Chapter 82 Two eternal themes: decentralization and equal wealth

For more than two thousand years, there have been only two eternal themes of China's economic governance, one is decentralization of power, and the other is equalization of wealth. In history, we have seen this scene again and again. Because China has the most extensive domestic demand market and people who enjoy secular consumption, economic recovery has never been a particularly difficult task.As early as the 1930s, the historian Fu Sinian gave a cycle of economic prosperity and decline. According to his observation, as long as China has a stable period of 70 years, it will surely regain great prosperity. ", from the unification of Emperor Wen of the Sui Dynasty to the "Government of Zhenguan" of Emperor Taizong of Tang Dynasty, from the end of the Five Dynasties and Ten Kingdoms by Song Taizu to the revival of Fan Zhongyan's generation, and the "Kangqian Prosperity" of the Qing Dynasty, the period was only two or three generations.In his view, if there is no war in China, it can be restored in ten years, revitalized in thirty years, and prosperous in fifty to seventy years.Under such a view of history, the recovery of China’s economy after 1978, and within the next two decades, China’s total economic output surpassed that of the United States and became the world’s largest economy again. It seems that the cycle repeats itself, and it is “inevitable” high probability event.

However, in addition to the law of prosperity, the economic governance of the past dynasties also has the law of "opening first and then closing". , open up after falling behind, dynasties change, the axis remains unchanged, and the cycle goes on and on, endlessly.The Han, Tang, Song, Ming and Qing, and the Republic of China in the past all fell into this closed-loop logic.The root cause of this cyclical governance crisis lies in the imbalance in the distribution of rights and wealth. Under the centralized system, the so-called decentralization mainly refers to two types of decentralization, namely, the distribution of rights and interests between the central government and local governments, and the distribution of rights and interests between the government and the private sector.In my opinion, there is an inherent relationship between these two kinds of decentralization. Without decentralization from the central government to local governments, the decentralization of power from the government to the people would not be possible.

As early as the initial period of the formation of the feudal system, the contradiction between the centralization and decentralization of power between the central and local governments had already broken out. Chao Cuo’s cutting of feudal vassals at the end of the “Rule of Wenjing” and the resulting “Seven Kingdoms Rebellion” were the most prominent manifestations. event.During the period of the Republic of China, the KMT never handled the relationship between the central government and local warlords well. After 1949, the mighty Mao Zedong repeatedly swayed between "centralization and distribution": in 1950, all local fiscal revenues were turned over to the central government, and two lines of revenue and expenditure were implemented, which was a high degree of centralization; in 1956, Mao Zedong published "On Ten Major Relationships". ", began to fully decentralize power; in 1962, the "Seven Thousand People Conference" was held, strengthening centralism and a game of chess across the country, and re-centralized power: In 1966, the proposal of "virtual monarchy and republic" and "going out with all people and horses" was another big move. Decentralization; In the 1970s, the national economy was in systemic disorder, and the central government once again centralized power. After the reform and opening up in 1978, there were two more stages in the distribution of rights and interests between the central and local governments. The reform of the overall supporting system of price, finance and taxation in 1994 was the boundary. Due to the excessive decentralization of power, a pattern of "weak central government and strong local government" was formed, so later, the centralization of power was re-implemented by means of the implementation of the tax sharing system.

After the global financial crisis in 2008, China's economy has entered a new adjustment period, and the contradictions between the central and local governments in the economic field are intensifying. Relying heavily on land finance, the “replacement of business tax with value-added tax” that was implemented on a trial basis at the end of 2012 took a portion of the county’s revenue.In the future, with the implementation of the urbanization strategy and the improvement of various social security systems, the demand for local expenditures will not decrease but will increase significantly. Therefore, re-adjust the financial relationship between the central and local governments, expand the administrative authority of local governments and increase revenue benignly capacity has become the primary topic of macroeconomic reform.Its possible fields include: through tax reform, restraining the local government’s impulse to sell land and forming a sustainable revenue model; greatly increasing the local tax revenue of central enterprises, which will be used for social security system investment in various places; increasing the resources of local governments Proportionate tax retention; under the premise of supervision in place, improve the investment and financing platform of local governments.All in all, only by re-segmenting the "cake" between the central and local governments can the "cake" continue to grow in the future.

As for the equalization of wealth, it is also divided into two categories, that is, the equal wealth between the government and the people, and the equal wealth between the haves and the have-nots. Equalization of wealth is also impossible. In the past 20 years, the government has benefited far more from economic activities than the private sector. In 2012, the national GDP was 51.9 trillion yuan, and the government’s fiscal revenue was 10.3 trillion yuan. This does not include the profits of central enterprises, land revenue and fee income of local governments. In summary, the government’s benefits from economic activities The ratio should be more than 30%. In February 2013, the China Federation of Logistics and Purchasing released data that the transportation costs of national logistics companies were about 3 trillion yuan, of which the road and bridge tolls collected by local governments accounted for 1/3, up to 1 trillion yuan. Yuan.Another example is the most controversial real estate industry. According to calculations by economist Lang Xianping, the government has levied a total of 12 taxes and 56 fees. Land costs and taxes account for 70% of the average real estate price.He therefore appealed, "The only way to drop housing prices is for the government to abolish taxes and fees."

In future reforms, the government will implement a large-scale tax cut policy, alleviate the pain of high corporate burdens, and increase investment in medical care, education, and social security systems. This is the fundamental way to achieve equal wealth.Since the pre-Qin philosophers, "equalization of the rich and the poor" has been the oldest and most primitive governance ideal of thinkers and rulers in the past dynasties. Only by obtaining balanced benefits can the four major interest groups maintain social stability and progress.It is difficult for a unified China to reject a strong government, but its desires should be controlled.