Accelerated by project approval to see "steady growth" and "tune structure"

According to the website of the National Development and Reform Commission, there were as many as 328 projects approved by the National Development and Reform Commission in April, and more than 200 projects were approved in May. Nearly 100 projects were approved on May 21. In addition, in the first 20 days of May, the four major banks added 34 billion new loans due to new projects. In May, the total number of “released” projects exceeded 100 billion. Some media used the "opening the water" to describe the NDRC's move.

Whether the Chinese economy wants to "stable growth" or "tune the structure" has caused controversy and concern among the officials of the two circles. In this regard, this roundtable forum invited Zhang Liqun, researcher of the Macroeconomic Research Department of the Development Research Center of the State Council, Wei Jigang, researcher of the Industrial Economics Research Department of the Development Research Center of the State Council, and Hu Zhenhu, deputy researcher of the Asia-Pacific Finance and Economic Development Center of the Ministry of Finance.

Accelerated project approval is aimed at “stable growth”

China Economic Times: It is widely believed that the NDRC's acceleration of major project approvals is due to a "strong shot" of poor macroeconomic data in April and May. In the case of concerns about restarting investment stimulus policies, what is the NDRC's acceleration of major project approvals?

Zhang Liqun: Accelerating the examination and approval progress and construction pace of the key construction projects is a policy arrangement for steady growth, which plays an important role in stabilizing investment growth. The key is to scientifically select the project, and the project approval for the NDRC should also be judged from this perspective.

Although China's steel production capacity is excessive, this should not be the basis for new projects. Market competition is to survive the inferior. We cannot rely on new projects to protect backward production capacity, and we cannot maintain market status by controlling market access. When there is not much understanding of the project itself, there is no right to say the rationality of the project approval.

Wei Jigang: The government has the responsibility to maintain macroeconomic stability. The most important macroeconomic issue at present is to achieve steady growth of the domestic economy. Without macroeconomic stability, many domestic contradictions will gradually become prominent and even sharp, which will make China's development in a relatively passive and dangerous situation.

Therefore, it is necessary to implement a proactive fiscal policy and investment policy, a structural tax reduction policy, a moderately loose monetary policy, a structural optimization and an enhanced industrial policy and a fair market access policy. The NDRC's recent approval and approval of a large number of projects should be based on the voluntary policy of ensuring economic growth and maintaining social stability. This is also the need for the development of related industries.

Hu Zhenhu: Accelerating the progress of major project approvals and improving project implementation efficiency, first of all, it has the basic conditions for the stimulus policy to become larger, and secondly, it is more to cope with the inherent pressure of slowing economic growth. From July 2011 to May this year, the PPI fell for 10 consecutive months, with a negative growth for 8 consecutive months, fully indicating that the total demand is insufficient. At present, the CPI growth rate has dropped, and inflationary pressure has been greatly eased. The fall in inflation expectations has made room for the implementation of active policies. In order to ensure a crucial smooth transition in 2012, it is reasonable and reasonable to maintain social stability through “steady growth”. Specifically, the following two main factors must be considered to accelerate the approval of major projects:

On the one hand, we must recognize the objective necessity of accelerating approval. The export, investment and consumption locomotives that drive economic growth are decelerating, and some measures must be taken to prevent a rapid economic downturn. First, exports continue to decline. The Ministry of Commerce’s " Report on China's Foreign Trade Situation in Spring 2012" shows that China's foreign trade growth rate slowed down significantly in the first quarter of 2012. Second, investment growth is slow, mainly due to the decline in fixed asset investment, manufacturing contraction, the downturn in the real estate market and the sluggish private investment. Moreover, consumer demand is weak. Some economic leading indicators show that the lack of demand is continuing or even worse. The national income distribution structure is difficult to optimize in the short term, and the purchasing power to support household consumption is difficult to increase rapidly. More recent power reserves and lower oil prices indicate that the lack of market start-up has led to a decline in demand for factors, which in turn has led to oversupply of factors and falling prices.

On the other hand, choose a scientific policy tool. Specifically, the short-term policy mix of “steady growth” is mainly to increase financial input, introduce liquidity and introduce industrial policies, and achieve the goal of total regulation and control and structural control through a combination of different strengths and policies. In order to have an immediate effect, it is generally necessary to rely on a combination of fiscal policy and monetary policy. In order to manage inflation expectations, the continuous and intensive use of quantitative tools and price instruments since 2010-2011 has caused a decline in currency liquidity, especially for SMEs. At the same time, capital markets such as stocks and bonds are also sluggish. The financing environment is poor. To this end, the central bank recently lowered the benchmark interest rate by 0.25 percentage points, while allowing the deposit and lending rates of financial institutions to float, in order to effectively reduce the cost of the real economy loans, boost investment enthusiasm, and thus promote economic growth.

The economic downturn is within expectations

China Economic Times: Whether the Chinese economy will "hard landing" has become a hot topic again. According to the current situation, is China's economic downturn expected?

Wei Jigang: The situation of the international environment is not optimistic. It is difficult to change in the short term. It is difficult to achieve domestic demand in the short term. In addition, due to strict macroeconomic regulation and control for a period of time, the environment for economic development is indeed not loose. In addition, the new economy in the process of structural adjustment The growth point has not been effectively replaced. Overall, the short-term downward pressure on the economy is indeed very large, and the economy has fallen in the short term in line with expectations.

Hu Zhenhu: The decline in China's economic growth is the result of the deteriorating external environment and the negative effects of the domestic “active” economic transformation. It is not surprising. However, the Chinese economy is less likely to have a “hard landing”.

At present, the economic downturn in both developed and emerging market economies has worsened the external environment of China's economy. At the same time, China's domestic economic transformation and policy adjustments have also directly caused China's economic growth to slow down. First, the upgrading of industrial structure, although long-term favorable, will be at the expense of certain economic growth in the short term; second, energy conservation and emission reduction will eliminate some of the backward production capacity, and will also squeeze out the "moisture" in economic growth, but in economic figures. It will show a decrease; the third is that the RMB exchange rate reform objectively causes a return to appreciation channel, and the export growth rate will be dragged down, thus affecting economic growth.

However, the Chinese economy will not have a "hard landing." First of all, we must have a clear understanding of the "hard landing" of the economy. "Hard landing" does not mean the general economic downturn, but refers to the sharp and sharp decline in the economy, and even bottoming out. At present, China's economic downturn is only a small fluctuation under the "fine tuning", but it does not directly cause instability in the social and financial system, and is essentially different from the "hard landing."

On the one hand, the Chinese economy still has a solid foundation to maintain long-term economic growth. The main supporting factors are as follows: First, there is still much room for improvement in infrastructure, especially rural infrastructure such as water conservancy, electricity, and networks; second, there are some that need to be further opened up. Service areas, such as health care, communication, education, etc.; third, there are many areas for industrial upgrading, especially in strategic emerging industries such as high, fine, and sharp; and fourth, strong financial strength, showing strong financial foundation, rich savings, The foreign exchange reserves are abundant and have the financial basis for transforming into real investment. On the other hand, the recent economic data is still releasing some positive signals behind the “ugly”. Some leading indicators show that the Chinese economy still has the potential to maintain its growth momentum. In May 2012, China's non-manufacturing business activity index was 55.2%, a slight decrease of 0.9 percentage points year-on-year, but from May 2011 to now it has been at the critical point of "dry line". In May 2012, the PMI fell slightly, but it has remained above the “dry line” for six consecutive months.

Use caution when using stimulus policies

China Economic Times: Although the National Development and Reform Commission recently held a news briefing to clarify the so-called "new round of economic stimulus plan is coming, and the 4 trillion investment version 2.0 is coming" and other false reports, but due to the trend of macroeconomic data in April and May this year The data before and after the launch of the “4 trillion” stimulus plan launched in the second half of 2008 is also close. Many people still think that “the economic stimulus horn has been blown” and began to speculate on the new round of economic stimulus. Do you think that "stimulation of the New Deal" will restart, is there a need to restart?

Wei Jigang: In such a challenging historical period, it is indeed necessary for the government to coordinate short-term growth and long-term development, and take into account economic, social, and political factors, and consider both domestic and international situations. Correspondingly, the use of short-term policy tools should give priority to preventing a serious decline in the Chinese economy. However, short-term policies should pay attention to two points. First, the driving force for short-term growth must ensure that advanced productivity and production organization methods are eliminated, and “bottlenecks” and weak links that constrain economic development are eliminated. On the other hand, short-term policies must be integrated into long-term policy objectives, such as The structural optimization and sustainable development of the industry, the transformation and upgrading of traditional industries, the accelerated cultivation and development of strategic emerging industries, the accelerated development of modern service industries, the continuous industrial competitiveness, and the sustainable development of the industry.

Hu Zhenhu: The European debt crisis has the possibility of further deterioration. In particular, Greece’s market expectation of withdrawing from the euro is becoming stronger. The US economic recovery process is still slow. Some developed countries and emerging market economies are also recovering hard, and trade protectionism is on the rise. Obviously, the external environment of the Chinese economy is still deteriorating.

Although China's economic growth is facing some pressure, it cannot simply look at the surface of economic figures. The current economic situation is fundamentally different from that of 2008. There has been no fundamental change in China's economic fundamentals. It is worth noting that the “4 trillion” investment in response to the global financial crisis is indeed not efficient in some areas of investment, and has formed bad debts and boosted prices. Therefore, whether to introduce a larger and larger economic stimulus plan depends on the subsequent external situation evolution and economic data changes. In fact, many economic policy effects have a certain lag period. Policy adjustments cannot be too frequent and sloppy. Otherwise, the positive and negative policies will offset each other and fail to meet the original intention of the policy.

The government should guide the new batch of projects to promote both growth and restructuring.

China Economic Times: Will this “re-growth growth” affect the “structure adjustment”? What will be the effect of this batch of projects that will accelerate the implementation of the economy?

Zhang Liqun: The recent policy of steady growth is relatively concentrated. I believe that with the implementation of these policies, China’s economic growth will gradually stabilize. Of course, we must also be highly vigilant in striving for growth by investing in growth, and earnestly taking the scientific arguments for government projects; further improving policies that encourage private investment and improving the risk-responsibility mechanism for private investment.

Wei Jigang: The newly started projects will undoubtedly promote economic growth in the short term and will also promote a certain degree of structural adjustment. For example, the new steel project is a fine steel project, which is good for optimizing the structure and layout of China's steel products. However, we must also see that while a series of economic stimulus policies since 2009 have achieved stable growth, the issue of unsustainability has gradually been exposed, which has a major impact on rising prices, and the situation of energy conservation and emission reduction is also severe. How to co-ordinate the relationship between maintaining stable and rapid economic development, adjusting economic structure and managing inflation expectations is a new issue facing the government.

Hu Zhenhu: "Stable growth" is to achieve steady progress. The connotation of "stable" must include maintaining healthy economic development. The meaning of healthy development must include "tune structure." On the contrary, "adjusting the structure" will certainly promote economic coordination and sustainable development. Therefore, before choosing a policy tool, it is necessary to clearly understand the starting point of the policy, while avoiding the negative impact of the weak and weak policy. If it is to stimulate growth by stimulating investment demand, it is necessary to effectively improve investment efficiency through technology, management and institutional innovation. Otherwise, it may lead to a return to investment demand and cost-driven inflation, even with economic growth unsustainable. In the end, there will be a risk of falling into a "stagflation" trap.

Due to the high enthusiasm of some local governments to promote urbanization, industrialization and regional coordinated development, the industrial structure upgrade in the central and western regions and the development of the service industry are broad, and it is necessary to accelerate the project approval progress and start the project. At the same time, accelerating the implementation of the project will play a role in changing some regions and a certain range of economic figures in a certain period of time, but if there is no supporting system reform and policy introduction, these projects may be "unstable." In the long run, if local governments cannot change from an investment-led government to a public service-oriented government, local governments will continue to compete for investment projects in the future. If the local government does not improve the rationality and return of investment through innovation, not only will the effect of accelerating the implementation of the project be greatly reduced, but also the debt risk will be accumulated.

Looking forward to private capital entering the field of infrastructure

China Economic Times: According to the State Council executive meeting on May 23, private investment is encouraged to participate in railway, municipal, energy, telecommunications, education, medical and other fields. Does this mean that a large amount of private capital will enter these new projects?

Wei Jigang: Encouraging private investment to participate in infrastructure and public services is conducive to improving the efficiency of growth and the sustainability of growth. It is in line with the requirements of further improving the socialist market system and is an important measure for efficient growth and sustainable growth. I expect private capital to enter the major infrastructure areas such as railways, which is conducive to the development of the railway, but also to the improvement of economic efficiency and social harmony. The government should focus on eliminating “glass doors, spring doors, revolving doors” where private capital enters the infrastructure sector.

Hu Zhenhu: After the global financial crisis in 2008, the Chinese government started to invest 4 trillion yuan, and through large enterprises investing in large projects, it has played a good role in economic recovery, especially some state-owned enterprises with capital, technology and talent advantages, not only On the contrary, it has developed rapidly, but still has not got rid of the investment-led economic growth model. Initiating private investment through market mechanisms can not only allow private funds to participate in investment project competition, improve economic efficiency, but also stimulate consumer demand through the rationalization of private investment to promote national income distribution. Therefore, the new launch project must involve private investment.

The central government has been trying to encourage private investment by introducing various policy measures, but it seems to have little effect. Of course, there are many reasons. There are some natural monopolies that the monopoly departments have formed in the fields of railway, municipal, energy, telecommunications, education, and medical care for a long time. There are also some administrative monopolies caused by forced intervention in the interests of the maintenance departments, as well as real estate. The attraction of private investment in the fields of commodity markets has formed unhealthy market behaviors such as “real estate speculation” and “fried agricultural products”.

In addition to breaking the monopoly and regulating the market order, we must provide a relaxed environment for private investment through reforms such as structural tax cuts, rationalization of investment channels, and deepening of financial system reform. Only in this way can private funds be more competitive in market competition.