How to understand and adapt to the new economic normal

my country's economy is evolving to a stage with more advanced forms, more complex division of labor, and more rational structure, and economic development has entered a new normal. The 2014 Central Economic Work Conference proposed that understanding the new normal, adapting to the new normal, and leading the new normal are the general logic of my country's economic development at present and in the future.

The economy has entered a new normal

The 2014 Central Economic Work Conference focused on consumer demand, investment demand, exports and international balance of payments, production capacity and industrial organization methods, relative advantages of production factors, market The characteristics of the new economic normal are deeply elaborated on nine aspects, including competition characteristics, resource and environmental constraints, accumulation and resolution of economic risks, resource allocation models and macro-control methods.

Liu Yuanchun (Executive Dean of the National Institute of Development and Strategy, Renmin University of China): The old normal of China's economy is the high speed we often talk about, and there are two "highs" behind it to support it. One is high investment, and the other is high exports. These two highs lead to high investment, high energy consumption, and high pollution, so together they constitute the "six highs" characteristics of China's economic growth miracle in the past 30 years and the formation of the old normal.

Now the old normal of the "six-high model" cannot continue. First, the basis for growth has changed, especially high exports, which are gradually constrained by global economic turmoil; second, the basis for high investment has changed. The demographic dividend and high savings we often talk about have undergone some mid- to long-term changes. change. We have entered an aging society, and the savings rate no longer continues to rise. It has weakened since 2008. More importantly, there are some problems with the foundations on which traditional growth relies. The so-called new normal is to shift from a traditional growth model to a sustainable growth model. In the process of this transformation, it is very important that the speed, structure, and policy foundations need to change, and the power mechanism and sources of growth also need to change. Change is going to happen.

Long Yongtu (former Vice Minister of the Ministry of Foreign Trade and Economic Cooperation): I very much agree with what President Liu said, we must view this new normal positively.

A very important feature of the new normal is that the growth rate has slowed down. The double-digit growth that we were accustomed to in the past 30 years has gradually slowed down, which is a growth rate of 7 or 8, so it gives the impression that the growth rate has slowed down. I think we still need to increase our confidence, have strategic thinking, and view the new normal from a positive perspective.

The second feature is that economic transformation has also accelerated. Many people ask what transformation is. Now we regard it as a basket and put everything in it. We believe that it mainly involves a shift from pursuing the quantity of economic growth to pursuing the quality of economic development. A very important manifestation of this is that after economic growth, the people will benefit. People's livelihood has been improved and society has become more equitable.

The third feature is to accelerate the adjustment of industrial structure. We are eliminating some redundant industries and creating some new industries, such as new energy vehicles and new materials. There is also the need to accelerate the transformation and upgrading of traditional industries.

The new normal is different from other countries

Compared with countries such as Europe and the United States, our new normal is obviously different. One is coming from the bottom, and the other is coming down from the peak. , although they are both called the new normal, their meanings are different.

Liu Yuanchun: For the United States, the new normal mainly refers to governance and adjustment after the financial crisis. One of its very important themes is deleveraging. Through large-scale asset acquisitions and large-scale currency issuance, Bring the economy back to a relatively stable state of recovery. It should be said that the new normal in the United States is relatively short-lived. Since March 2014, many financial indicators and economic parameters in the United States, including real estate parameters, have returned to pre-crisis levels. The way the Fed thinks, its unconventional policies could end by the middle of this year.

But relatively speaking, we have some more important changes, that is, our basic parameters have changed. The total working-age population has begun to fall, and the total marriage-age population has also declined since last year. The population There have been some changes to the bonus. The reform dividends built over more than 30 years of reform and opening up are gradually decreasing, and we are looking for the second round of reform dividends.

The second is that there have been some changes in basic parameters, leading to adjustments to growth trajectories and methods. The third is the institutional foundation, which requires the transformation from the primary market economy built through reform and opening up to a more advanced socialist market economy. The combination of these three factors forms the basis of China's new normal.

Long Yongtu: In fact, compared with Europe and the United States and other countries, our new normal is obviously different, because the new normal in the United States is that after the global financial crisis, the economy hit the bottom and then rebounded. It is such a recovery to a relatively growing trend. And we have returned from the peak growth rate to a medium-level sustainable development that emphasizes quality. So one is coming up from the bottom and the other is coming down from the peak. Although they are both called the new normal, their meanings are different.

A rational interpretation of consumption and investment

In fact, there is no contradiction between investment and consumption. China is inseparable from investment at this stage. The key is who invests and what are the benefits. If With a large amount of private investment, the foundation for our development will be very solid.

Liu Yuanchun: In the short term, there is no doubt that if a society invests too much and consumes too little, it will lead to structural problems. But if we look at it from a mid- to long-term perspective, we generally believe that consumption does not constitute the core of growth. If consumption constitutes the core of growth, then we can just consume as hard as we can. In fact, from a medium-term perspective, for a big country like China, its core It is still not about consumption, but about innovation. It still lies in the improvement of national quality and the improvement of the quality of our overall capital formation. This is its core.

What do you want to see the second time? That is, there is actually no contradiction between investment and consumption, but one of the factors behind it is problematic, that is, there are problems with our income distribution structure and national savings structure, and the people lack the foundation and system for consumption. Therefore, the relationship between capital and labor must be adjusted and a normalized and sustainable labor-capital relationship must be built. This is a key point of the reform.

Long Yongtu: When talking about economic growth and mode changes, investment seems to have become a bad thing. In fact, in our developing country, for a long time, we still have to play the horse carriage of investment. role. Investing is not necessarily a bad thing, the key is to be effective.

Liu Yuanchun: Investment is not a question of high or low, but a question of who will invest and what to invest. For example, India has stated that it wants to learn from China in investment, especially in infrastructure construction and basic education. We often find that public opinion is like a pendulum, and we seem to be abandoning what other emerging countries want to learn from us. We need to reflect on this and not go from one extreme to the other.

Long Yongtu: China is inseparable from investment at this stage. The key is who invests and what the benefits are. If there is a large amount of private investment, people will invest their own money in cultural industries and health. industry, medical care, and education, then the foundation for our development will be very solid.

Su Peike (financial commentator): Several problems must be solved to allow people to consume.

First of all, he must have money to spend. What we need to solve is the problem of income distribution. Compared with the government and enterprises, the growth rate of personal savings is slowing down. Under this situation, it is necessary to reform the income distribution system so that people can have money in their pockets for consumption. .

The second is to dare to consume. If we improve the social security system and solve a series of problems including medical care and elderly care through financial investment, then people will definitely dare to consume.

Liu Yuanchun: Let’s talk about the relationship between economic growth and employment. There are several typical facts that need to be paid attention to under the new normal. First, GDP growth has dropped, but there has been no obvious deflation. Second, although the GDP growth rate has dropped, there has not been widespread unemployment. Instead, there has been a shortage of migrant workers and difficulty in recruiting workers, and wage income has continued to grow. Why this change? The subtext behind this is that every time China's GDP increases by 1, the amount of employment it drives changes, which can also be said to be a change in the industrial structure.

Long Yongtu: Why has the economic growth rate dropped, but employment has increased? Because the development speed of the service industry exceeds the development speed of the manufacturing industry, for the same unit of GDP, the service industry generates 30 more jobs than manufacturing and real estate industries. Although our GDP growth rate has slowed down in the past two years, However, the employment rate has increased instead, and the task of creating more than 10 million jobs every year has been exceeded. This is very important.

How the government acts

In a sense, the series of measures to comprehensively deepen reforms are to digest some problems that have existed and accumulated in the past. By solving these problems, we can start from a new starting point and develop healthily and sustainably.

Liu Yuanchun: We emphasize that there are several considerations for interval regulation. The first consideration is to enable people's income levels to develop and reform in the process of continuous improvement, which requires maintaining a certain speed. Second, employment is the greatest livelihood issue. To maintain an employment level of around 13 million, according to our calculations, the GDP growth rate should be around 7.5. In fact, a growth rate of 7.1 can guarantee 10 million new jobs.

Long Yongtu: If the proportion of the service industry becomes larger and larger, one day in the future, even a growth rate of 7 or even 6.5 can create 10 million to 13 million jobs.

Zhu Xu (Media Observer): For China, the new normal is a brand-new topic and a new challenge. This involves the relationship between the government and the market, that is, in terms of the positioning of the government, is it a leading positioning or a service positioning? In terms of means, should you actively spend money, or should you be cautious? Are the goals performance-driven or something else?

Liu Yuanchun: The overall goal of comprehensively deepening reform is to improve and develop the socialist system with Chinese characteristics and promote the modernization of the national governance system and governance capabilities. Through a series of measures such as streamlining administration and delegating power, the government has given the market room to expand, allow the market to innovate and self-allocate resources. This is the core project of economic reform or the modernization of economic governance. Once this project is completed, the foundation for new economic growth will be established.

We are now particularly emphasizing the need to transform the government’s functions, but we must also clearly realize that the transformation of functions will not ultimately lead to the government’s complete withdrawal from the market. If government power is used properly and is exercised entirely within the legal framework and under the sun of supervision, I think this is a good thing for the development of the entire economy. We believe that the goals of reform can be summarized in three sentences. The first is a fair and unified large market; the second is a strong central government with effective rule of law. Rather than simply saying that we make the market bigger and the government smaller, This is not the logic; the third one is low-level and broad welfare. These three are our mid- to long-term goals, and they are unified with each other.

Long Yongtu: Now we need to digest some of the problems caused by rapid development in the past. The Third Plenary Session of the 18th Central Committee of the Communist Party of China proposed a series of measures to comprehensively deepen reform. In a sense, it is to eliminate some problems that existed and accumulated in the past. By solving these problems, we can start from a new starting point and develop healthily and sustainably. Therefore, it is very critical to solve the existing problems while seeing the achievements so that the Chinese economy can maintain a new growth normal.

Liu Yuanchun: Where should we start with systemic reform? Now the top-level design has been basically completed, and we have begun to solve the problem, which is the anti-corruption we are concerned about. Breaking the traditional interest structure through anti-corruption to form the vitality of reform and the first consciousness of reform is a very important stage. Of course, the goal of the current comprehensive reform is to modernize the national governance system and governance capabilities. One of the most important cores is the rule of law. This is the first entry point I want to talk about. The second very important entry point is the adjustment of the state-owned system. The next step is to adjust the governance structure of state-owned enterprises. In addition, there are several other priorities in the economic field, such as financial system reform and fiscal and taxation system reform.

Growth opportunities for enterprises

In the new normal, there are many opportunities for enterprises.

The consumption-based service industry will grow very fast, and innovation is still the core of the enterprise. The fulcrum between service and innovation is the production-oriented service industry, which is a very important basis for our future growth.

Liu Yuanchun: There are many opportunities for enterprises. If you look clearly at the future development trends, structural adjustment trends, and the foundation for building new growth drivers, you will find that: first, the consumption-themed service industry has grown very fast. In fact, except for 2009, the growth rate has basically continued in other years. 2 growth rate, prices have been rising, and the performance of listed companies in the service industry is still good. Second, innovation remains at the core of China’s future growth. The country has established many industrial funds and provided a lot of taxation and various support. We have become the second largest patent applicant country after the United States. Third, the fulcrum between service and innovation is the production service industry, which is an important basis for our future growth. So you will see that Alibaba is a manifestation of one or several innovations. In the future, we will look for the next company similar to Alibaba. If innovative companies bloom everywhere in China, I think our country’s second golden growth period is just around the corner.

Long Yongtu: There are many opportunities for enterprises. For example, people are paying more and more attention to quality issues, including the quality of food, air, life, eating, drinking, sleeping, etc., and pursuing higher standards, which brings great benefits to enterprises. A lot of opportunities came. In particular, China's traditional manufacturing industry is facing a major upgrade. What is a core issue to be solved in the major upgrade of the traditional manufacturing industry? It is the service industry. From upstream to downstream, many high-end production-oriented service industries can be developed around manufacturing. On the one hand, it creates a large number of jobs and many new forms of employment; on the other hand, it allows us to survive Traditional manufacturing industries have been improved. In addition, the needs of ordinary people are increasing, including cultural consumption, health consumption, and education consumption. During China's economic transformation, these new areas will bring many development opportunities to enterprises. ?