The "Government Work Report" put forward the expected target of economic growth this year: "Growth GDP will increase by about 6.5%, and strive for better results in actual work." Why should we set the growth target at around 6.5%? What does “better result” mean and where does it come from?
"Better results" means the end of the bottom?
Some experts believe that the Chinese economy is expected to transition from the "one vertical" of the L-type to the "one horizontal"
In 2016, the economic growth rate of the Chinese economy in the four quarters was 6.7%, 6.7%, 6.7% and 6.8%, respectively. This made many people think that the economic growth target may increase this year. However, this year's "Government Work Report" has lowered the GDP growth target to around 6.5%. Why is it around 6.5%?
Huang Shouhong, head of the drafting group of the "Government Work Report" and director of the Research Office of the State Council, said that in view of the complexity, uncertainty and instability of the international environment this year, the domestic supply-side structural reform will be promoted to improve quality and efficiency. In other aspects, the "Government Work Report" proposed a GDP growth of about 6.5% this year, and strive for better results in actual work.
The growth rate of about 6.5% is closely related to people's livelihood and employment. "The bottom line of economic growth is to protect employment. As long as there is no problem in employment, the economic growth rate is slightly higher and slightly lower. It is acceptable. According to the current coefficient of elasticity, a one percentage point increase in GDP can drive 1.9 million. With an employment of 2 million people and a GDP growth rate of around 6.5%, the annual employment target of more than 11 million people can be achieved." Huang Shouhong said.
The growth rate of about 6.5% is in line with the goal of building a well-off society in an all-round way. According to estimates, in the next few years, the economic growth rate will remain at an annual average of 6.4% or close to 6.5%, and the GDP per capita and the per capita income of urban and rural residents will double by 2020.
So what does it mean to "get better results"? Does this mean that the bottom of China’s economic growth has ended?
"'Better results' is a higher growth rate." Yin Zhongqing, deputy director of the NPC Financial and Economic Committee, said that many economists and domestic and foreign research institutions are still optimistic about China's 6.5% growth, and as long as it is not More uncertain events occur, and the growth rate is likely to be higher than 6.5%. However, we still set the growth target at around 6.5%, which is also a certain flexibility for the supply side reform to resolve structural contradictions.
Some experts believe that the Chinese economy will not have a V-shaped or U-shaped rebound curve, but it has basically transitioned from the first half of the slowdown phase to the second half of the upgrade phase. It is expected to transition from the L-shaped 'one vertical' to 'One horizontal'".
Liu Shijin, vice chairman of the China Development Research Foundation, believes that “after nearly seven years of growth, the Chinese economy is very close to the bottom. 2017 is the verification period for the Chinese economy to bottom out and move into the medium-speed growth period. Into medium-speed growth is an iterative process. Whether to bottom out and enter the medium-speed growth period requires a verification process."
In the view of the economist Li Yining, the Chinese economy has to change from a development mode that originally placed speed and quantity to a key position to a development mode centered on efficiency and quality. "Can this year have a growth of more than 6.5%, depending on the efficiency base." Li Yining analyzed that the efficiency base includes both the material basis and the moral foundation, namely, identity, cohesion, and common sense of crisis. "The whole country is giving its own strength to the party's 19th National Congress. This shows that the economic growth rate in 2017 may exceed 6.5%, and there may be more economic achievements."
However, experts also said that there should be no excessive “speed expectations” or “speed anxiety” for “better results”. "The ‘to strive for a better result’ is not to engage in a flood-stimulated stimulus policy, but to release a positive signal to guide the localities to maintain a good momentum of development and to raise their sleeves to work hard.” Yin Zhongqing said.
What brand is achieved around 6.5%?
The market potential of a populous country, the consumption power of “rich”, the rolling dividend of new urbanization
In the past six years, China's economic growth rate has dropped from 10.6% in 2010 to 6.7% in 2016. At the same time, problems such as overcapacity in manufacturing, real estate differentiation, asset bubbles and financial risks have also surfaced. So, is China’s economy conditional and capable of achieving growth of around 6.5% this year?
In the view of economist Lin Yifu, China's economy has potential, resilience, and advantages. It is possible to achieve GDP growth of around 6.5%, and in actual work, it is more competitive than 6.5%. achieve. "'6.5% or so' is a fairly good statement, representing our confidence. We also have the potential and the ability to achieve this goal. Of course, if there are some 'black swan' events that we cannot control internationally, then it may be better than 6.5% is a little lower, but it is acceptable."
Confidence comes from the market potential of a populous country. As a large developing country with a population of nearly 1.4 billion, China's domestic demand market provides strong support for maintaining a medium-to-high speed in economic operations. Dong Mingzhu, chairman of Gree Electric, said, "The domestic demand market is huge. Many western countries have a population of 30-40 million, and we have nearly 1.4 billion people."
Confidence comes from the consumption power of “rich up”. China has bid farewell to the shortage economy of “clothing, food, housing and transportation”, but the standardization and mass supply in the era of large industry is increasingly unable to meet the high quality and individualized needs of the public. Promoting effective matching of supply and demand structures, consumption upgrades and positive investment in effective investment will further unlock the potential of domestic demand. "In the present China, it seems that there is no chance on the surface. There are more steel and coal. What seems to be overcapacity. In fact, we still have too many needs to be met, such as health, education, culture and other 'happiness industries'. Therefore, there are still plenty of opportunities to invest in China," said Guo Guangchang, chairman of Fosun Group.
Confidence also comes from the rolling bonus of the new urbanization release. China's urbanization rate is only 57.35%. The urban-rural gap and the uneven development of the eastern, central and western regions provide a space for manoeuvre to maintain stable economic operations. “Urbanization is not only the driving force for China’s economic development, but also the driving force for productivity growth,” said Hans-Paul Bokner, global chairman of Boston Consulting.
How to strive for better results
Realize the new dynamic equilibrium of supply and demand by deepening the reform
The key to whether China's economy can achieve "better results" this year is the intensity of supply-side structural reforms.
According to the analysis of any peak of the National Development and Reform Commission, China's current economic development faces three major structural imbalances: First, the structural imbalance between supply and demand in the real economy, although the supply system capacity is very strong, most of them can only meet the low-end, low-quality, low-price The demand is difficult to meet the increasing multi-level, high-quality, and diverse consumer demand of the public. The second is the imbalance between the financial and real economy. There is a phenomenon of diversification of funds. A large amount of funds self-circulate within the financial system, which not only increases the risk of the financial system, but also further increases the financing difficulties of the real economy. The third is the imbalance between real estate and the real economy. A large amount of funds poured into the real estate market, which once led to the rapid rise in housing prices in first-tier cities and hot-selling second-tier cities, further pushing up the cost of real economic development.
"To resolve the above three major imbalances, we must aim at the main contradictions, find ways to optimize the structure, and work hard on the supply side. With deepening reforms, we will improve the quality and efficiency of the supply-side system and achieve a new dynamic equilibrium between supply and demand." He Lifeng Say.
To deepen reform, we must innovate the supply of the system and properly handle the "two hands."
"The short-term problems in the current economic operation of China are deeply rooted in major structural imbalances. The fundamental reason is that institutional and institutional obstacles are the decisive role for the market to fully utilize the resources allocated. The government has not played its due role better." For example, Yang Weimin, deputy director of the Central Financial and Economic Leading Group Office, currently uses more effective administrative methods in the process of capacity reduction, but the fundamental approach is reform, and the production capacity is solved by improving the market mechanism. "Otherwise, it is very likely that this round has gone, and the next round is up again."
To deepen reform, we must adhere to the innovation strategy and must not go back.
"The real economy is the foundation of China's economic development. To revitalize the real economy, on the one hand, we must avoid the expansion of the virtual economy bubble, and on the other hand, we must avoid economic growth returning to the track of extensive growth in the past." Deputy Director of China Economic Climate Monitoring Center, National Bureau of Statistics Director Pan Jiancheng said that revitalizing the real economy is an important task for economic work this year, but it is not simply to increase investment in fixed assets and achieve scale expansion to promote economic growth, but to closely integrate with supply-side structural reforms, and to uphold innovation. Coordinated, green, open, and shared development concepts focus more on quality and efficiency than on quantity and speed.
To deepen reform, we must also adhere to the bottom line thinking and prevent and control potential risks.
At present, the Chinese economy is also facing many risks. It is necessary to put prevention and control financial risks at a more important position to ensure that no systemic risks occur. "Maybe some local comrades still have a speed complex and pursue high speeds driven by short-term investment, but the high speed under such high leverage is high risk." Liu Shijin believes that we emphasize quality and efficiency, not paying attention to speed. After emphasizing quality and efficiency, we can win medium and high-speed growth for a longer period of time. “The rate of economic growth must be based on risk prevention, lack of water, and sustainability.”
