Chapter 25 The second part of the three alarming words, prosperity and chaos, bees are making honey

Strictly crack down on the second ring of the Prosperity Plan, and five supporting policies will be launched at the same time. 1. Twenty-five percent of all personal deposits of Chinese people in domestic banks must be exchanged for consumer coupons regulated by the state, one third must be spent within 90 days, two thirds within six months, and expired . Excessive savings by the Chinese is one of the main reasons for insufficient domestic demand.The deposits of private individuals and enterprises in China account for more than 20% and 30% of the total annual GDP respectively. When the external economic environment is not good, people with spare money will hold their wallets and don’t spend money. Everyone is like this, can the economy not decline?It is no longer effective to rely on interest rate cuts or moral persuasion to get the people to pay for consumption, and can only rely on coercive government orders.This is unthinkable in Western countries.

The first advantage of this decree is that it is relatively simple to implement. All banks are computerized, and it is easy to cut across the board.The second advantage is that this decree only involves property owners, and it mainly affects the urban middle class and well-off people who have personal savings in banks, including civil servants, professionals, white-collar workers, state-owned enterprise employees, small businessmen, and retirees. It makes sense for them to spend 25% of their savings on themselves while helping the country stimulate the economy to tide over the difficulties.Consumers start spending money and businesses start spending money.The third advantage is that the recession can be reversed without the need for state financial allocations or Keynesian employment projects. At least it has strongly activated the economic growth engine driven by domestic demand, and it is estimated that it can increase at least five GDP growth points.

In this way, urban residents with some savings are already busy enough: where will the money be spent?What goods or services to buy? Second, since demand is created, there must be supply.The second supporting policy is to cancel more than 3,000 controls on the manufacturing and service industries, facilitate the entry of private capital into all walks of life, relax credit for industries with domestic demand, encourage entrepreneurship, and complete the transformation of government functions.Except for industries related to national security and monopolized by central enterprises, many restricted industries are now withdrawn.He Dongsheng told Lao Chen that now anyone can set up a publishing house and publish books without using an ISBN.Lao Chen retorted: But all books have to be submitted for review, and many topics are forbidden.He Dongsheng said: But at least now there are private publishing houses everywhere, as well as Sino-foreign joint venture publishing houses, which fully comply with WTO requirements.

This decree is also effective enough. For a while, it seems that all people are engaged in business. Regardless of age, gender, region, or occupation, everyone is discussing business, using their brains to make money, looking for talents, or being sought by others, looking for resources, or looking for people for resources.As long as you give the Chinese people a crack, they can open up a piece of the sky. Miraculously, the idle manufacturing equipment in Guangdong, Jiangsu and Zhejiang provinces that were originally exported was transformed in a blink of an eye and began to be produced for domestic demand.Excess office buildings and factory buildings are also digested at once.New products and new services flood the market within a month or two.China has successfully transformed from an investment and export-led economy to a domestic demand-driven economy within half a year.

How successful is it?He Dongsheng said that the goal of the first stage is to return to China in the 1980s, that is, domestic demand accounted for half of GDP, and this goal has been achieved.The ideal goal is the United States before the 1970s, when internal consumption accounted for 60% of GDP.Later, the United States went too far, relying too much on internal consumption to more than 70%, with insufficient investment and exports, excessive credit, and no private savings at all, which led to major problems.However, the proportion of internal consumption in the United States before the 1970s was an ideal proportion for a large country. China itself has a huge internal market with more than one billion people. Many aspects can be self-reliant, and there is no need to rely too much on exports to developed countries. That is to say, in the future, it will not be overly affected by the fluctuation of the US dollar.Of course, for the time being, China’s domestic demand has only increased from 3.5% to nearly 50% of GDP, and investment and foreign trade still account for more than half. There is still a situation of excessive investment in infrastructure and real estate, and the proportion of foreign trade will rebound slightly after the global economy recovers, but Generally speaking, the proportion of domestic demand has been greatly increased, the wages of Chinese people have increased, the return on investment of enterprises has been good, and the national tax has also increased accordingly. It can be said that the economic foundation of the prosperous age has already been laid at this moment.

Kill two birds with one stone, because businesses are starting up and expanding everywhere, and the unemployment problem in urban and rural areas has also been solved. 3. At this time, many migrant workers also returned to the city, taking advantage of the shortage of migrant workers to choose jobs with good pay.So what are the left-behind farmers busy with?He is also busy with his property.The third supporting policy is to allow farmers to own their own farmland property rights, and farmers become people with permanent property.This matter has been talked about for many years, and now it is finally implemented. One of the motives behind it is to divert the attention of farmers in times of economic crisis in order to maintain social stability.Sure enough, farmers are busy disposing of their assets.He Dongsheng himself is undecided about whether farmland should be privately owned. The privatization experience of other countries is not necessarily positive, but he cannot win other people's opinions.One thing is certain and he is speechless: farmers support the privatization policy.He Dongsheng said with a bit of sadness: "China cannot go back from now on."

4. This is a period of passion for the whole country. It may look chaotic, but it is a constructive and necessary chaos.In other words, while liberating productivity and mobilizing the subjective initiative of the people across the country, our most important task is to strictly prevent economic crimes and corrupt officials from undermining policies.The previous three weeks of hard and fast crackdowns, first wiped out a group of black and evil forces, professional criminals, hooligans, human traffickers, pickpocketing and beggar groups, and then took advantage of the power of the crackdown to announce the three severe crackdowns, namely combating corruption and combating speculation. Falsification, fight against rumors to confuse the public.When everyone heard about the crackdown, they were afraid of death.

The Communist Party is best at beating small flies. It catches a few models at random to sentence them to death without mercy. It also deters local officials and makes them clamp their tails and behave like a human being. This has achieved the desired effect.As long as local bureaucracy is improved and officials are afraid to do anything for the time being, the first three economic new policies will have a greater chance of success. Five: He Dongsheng supports the market economy, but he does not believe that the market is omnipotent, and he does not believe in laissez-faire.He has always known that public power cannot be absent in certain links.The previous four policies have created real demand and started corresponding production. At this time, the currency and credit circulating in the market have increased greatly, and the supply of goods and services will be short-term. Even if there are no speculators, let the market go Adjustment, people will have inflation expectations, and prices will rise irregularly. If hyperinflation turns into hyperinflation, this reform will be under great pressure, or even overturned.what to do?Only prices can be controlled.

This is the policy that He Dongsheng believes is the most controversial in concept and the most technical in implementation.Those experts and scholars who have been brainwashed by Western neoclassical economics probably have negative conditioning on the word price control itself.He Dongsheng's economics is self-taught, and he reacted in this way at first. It was not until he carefully read the economic history of Western countries in recent years that he discovered that in the last century, Western developed countries had many successful examples of large-scale price controls. All are capitalist countries.It was eye-opening for him to read how the Jewish banker Vafenau had successfully presided over the economic planning of the German Empire during World War I.By World War II, the German Third Reich also effectively combined capitalism and a planned economy.He Dongsheng was most encouraged by President Roosevelt's economic policies during World War II, including material control, which not only undertook huge military expenditures, but also officially helped the United States get rid of the 12-year economic recession.The well-known economist Galbrev once worked in the Material Management Bureau at the time, with 16,000 employees. Before he was elected as the president of the American Economic Association in 1972, he wrote a monograph on price management, and wrote a book on economics in the 1970s. During the period of stagflation, the control of goods was proposed again. It can be seen that not all Western economists do not accept price control. However, in the past forty years, market fundamentalists such as the Chicago School have risen in the United States. As a result, no one remembers that price control is a market economy. a means of control.In fact, in Europe, until the 1980s, 40% of France's economic activities were subject to price controls.

He Dongsheng first broke through his own understanding of economics a few years ago, and then combined with China's reality, he patiently sold his ideas to other comrades in the central government.Fortunately, many officials in China have just come out of the socialist command economy, accept the market economy on the surface, and are happy when they hear the control from the bottom of their hearts, so He Dongsheng can convince them that price regulation that is beneficial to the operation of the market is possible. It can even be said that it is necessary during a period of major economic transformation. It is to support the market and prevent emerging markets from self-destructing, rather than replacing the functions of mature markets.

However, in the price control team formed by He Dongsheng, none of them are officials who are full of ideology.The backbone is a group of technical bureaucrats in their fifties who have accumulated more than 30 years of experience in price control during the reform and opening up. Together with a large number of top statistics and econometrics recruited from key universities, they are equipped with a team that was not available in the planned economy era. Equipped with database management software and nationwide network connection, people on earth, producers and consumers can check all the latest price control information online in real time.Price control is a clear and real price, real knives and guns, to allow businessmen to make money and encourage them to produce, but to dispel their ideas of speculation and hoarding.What should be regulated, what should not be regulated, and the impact of regulation on supply and demand, all need to be properly grasped. To suppress sharp rises and falls, let go at the right moment and let the market's own adjustment function take over.Such a large-scale feedback adjustment system opened the eyes of foreign media that were initially critical.To put it bluntly, no matter how authoritarian an authoritarian government is, it is only possible to realize this new generation of "command economy" if it uses the automated information and measurement technology of the 21st century.In this way, price control has escorted the major reform of China's economy. The above five supporting policies are probably the only ones in the world that can implement them simultaneously. In the difficult period of the global economy, Western countries are overwhelmed and overwhelmed, but this is our century-old opportunity.The previous government, which was originally in jeopardy, turned a social and political crisis caused by the economy into an opportunity in a short period of time, and made people at home and abroad accept the saying that China is prosperous.In the following year, the party and government leadership changed smoothly.He Dongsheng was not promoted, and his plan to become a secretary of the Central Secretariat fell through. He just changed from an alternate member of the Politburo to a member of the Politburo, and became a veteran of the three dynasties.On the anniversary of the Ice and Fire Prosperity Project, He Dongsheng not without self-deprecating congratulations said: "He Dongsheng, well done".