterprises believed that the revitalization plan of the top ten industries would be more beneficial to state-owned enterprises.How to unravel the doubts entangled in the "advancement of the country and the retreat of the people"?Can we prescribe secondary medicine for those "injured" private enterprises? ◎Reporter: Let's start with some basic questions, such as why macro-control is needed?Since when has this saying started?

Chen Zhiwu: This term is a product of the emergence of Keynesian macroeconomics in the 1930s.In fact, in the planned economy era, China should be said to be an economy with super-macro-control, an economy that manages both macro and micro.After the market-oriented reform, we used the term macro-control more and more, emphasizing the micro-management of the government's withdrawal from enterprises and the market. ◎Reporter: After the market-oriented reform, why did macro-control begin to emerge? Chen Zhiwu: The most basic idea of ​​market-oriented reform is: economic affairs are completed by the market.As a rule-maker and rule-executor, the government should not be an operator, nor should it conduct economic activities in the capacity of a direct stakeholder.However, after the government withdraws from economic affairs, the economic field, and the market, and delegates economic decision-making power to enterprises and private operators, the role of the government needs to be redefined—the government becomes a rule maker and regulator.When there are major economic problems, the government may step in and use government power to solve these problems, which may not be solved by private and market forces.Conceptually, the term macro-control appeared.This is a basic idea of ​​the market-oriented revolution in the 1980s and 1990s.But the actual situation is often not the case: in some cases, the government does not just stop at the level of macro-control, but penetrates into more micro-level market management.

◎Reporter: Is there any difference between our macro-control and the use of fiscal policy and monetary policy to affect economic operation advocated by Keynesian economic theory? Chen Zhiwu: According to Keynes' macro-control theory, when the government intervenes in the economy, it only affects the economic operation through core economic variables such as finance and currency, so as to achieve the effect of affecting the macro-economy.However, this is not the case in China's specific implementation process. For example, the "Tieben Incident" in 2004 is no longer "macro-control", because the government can even order a private entrepreneur or an enterprise to suspend construction projects and investment projects. In this process, criminal detention and other means are even used, which is far beyond the logic and scope of Keynes or any macro-control theory.

◎Reporter: Another question related to this is why what we see from the media is that most of the damages under macro-control are private enterprises, and the most famous examples are also private enterprises, such as the one just mentioned Iron Ben? Chen Zhiwu: Fundamentally speaking, the first reason is that there has been little discussion on the formulation and design of basic institutions in China's economic reform.Deng Xiaoping said that no matter whether it is a white cat or a black cat, as long as it catches mice, it is a good cat. The "white cat and black cat theory" actually means that instead of arguing about what should be done or what basic system reforms should be done, one should cross the river by feeling the stones, go wherever one goes, and then wait for the next step.Under this framework of thinking, China has not conducted in-depth discussions on the basic institutional framework.In my opinion, if there are still many state-owned assets and state-owned enterprises in the entire economic system, then, in the process of rule-making and macro-control, the government will inevitably not give priority to state-owned enterprises and state-owned assets before private enterprises .As long as there is a large economic swing, once the government decides to intervene in the market, it will definitely favor and protect state-owned enterprises, while focusing on private enterprises for supervision, supervision and regulation.The reason is very simple.SOEs are like the sons of the country, they are the direct stakeholders of the government.Therefore, any time supervision and regulation is to be carried out, it will first target private enterprises that have no direct interest relationship with the government.

In this sense, in previous discussions, many economists focused on the rate of return on investment and economic benefits when explaining why state-owned enterprises should be privatized. Enterprises should not be privatized.I have been saying in recent years that this kind of consideration is actually very narrow.China has been calling for the strengthening of the rule of law and the development of a society ruled by law.But as long as there are still many state-owned enterprises in the economic field, it is actually impossible to promote the spirit of the rule of law.Because as long as there are state-owned enterprises, no matter whether it is laws, regulations, or the government when formulating policies and macro-control, they will favor state-owned enterprises. In this way, it is impossible for private enterprises to be equal to state-owned enterprises. There will be no real equality in the law, or in the specific provisions of the law.This is why economists can’t just look at the state-owned enterprises and private enterprises that bring more benefits, but must consider that the existence of the state-owned economy will bring a lot of distortion to the formulation and implementation of the rules of the game in the whole society, and bring about inequality before the law. .

◎Reporter: Going back to macro-control, there is a more instrumental and more detailed statement. Why do private enterprises suffer every time? The reason is that private enterprises are limited in finance. As long as banks start to step up loan collection, some companies will The capital chain is tight. Chen Zhiwu: This is another concrete manifestation of the inequality between state-owned enterprises and private enterprises.Now that China's banking and securities industries are basically controlled by the state, will they give equal opportunities to state-owned enterprises and private enterprises when lending money, and let them have the same development opportunities?Clearly, past experience tells us this is impossible.Bank lending officials are more inclined to lend to state-owned enterprises, especially after the introduction of the economic stimulus package this year, everyone is trying to find ways to lend as much as possible to some large infrastructure projects and large state-owned enterprises. This is in response to the call of national policy .Lending to private companies will allow these officials to take risks and even affect their own political future.

◎Reporter: Now more and more private enterprises are beginning to enter the financial field.Will this approach help them cope and survive better in macro-control or economic downturn? Chen Zhiwu: It should be like this.However, there have been very few opportunities for individuals and private enterprises to enter the financial field over the years.Although more private individuals should enter the financial industry, in China, the state's monopoly on finance and the strong position of large state-owned enterprises in China are unlikely to change in the short term.Under such circumstances, at least small and medium-sized financial institutions corresponding to private enterprises should be allowed to coexist and develop rapidly. It is best to form such a situation: large state-owned financial institutions mainly serve large state-owned enterprises, and at the same time there are many small and medium-sized private financial institutions. Willing to provide financial services to small and medium-sized private enterprises.

However, in recent years, the government has not allowed individuals and private enterprises to enter the financial industry as real major shareholders, so it has formed the problem of financing difficulties for small and medium-sized enterprises that we have talked about for many years.Recently, the financial industry has finally loosened up a bit, and microfinance companies have begun to appear, but to a very limited extent. There are many reasons, especially some previous misunderstandings in concepts and ideologies have not disappeared.For example, a key misunderstanding is that after individuals and private enterprises enter the financial industry, since they all operate financial enterprises to make money, will they lend usury?But in fact, according to my research, the real solution to the usury problem is to open up finance and protect the rights and interests of lenders in the same way as equity investors. In this way, more people and companies will provide funds, and the loan interest will drop. Only then can the usury problem be solved.

◎Reporter: If we admit the existence of the strong position of state-owned enterprises and the fact that there will always be macro-control, what should private enterprises do?We have learned that there are two methods, one is that they try to enter the financial industry; the other is to try to avoid entering industries that require a large amount of capital investment.What is your opinion? Chen Zhiwu: What needs to be done includes several aspects. First, from a fundamental perspective, the academic circles and decision-makers must have a deeper understanding of the negative impact of the state-owned economy and state-owned assets, and try to avoid using macro-control or other names to attack the private economy.We should be more aware that once the trend of "advancing the country and retreating from the private sector" is strengthened, it will bring many negative consequences to society.Although it is unrealistic to completely change the gap between the state-owned economy and the private economy in the short term, it is very important for everyone to recognize this, and it is time to move towards "retirement from the state and advancement of the private sector".

Second, for private companies, it is obvious that they cannot compete with large state-owned enterprises in capital-intensive industries, because state-owned enterprises can get a lot of capital and financial support.The changes in the real estate industry over the past year have once again proved this point.Therefore, private enterprises can find their own space and advantages in the service industry and other industries, as well as industries involving R&D.Of course, I know that R&D is also a capital-intensive industry, but fortunately, there are now many private equity funds and venture capital funds that are thriving in China, which in a sense is alleviating the financing disadvantages of private enterprises compared to state-owned enterprises.Private enterprises can make more investment in R&D (research and development) with the support of domestic and overseas VC and PE.The reason for such a suggestion is that I think the advantage of state-owned enterprises lies in imitation. They have a very strong ability to imitate mature products and mature technologies, but they are at a disadvantage in R&D and innovation.Due to the flexibility of the system and the better incentive mechanism than state-owned enterprises, private enterprises can occupy more leading positions in R&D and innovation.I think private enterprises and individual entrepreneurs can develop in industries that are most able to get the support of PE and VC, and use this method to avoid financing disadvantages compared to state-owned enterprises.

◎Reporter: But the reason why private enterprises have entered capital-intensive industries is precisely because they believe that if they do not do so, they will never grow in scale and will never change the strength of state-owned enterprises and private enterprises. Chen Zhiwu: This statement is a misunderstanding.In fact, in the service industry and other industries, the scale of many enterprises can also be very large.There are some larger companies emerging in the hotel industry, catering industry, travel industry and retail industry.These industries are neither manufacturing nor heavy chemical industry. ◎Reporter: The emergence of the financial crisis seems to make some people think that nationalization has certain advantages. What do you think of this trend? Chen Zhiwu: Unfortunately, this financial crisis has led many people to come to some ridiculous conclusions in my opinion, thinking that the state and the government dominate the economy, and through macro-control or even micro-control, financial risks can be better curbed and the risk of economic crisis.This conclusion is very contrary to the entire human economic history.In the 1980s and 1990s, privatization reforms were carried out around the world, and the emergence of this trend is definitely not accidental.We cannot short-sightedly believe that the economy can be more prosperous if run by the government. This view is obviously contrary to the past 100 years of human economic history.Many people don't realize that the US government's intervention in some companies and banks is a short-term solution to the crisis. The government has not been directly operating these companies and banks as a stakeholder since then. ◎Reporter: It may be even more ridiculous that the conclusion drawn from the financial crisis is that our current system is superior to the Western political and economic system. Chen Zhiwu: In a sense, there are still too many nouveau riche mentality in China. Many people do not fully understand the reasons behind the economic growth in the past 30 years.The dividends brought about by globalization are so great that this lack of understanding has not hindered China's continued rapid economic growth.So in this case, many people will draw some specious conclusions.In the long run these conclusions are bound to be misleading. We must realize that both the US economy and the Western European economy have experienced hundreds of years of ups and downs.The United States has experienced many financial and economic crises, but each time its economy can recover fundamentally, which proves that at least so far the self-healing ability of American society is very good, and it can emerge from the crisis stronger every time. come out with a gesture.I don't think this financial crisis is fundamentally different from other economic crises in history.But it is a pity that some people, including some government officials, are overconfident and underestimate the self-healing ability of the United States.I hope that this attitude of underestimating America's ability to repair itself will not affect many of China's policies.Otherwise, it will make China miss some future growth opportunities. ◎Reporter: After 2004 and 2005, many large state-owned enterprises and state-owned banks underwent shareholding restructuring and went public overseas, and their performance became better and better.How should we understand this? Chen Zhiwu: On the surface, this is indeed the case, but there are several key reasons behind it. After China joined the WTO at the end of 2001, the Chinese economy will definitely enjoy a lot of WTO dividends for a certain period of time, mainly because some export-oriented manufacturing companies have better trade opportunities, including machinery manufacturing. These opportunities included in the WTO dividend are mainly directly enjoyed by state-owned enterprises and some large private enterprises, and enterprises in other industries are also indirectly shared through spillover effects.Export companies have exported a lot of heavy machinery and equipment to many emerging market countries, and have obtained unprecedented opportunities to expand their global market share.But unfortunately, SASAC attributed all these to itself. Another very important factor is the joint-stock reform of state-owned banks you just mentioned, as well as the joint-stock reform of some large state-owned enterprises.These state-owned enterprises took advantage of the listing opportunities provided by the US capital markets such as the Hong Kong Stock Exchange, New York Stock Exchange, and Nasdaq to list overseas. The capital market has also had a great impact on these companies themselves, including transparency, management behavior, and performance. on the impact. Many people think that the improvement of these large state-owned enterprises is due to the better supervision of the State-owned Assets Supervision and Administration Commission and the macro-control policies.This kind of view is very superficial. They don't see the invisible regulation, supervision and restraint provided by the capital market, and the improvement brought by these invisible hands to state-owned enterprises. ◎Reporter: Will the further globalization of capital and finance help Chinese private enterprises solve many financing problems? Chen Zhiwu: This is indeed the case. Thanks to financial globalization in recent years.In the past, financial globalization provided a great impetus to China's private economy.We can look at Zhongguancun and look at China's solar manufacturing industry today.For the solar energy manufacturing industry, from VC, PE to the final listing, without the multi-level support of the US capital market, it is impossible for China to become the leading country in the global solar energy manufacturing industry in such a short period of time.In other words, it is precisely because of the support of overseas capital markets, private equity funds, venture capital funds, and securities markets that China's private economy will not be completely squeezed out in a society monopolized by state-owned enterprises.