Chapter 34 The crisis is more positive than negative for China

Since the financial crisis has developed, it has stabilized somewhat. Regarding the United States, the center of the storm, Chen Zhiwu pointed out that considering the long-term strong self-adjustment ability, the US economy is more likely to recover before Europe or some developing economies.What will happen to the recovery of the Chinese economy? ◎Reporter: Do you think the global economy is in recession?How long will this downturn last? Chen Zhiwu: Looking at it now, it may last for one to two years.I know that many domestic and international media are saying that after this crisis, the United States may fail, and that the economic strength and future status of the United States will come to an end.I think this conclusion is a bit exaggerated and a bit premature.Objectively speaking, the self-adjustment and recovery capabilities of the US economy will exceed many people's expectations in two years.

Of course, this financial crisis originated in the United States, and then affected the economies of countries around the world.Therefore, in this case, according to the general and simple understanding, this means that the U.S. economy will suffer more serious setbacks than other countries, and it will be dragged down for a longer period of time.However, the U.S. economy has gone through two centuries of development, especially its financial market. Although there is a crisis this time, the structure of the entire financial system is still there.So, sometime next year, once everyone sees that the financial and economic crisis has come to an end, the U.S. economy will recover faster than people imagined.

One possibility is that the US economy could instead recover faster than the economies of Western Europe, Latin America, or even Asia.I know it's hard to imagine a situation like this in the midst of a crisis right now.On the contrary, for those less developed countries, after being hit by this blow, the recovery time may be longer and the difficulty may be greater. ◎Reporter: When do you think the financial and economic crisis will bottom out? Chen Zhiwu: In a sense, the financial crisis has come to an end. Of course, this bottom is definitely not a V-shaped bottom, but a U-shaped bottom.But the hit to the real economy has only just begun.

Recently, some large companies in the United States have announced layoffs, and there will be more similar news in the future, and small and medium-sized enterprises may face bankruptcy.Looking at it now, by the first half of next year, the unemployment rate in the United States may exceed 8%, or even 9%. ◎Reporter: Some people think that the US economy may start to recover later next year. What do you think? Chen Zhiwu: It is possible.There are many reasons for this.The first is that all countries are adopting active fiscal policies to stimulate the economy, which in turn will help the recovery of the US economy; the second is the factor of Obama.I think Obama's taking office will greatly boost the confidence of the entire American society in the future, and Obama's appeal will far exceed Bush's.

Obama might be able to do what Roosevelt did. After President Roosevelt took office in 1933, he quickly stimulated the confidence and cohesion of American society, making American families and businesses of all sizes willing to accept new challenges with the new president, make their own contributions, and help the American economy out of the big world as soon as possible. depression.It is precisely because of such support from the whole society that Roosevelt's New Deal was launched and implemented smoothly. I think that after Obama took office on January 20, 2009, he may imitate Roosevelt's approach in many aspects, reform the financial and securities market system structure, and introduce many measures to stimulate economic growth to stimulate consumption. Being able to get support from a wider range of social groups in the international community will greatly help the US economy recover in the second half of next year.

In contrast, the sluggishness of other economies may last longer, and the economies of some Latin American, Eastern European and even Western European countries may stay in the downturn for as long as two years. ◎Reporter: How will China's economy recover? Chen Zhiwu: China's situation may be similar to that of the United States, and it may even recover faster. The current global crisis has dealt a severe blow to China's real economy, but if you think about it calmly, in the long run, this kind of blow is not all bad, and it may also become an opportunity.In my opinion, the positive opportunities brought about by this crisis far outweigh the negative blows.

For example, for the past two years, we have been concerned about resource security.However, in recent months, with the occurrence of the financial and economic crisis, the international oil price has dropped by 2/3, and now it is only more than 50 US dollars.The prices of various other raw materials have also fallen sharply. As a result, the cost of resources needed for the next step of China's economic development has dropped significantly, which can be regarded as an unexpected gain. On the other hand, the country had a large fiscal surplus last year and the first half of this year, and this money can be used to further stimulate economic growth.The key is to use it well, such as sending money directly to the people in the form of tax rebates or subsidies, and then increasing investment in medical education.In addition, the proportion of China's national debt is very low. This year, the balance of China's national debt is about 5 trillion yuan, equivalent to about 18% of GDP, of which 1.6 trillion yuan is the special national debt issued when the CIC was established.If this piece is removed, the ratio of China's national debt to GDP is only about 13%.Relatively speaking, Western European countries are generally around 60%, while the balance of US national debt before the launch of this round of rescue measures is 10 trillion US dollars, accounting for 71%.

Such a stark contrast shows that China has a lot of room for further issuance of government bonds.If necessary, we can issue a large amount of treasury bonds as we did during the Asian financial crisis in 1997, and use the proceeds to subsidize low- and middle-income families, invest in people's livelihood and welfare projects, and increase efforts to stimulate consumption.If these measures are effective, it is expected to lay a solid foundation for the rapid recovery of the Chinese economy in the next few years. ◎Reporter: What specific expectations do you have for China's economy?

Chen Zhiwu: The current global economic crisis is much more serious than originally imagined, which directly leads to an accelerated decline in China's exports.However, the impact of the decline in exports on the real economy has not yet been seen, and there is a lagging effect in this regard.In western countries, the financial crisis began to turn rapidly in mid-September and October, so the negative impact on China's exports may not be reflected until the first half of 2009, because export orders are often delayed for about half a year. Under such circumstances, I predict that the annual growth rate of the Chinese economy next year may be around 7% to 8%.

◎Reporter: How much do you think the recently announced 4 trillion yuan economic stimulus package will boost the Chinese economy? Chen Zhiwu: I am not too surprised by the introduction of this plan.But I personally think that the whereabouts and structure of the funds in this plan are not very reasonable. In general, before the end of 2009, about 2 trillion yuan of the 4 trillion yuan will be invested in railways and other infrastructure, and the contribution to the GDP in 2009 will be about 800 billion yuan, equivalent to less than 3 % growth rate. The plan this time is still too much like the past, especially the practice in the 1990s.When one thinks of economic stimulus, it is through the state increasing investment in infrastructure and industrial projects to drive demand in this way.This approach was necessary to accelerate China's industrialization process in the 1980s and 1990s. At that time, China's road system and transportation network also needed to be established, so the long-term impact of such investment on the overall economy is very positive and positive.

The situation now is very different from then.Global demand is falling sharply. At the same time, China's economy has reached its peak before 2007, and the potential for investment-driven economic growth has basically been exhausted.At this time, the country should focus on stimulating economic growth in domestic consumption, especially private consumption, rather than using investment to make up for the rapid decline in international consumption and break through the bottleneck of the economy. ◎Reporter: Then how to stimulate consumption? Chen Zhiwu: The most direct way is to give tax rebates and subsidies to low- and middle-income families, individuals and farmers.I have previously suggested that adults, children and farmers with a monthly income of less than 5,000 yuan be given a tax rebate or subsidy of 1,000 yuan each.Such targeted tax rebates and subsidies will immediately stimulate consumption growth.The effect is immediate. The second is that the government will increase investment in the medical and health system and education security, which will reduce the pressure on the common people in this area, and will help release private consumption demand, thereby indirectly driving the growth of private consumption. The third is to speed up the establishment of the trading market for rural land use rights.This is the goal proposed by the Third Plenary Session of the 17th Central Committee, but this one can be accelerated, so that land use rights can be circulated as soon as possible, and can be used for capitalized operations such as loans and mortgages.At the same time, by accelerating the establishment of a registration system and trading market for land use rights by the state, farmers and rural entrepreneurs can have more money to start businesses. The fourth is to take greater steps in tax cuts for enterprises and individuals. In particular, the threshold for personal income tax must be raised to at least 5,000 yuan per month, or even higher.