Article/Jia Kang of China Economic 50 People Forum
Putting good capacity and backward capacity together and cutting them flat, what is called de capacity? Formally, it can be explained that the de capacity task of the coal industry has been completed in advance, which is totally inconsistent with the basic law of coal production and the original intention of improving the quality and efficiency of the supply side that we pursue to achieve the de capacity.
How will China unleash its development potential in the future? After a rough look, I felt that the book Research on Hot Issues of China's Reform and Development really formed a series of achievements closely matching the four comprehensive strategic layouts according to the current major practical issues. The first part is that after the first two steps of our "three-step" modernization drive were achieved in advance, the intermediate node goal that must be achieved in the remaining half century span is the decisive stage of the 13th Five Year Plan.
The supply side structural reform followed. I understand that the supply side structural reform is the reform of Deng Xiaoping's "reform and opening up", which aims to solve the problem of effective system supply on the supply side. This statement is really rigorous in academic theory, because the supply side problem is first of all the problem of the effectiveness of the system supply. To grasp the leading role of reform, we need to solve the problem of overcoming difficulties in the reform deepwater area.
Supply management is not like the relatively simple counter cyclical framework that we used to learn from the general experience of market economy and pay attention to demand management. It must face a series of complex structural problems. First, the institutional structure and interest pattern have now reached a critical point to overcome difficulties, and how to "break through the barriers of interest solidification".
In the middle of the "four comprehensive" strategic layout, we should focus on the implementation of the strategic policy of supply side structural reform. In the book "Research on China's Reform and Development Hot Issues", we have pushed forward the proposition of administrative system reform and social construction. In fact, it is behind the deployment of 60 articles focused on economic reform at the Third Plenary Session of the Central Committee, corresponding to the Fourth Central Committee The spirit of the Fifth Plenary Session of the Central Committee of the Communist Party of China launches the framework feature of full coverage of reform.
In such an achievement set, economic reform extends to social reform and social governance. In fact, administrative reform must also correspond to the concept of comprehensive reform, so it is really a collection of hot issues and major practical issues.
Taking this opportunity, I would like to briefly talk about two perspectives of thinking, which are also combined with a well-off society in an all-round way and comprehensive reform, emphasizing two points of observation. One is that in the process of promoting a well-off society in an all-round way, I think 2017 should be a crucial year.
Our economy has been going down since 2010. At the beginning of the 13th Five Year Plan, we have a basic estimate. There is a bottom line of speed to achieve a well-off society in all respects. In the 13th Five Year Plan, if the average annual GDP is above 6.52%, the per capita GDP will double from 2010 to 2020; If we can hold the bottom line of 6.52%, we should also cooperate with social and structural policies such as poverty alleviation of 70 million rural people, so that we can build a moderately prosperous society in an all-round way according to the original plan.
Now 2016 has passed. In 2016, GDP growth reached 6.7%, more than 6.52%. I think that in combination with the academic discussions here, the relevant understanding is worth clarifying when further internal discussions are made, because some researchers say that the economy should not be afraid to continue to decline. Some estimate that it will fall below 6% in a year or two. The most extreme view is that it will soon fall below 5% and "the new 5 is better than the old 8 because of the completion of structural adjustment".
I think this statement is too simplistic. At present, China's development issues are connected with the goal of building a moderately prosperous society in an all-round way. In order to achieve the goal of building a moderately prosperous society in an all-round way, we need to take advantage of the trend and overcome the middle-income trap. In the current downward process, we should actively strive for a phased bottoming out and stabilization, and create a quality upgraded medium and high-speed growth platform.
China is still the market with the greatest potential in the world On the whole, China's industrialization has just reached the middle and later stages, and the underdeveloped areas in the central and western regions are still in the primary stage. The real level of our urbanization is that the urbanization rate of the registered population is only 40%. International experience shows that only when it reaches 70% can we turn to a low level of development. The demand release in the process of bridging the dual economy will be brought round after round, and the demand release of infrastructure construction and upgrading, industrial growth, human capital cultivation and so on will be released. There is a comprehensive opening pattern, Can get global supply response.
If we grasp the strategic policy of supply side reform, we will follow such a potential release process. Now I personally feel that we should not say in a pedantic manner to let the economy continue to decline. 2016 has shown that the first quarter to the fourth quarter is a unique small platform in recent years. Only one indicator is obviously bad, that is, the investment of private enterprises is declining. Other indicators now look like bright spots in general.
The latest sign is that PPI has gone through 54 months of negative growth and turned into a rapid increase. Taken together, I think that if our regulatory departments do not make some avoidable and low-level mistakes, we are hopeful that in 2017, we will form a phased bottoming in the middle of regulation after the decline in 2010, that is, from high-speed to medium and high-speed, after a decline, There is no obvious downward trend.
Why not call this periodic bottoming stabilization? Because it also needs a clear docking with the consensus of the market expectation. To consolidate such a situation, it needs to gather consensus on the market, and expectations need to be further docking.
Many people still don't believe it, and many local governments and enterprises are still worried, afraid of continuing to decline. If it can be handled well, we should seek to stabilize as soon as possible. Stabilizing means that various indicators continue to improve while market expectations begin to gather confidence, which will guide the behavior of future market players.
I always think that this cautious and optimistic consideration is a combination of various factors. If the GDP can grow by more than 6.5% in 2017, then the social policy will be more rationalized and strengthened.
Therefore, I think that in terms of the policy mix expressed by the Central Committee this year, the fiscal policy should have a certain boldness. Even if the deficit rate is slightly higher, monetary policy can emphasize more stability, and it is necessary to give appropriate efforts to the fiscal policy There are specific functions and responsibilities in promoting structural optimization; The industrial policy is accompanied by criticism of the government's behavior, which is enough to alert us that the industrial policy must be needed. The key is its implementation mechanism. If the implementation mechanism is not well mastered, it may backfire.
If we say that we are well-off in an all-round way, 2017 is a very important year, and we need to grasp the essentials. It is a year that may have a periodic bottoming out and then seek stability. I have observed that 70 million people have been lifted out of poverty. Now in some regions, it is still relatively serious. For example, we should quickly break through the bottleneck in infrastructure.
I have been to Xichang, Sichuan Province. Although there is a very advanced satellite launch base, Muli County, where Tibetan compatriots live, covers a total area of more than 13000 square kilometers and has a population of 100000 people. As you can imagine, the proportion of poor people is higher than that of ordinary places. How can we help them out of poverty? In order for various factors to flow, the first is the infrastructure conditions. The problem of "building roads first if you want to be rich" needs to be solved.
Now the local government has realized that the time is running out. During the 13th Five Year Plan period, poverty must be lifted out, and all cadres are not allowed to be promoted until they are lifted out of poverty. They have decided to cooperate with private enterprises to build PPP projects on five main roads with the funds of private enterprises and open them to traffic as soon as possible. This is a basic condition for the residents in this area to get rid of poverty as soon as possible, which is a microcosm of a similar underdeveloped area.
What I mean by this is that in order to truly achieve a moderately prosperous society in an all-round way in China, it is hard to say that none of them can be left behind. It is still very obvious that the major part of 70 million people will have to shake off poverty. If we put our possible working energy into such things, it will be very beneficial.
Second, I'd like to talk about some hot spot observations. Although a series of progress has been made in the supply side reform in 2016, researchers are more concerned about the deviations and signs that need to be corrected. In this regard, I would like to start with the "capacity reduction" in "three reductions, one reduction and one compensation". The representative industries of capacity reduction are steel, coal and electrolytic aluminum. In the first quarter of 2016, the steel industry began to stabilize its product price; With the obvious warming of the whole industry, the price has risen significantly.
Many people said that the task of capacity reduction in the iron and steel industry was completed ahead of schedule. At this time, people began to observe what kind of specific quantitative standard is capacity reduction? For steel production capacity, for example, over 1 billion tons, the management department should cut down how many percent, and then cut the task to each place, and then complete it ahead of schedule.
As a result of the completion ahead of schedule, the rapid recovery of the steel industry seems to be a good thing, but it is not a bit fierce? Take a closer look. Is it true that backward production capacity has been eliminated? I always think that overcapacity reduction is a general statement. The real capacity to be removed is backward capacity, which is the real essence of this problem.
The so-called overcapacity or non overcapacity can be changed instantaneously. For example, if steel is to be used for subway construction, Beijing's subway construction must be accelerated, or there is no way to resolve the crisis of public transport system. In such a metropolis, it is necessary to build a rail transit network similar to that of New York, Tokyo, Paris and other international metropolises as soon as possible. If you look at the car ownership rate of New York and Tokyo, it is much higher than that of Beijing. Why don't people take measures to restrict traffic and purchase? The reason is that people's rail transit is well developed.
Under the pressure of construction, Beijing has used PPP Hong Kong funds for Metro Line 4. Now Line 16 has followed up with the idea of PPP. It has signed a contract to start construction, followed by a large number of orders for steel, building materials, construction machinery, etc., and part of the original so-called excess capacity in the whole market has become effective capacity in an instant.
So the essence of the problem is not surplus, the problem is unreasonable administrative intervention to produce surplus, and the real thing to focus on is to remove backward production capacity. The production capacity of a large number of tens of millions of market entities must mainly rely on fair competition and the survival of the fittest. But it was precisely in 2016 that obvious deviations were exposed in this regard.
Everyone in the iron and steel industry already knows that it is the administrative means that cut the indicators, and each site will see who can press the indicators, which will certainly distort under the effect of "dealing with relationships", and the role of fair competition will certainly be suppressed.
How to reduce the production capacity of the coal industry? It is mandatory that all mines can only start operations for 276 days a year. In fact, a mine must be connected without special circumstances. If there is no special overhaul, 365 days is required to be connected, so that fixed costs can be fully allocated to all elements in the operation process. Now we have forced the operation of more than 300 days to only 276 days. In fact, the efficiency of all mines is reduced by administrative means, which seems to control the capacity scale. But is the backward capacity squeezed out here?
I said rudely, yes Putting good capacity and backward capacity together and cutting them flat, what is called de capacity? Formally, it can be explained that the de capacity task of the coal industry has been completed in advance, which is totally inconsistent with the basic law of coal production and the original intention of improving the quality and efficiency of the supply side that we pursue to achieve the de capacity.
Objectively speaking, the safety production of coal mines has been impacted. For example, coal mines must continuously extract coal-bed methane. If they have to stop working, they do not need to extract gas. But when to resume work and when to pump air in advance, without such experience, front-line managers may not arrange enough advance economically, which leads to the rise of safety accident rate.
The coal industry began to show signs of recovery in the second quarter, and rapidly recovered in the third quarter. The original price of a ton of steam coal was more than 280 yuan, and quickly rushed to 600 yuan. This recovery was more rapid than that of steel. Such a rapid recovery contains problems worthy of reflection. Our excessive administrative intervention has led to ups and downs that do not conform to the general economic fluctuations, and we have not discharged many backward production capacity, which is not in line with our original intention.
If the iron and steel industry and the coal industry still need to cut production capacity and see these problems while achieving results, should we summarize them in a timely manner? First, we should fully respect the market, maintain fair competition, and understand the internal logic of cutting production capacity and optimizing supply side reform. We must drop the backward production capacity substantively, It falls on the performance results of improving the quality of the entire supply system.
In this regard, I think these issues that we focus on in this hot topic discussion will certainly further deepen understanding of each other and have a positive role in promoting.
(Sort out the speech made by the author at the press conference of the new book "Research on Hot Issues in China's Reform and Development")
(The author of this article introduces: President of Huaxia New Supply Economics Research Institute and researcher of China Academy of Financial Sciences.)
