The long-term positive trend of China's economy will not change.

China's economy has great flexibility and resilience, and it has strong defense and self-healing ability against the current epidemic impact, which can enable China's economy to quickly return to a good development track on the basis of overcoming the current difficulties and risks. The epidemic will not change the fundamentals and long-term trend of China's economy. If we can promote a new round of reform and opening up, the best investment opportunity is in China.

Image source/Xinhua News Agency

■ Liu Yuanchun, Chen, work together to solve problems.

Recently, the China Macroeconomic Forum (CMF) of China Renmin University actively organized experts at home and abroad to conduct joint research on "Economic Growth and Macroeconomic Policy under the Background of Epidemic".

China's economy is strong and resilient.

Although the epidemic has had a short-term impact on China's economy, the basic trend of strong economic resilience, large room for manoeuvre, good stability and long-term improvement has not changed. What are the main aspects of China's economic resilience?

Liu Yuanchun (Vice President of China Renmin University and co-founder of China Macroeconomic Forum): First, the greatest resilience of China's economy comes from the leadership of China's * * * production party and the institutional advantage of socialist concentrated efforts to do great things. This advantage determines that China can quickly win the epidemic prevention and control war by using national strength and quickly restore the normal economic and social order.

Second, after more than 70 years of development, China has laid a solid material foundation and production capacity. It is difficult for the epidemic to cause substantial damage to China's fixed assets of several trillion yuan, the labor force of nearly 900 million people and the largest and most complete production system in the world.

Third, China has a super-large market and huge domestic demand potential. The impact of the epidemic can't shake the virtuous circle of China market. The upgrading of residents' consumption, the promotion of urbanization and industrialization, and the rapid development of service industry will provide broad development space.

Fourth, the vigorous development of new economy and new kinetic energy will cushion the impact of the epidemic to a great extent. In particular, the development of new formats such as Internet economy and online office ensured the effective operation of China's economy and society during the epidemic and cushioned the impact of the epidemic on the traditional economy.

Fifth, the China government has strong economic regulation and control ability, sufficient policy toolbox and broad policy space, which determines that China's economy has strong self-repair ability. At present, the debt ratio of China government is less than 60%, the budgeted deficit ratio is less than 3%, and the average weighted interest rate of various loans is still around 5%, thus ensuring that China government can continue to implement the flexible "six stabilities" policy under the general tone of striving for progress steadily.

On the whole, China's economy has great flexibility and resilience, and it has strong defense and self-healing ability against the current epidemic impact, which can enable China's economy to quickly return to a good development track on the basis of overcoming the current difficulties and risks.

Ren Zeping (Chief Economist of Evergrande Group and President of Evergrande Research Institute): The epidemic situation will not change the economic fundamentals and long-term trends of China. If we can promote a new round of reform and opening up, the best investment opportunity is in China.

First, China is the second largest economy in the world, and the Chinese and American economies dominate the world. According to the IMF's estimation, the global GDP in 20 19 reached 86.6 trillion US dollars, of which China and the United States accounted for 16.6% and 24.7% respectively.

Second, the real GDP growth rate of China in 20 19 is 6. 1%, which is in the leading level in the world. In contrast, the real GDP growth rate of the United States is 2.3%, that of South Korea is 2.0%, that of Britain is 1.4%, and that of Japan is 0.7%, all of which are far behind China.

Third, China's per capita GDP still has a lot of room for growth. In 20 19, the per capita GDP of China was 70,892 yuan, equivalent to 10277 US dollars, which was only about 1/6 in the United States and 1/5 in the United Kingdom, and equivalent to 198 1 in Japan and/in South Korea.

Fourth, there is still room for 20% improvement in China's urbanization rate. The urbanization rate of China in 20 19 is 60.6%, which is only slightly higher than the world average of 55.3% in 20 18, and far lower than the average of 8 1% in high-income countries. At the same time, the urbanization rate of registered population in China is much lower than that of permanent population, and there are still about 230 million migrant workers and their family children who have not become citizens.

Fifth, China has the largest market and the largest middle-income group in the world. China has a unified market covering 654.38+400 million people. Commodities, people, services and capital can flow freely, and there is a huge scale effect in product research and development, production, logistics and sales.

Sixth, China is rich in labor resources, and the demographic dividend has turned to the talent dividend. At the end of 20 19, China's working-age population was about 900 million, with more than 700 million employees, high-quality talents with higher education and vocational education1700,000, and about 8 million college students graduated every year. Although the total population of China has surpassed that of lewis turning point, the rising population quality has given birth to a new round of greater talent bonus in China.

Seventh, China is very active in innovation and entrepreneurship, and the number of unicorn enterprises in the new economy is second only to the United States. In 20 19, the newly added unicorns in China and the United States accounted for 12.6% and 55.9% of the global total respectively. In the future, the combination of China's information service industry with artificial intelligence, AR and VR technologies will still release huge growth potential and provide important kinetic energy for economic development.

The epidemic will not change the long-term positive trend in China.

Will the epidemic affect the potential growth rate of China? Should we restore economic growth mainly from the demand side or the supply side?

Liu Yuanchun: The economic impact of any epidemic is exogenous, short-term and partial, and will not lead to the deviation of the economic development trend of a large economy. This is because a country's long-term development trend and production capacity mainly depend on three factors: first, the capital stock and its growth rate. The second is the situation of labor force and its human capital accumulation. The third is technological progress and the improvement of resource allocation efficiency. These three factors will not be fundamentally changed because of the impact of the epidemic.

Throughout the history of nearly a hundred years, no major epidemic has caused a long-term stagnation of a large economy. After the epidemic subsided, the economy generally returned to the normal development track around 1 quarter. Therefore, the current epidemic situation will only bring about a small economic fluctuation of 1 to 2 quarters at most, and will not change the medium and long-term positive trend of China, and the potential growth rate of China will not deviate systematically. Therefore, the current economic work should focus on the orderly resumption of work and production, so that the economic cycle can be normalized as soon as possible, and it is not appropriate to launch a large-scale economic expansion plan before the economic and social order is normalized. Economic policy should focus on epidemic relief and promote the recovery of economic circulation system, and adhere to the basic principles of bottom line management.

Ren Zeping: The economic impact of this epidemic will be greater than that of SARS in 2003, but the time may be shorter, depending on the duration of the epidemic and the impact of policies. At present, it is necessary to give consideration to the epidemic situation and long-term reform, exert efforts at both ends of supply and demand, launch several key measures with ice-breaking effect, release major signals and boost the confidence of all parties. First, reserve projects in advance, implement large-scale infrastructure after the epidemic, and fill the pit of the epidemic. In particular, large-scale infrastructure construction will be carried out in urban agglomerations and regional central cities with population inflow to stimulate demand, stabilize employment and hedge the downward pressure on the economy. The second is to implement large-scale tax reduction and fee reduction and optimize the way, from reducing value-added tax to reducing corporate income tax and social security contribution rate, and improve the sense of enterprise acquisition. On the one hand, the social security contribution rate continued to be lowered by 3 percentage points, of which the pension and medical insurance contribution rates were lowered by 1 percentage point and 2 percentage points respectively. On the other hand, the corporate income tax rate is lowered to 265,438+0%, which is equivalent to the US federal corporate income tax rate.

Watch out for six risk points under the epidemic situation

What are the risk points that must be guarded against under the epidemic situation?

Liu Yuanchun: First, under the downward trend of economic growth, the employment risk is the biggest grey rhinoceros. In February, the index of manufacturing employees was only 37.9%, which was 65,438+05.7 percentage points lower than that in the same period of 2065,438+09, indicating that the job market has shrunk. Although it will not cause large-scale unemployment, the employment situation is obviously tight.

Second, the current structural upward trend of prices will be further revealed, and the risk of "stagflation" should be prevented. It can be predicted that the price will be released soon after the epidemic control is relaxed. At the same time, the inconsistent process of returning to work in different industries and regions will also lead to bottlenecks in the supply chain, and the prices of some raw materials will rise rapidly.

Third, we should be alert to the risk of rapid global economic decline and large fluctuations in financial markets caused by the global spread of the epidemic. At present, the spread of the epidemic around the world has obviously intensified. Therefore, in the coming period, China will face great uncertainties in the global economy and international financial markets, and should make corresponding plans to prevent the potential impact of external shocks on China's economy.

Fourth, we should attach great importance to the uncertainty of the real estate market and prevent the house price from falling too fast. After the epidemic, there will be an increase in the number of housing enterprises that quickly withdraw funds through sharp price cuts. Once the price reduction expectation is formed, it is easy to form an unfavorable cycle of "the willingness to buy a house is reduced-the demand is reduced-the price reduction expectation is enhanced", which has a great impact on the stability of the real estate market.

Fifth, we should be highly alert to the risk of asset bubbles caused by loosening monetary policy. At present, the economic cycle has not basically recovered, and the liquidity released by monetary policy is difficult to flow into the real economy. The large-scale entry of funds into the financial market will bring the risk of asset bubbles. The asset bubble will trigger a sharp correction in the financial market and hinder China's economic recovery after the epidemic.

Sixth, we should be highly alert to the risk of excessive active fiscal policy leading to an increase in government debt. Different from the international financial crisis in 2008, the impact of this epidemic is short-lived, and the economic operation will return to normal after the epidemic, so the reason for adopting a large-scale stimulus policy similar to that in 2009 is not sufficient. Moreover, excessively active fiscal policy will lead to a sharp increase in government debt and macro-leverage, which will become the core source of financial risks and hinder the improvement of social productivity.

Ren Zeping: At present, it is necessary to give consideration to epidemic prevention and control and resume production, and be alert to the phenomenon of "one size fits all, layers of overweight" in epidemic prevention and control in various places. Some cities with light epidemic blindly copy the measures in areas with heavy epidemic and adopt various over-limit measures. They can't seek truth from facts and adapt to local conditions. There is no bottom-up plan, enterprises pay the bill, epidemic prevention and control measures are infinitely expanded, and economic development is basically stagnant. Essentially, it is a sign of laziness and irresponsibility.

The prevention and control of "one-size-fits-all, layer-by-layer overweight" has disrupted the economic operation order and brought severe pressure to enterprises, industries, industrial chains and social stability. Therefore, it is necessary to adhere to the "two-handed grasp" of epidemic prevention and control and enterprises' resumption of work, take prevention and control measures at different levels, put an end to the practice of being lazy in the name of epidemic prevention and control, and restrict enterprises' resumption of work in a simple and rude way.

How much impact will the epidemic have on the global supply chain? What measures should China take to consolidate and improve our position in the global supply chain and enhance its international competitiveness?

Ren Zeping: The epidemic has affected the global supply chain, and China must grow steadily through reform. First, liberalize market access in basic fields such as automobiles, finance, energy, telecommunications and electric power, and service industries such as medical education, and foster new economic growth points. Deepen the reform of state-owned enterprises, implement competition neutrality and ownership neutrality, eliminate ownership discrimination, and improve market competition and resource allocation efficiency. The second is to improve the multi-level capital market supporting system with the reform of the registration system as the starting point. The third is to promote the reform of the housing system with "connecting people with land and stabilizing wealth" as the core, strengthen the attributes of housing and real economy, and weaken the financial attributes. On the one hand, the reform of "linking people with land" focuses on increasing the permanent population. On the other hand, maintain the stability of real estate financial policies, return to marketization, support the demand for just-needed and improved housing purchases, and support inter-industry mergers and acquisitions. The fourth is to mobilize the enthusiasm of local governments and entrepreneurs, give local officials a new incentive mechanism, and reassure private entrepreneurs.

Monetary policy should focus on directional regulation and precise regulation.

At present, the CPI is at a high level in recent years, which restricts monetary policy, but the epidemic situation has a more obvious impact on catering, tourism and other industries, especially small and micro enterprises. Under the dilemma, how should monetary policy be positioned?

Chen (Executive Director of National Key Research Base of Economics Textbook Construction, Ministry of Education, Renmin University of China, Professor of School of Economics, and main member of China Macroeconomic Forum): In June 2020, CPI rose to 5.4% year-on-year, reaching the highest level since 20 12 years. Excluding food and energy prices, the core CPI only rose by 1.5%, and remained at a low level below 2% for 16 months. The trend differentiation between overall CPI and core CPI has brought some troubles to the formulation of monetary policy.

Theoretically, monetary policy should focus on the core CPI, not the overall CPI. This is mainly because CPI, including food and energy prices, is prone to unexpected large fluctuations, thus disturbing public expectations and restricting monetary policy space. This round of CPI increase is mainly affected by the epidemic situation of pork price increase, and has little to do with economic fundamentals. Therefore, a prudent monetary policy should not be subject to the increase of overall CPI, but should adhere to the goal of stabilizing the economy and intensify counter-cyclical adjustment.

Of course, the problem of rising CPI caused by rising pork prices cannot be ignored. To effectively solve the structural problem of rising pork prices, we need other targeted economic policies such as financial subsidies to stimulate production and achieve price stability, and we can't rely on monetary policy based on total adjustment.

Wu Ge (Chief Economist and Assistant to the President of changjiang securities): First, to cope with the severe impact of the epidemic, monetary policy should adhere to a prudent and slightly loose orientation. In the first quarter when various industries were generally hit hard, loose monetary policy was needed to "escort" steady growth and stable employment. Second, we must grasp the strength and rhythm of monetary policy easing, adhere to moderate easing but avoid "flooding". At present, the increase of CPI is at a high level, and the degree of monetary easing needs to consider the impact on prices. At the same time, excessive monetary easing will easily lead to a sharp rise in house prices. In the future, we still need to adhere to the positioning of "housing and not speculating" to prevent excess liquidity from pushing up housing prices. Third, monetary policy should adhere to directional control, precise control and rational use of policy tools. This epidemic has a great impact on the secondary and tertiary industries and small and medium-sized enterprises. Therefore, the operation of monetary policy should focus on directional control and precise control, and rationally use structural monetary policy tools to achieve precise assistance.

How can monetary policy improve the regulation efficiency and strengthen the support to the real economy more effectively under the epidemic situation?

Chen: In the face of this epidemic, monetary policy has taken various measures in time to release abundant liquidity, and actively guided the downward trend of market interest rates through policy interest rates. However, we should also see that the effect of the current monetary policy is more reflected in the rapid rise of the stock market, and the problem of funds "deviating from reality to emptiness" has emerged. Therefore, it is a key problem to improve the efficiency of monetary policy regulation and make monetary policy support the real economy more effectively.

In fact, the problem of poor transmission of monetary policy in China has always existed, and its root lies in the distortion of economic and financial systems and mechanisms. On the one hand, there are some departments with soft budget constraints in the real economy, and the demand for credit funds is large, which squeezes the credit resources of other departments. On the other hand, under the background that interest rates are still under control, commercial banks can obtain a stable net interest margin, so they are unwilling to take too many risks and are more willing to put credit resources into budget soft-constrained departments.

Efforts should be made to improve the regulation efficiency of monetary policy. First, strengthen the coordination of monetary policy, macro-prudential policy and micro-financial supervision to promote the better flow of funds into the real economy. Second, appropriate structural monetary policies should be adopted to guide financial institutions to increase their support for specific regions, industries and groups. But this can only be used as a stopgap measure in a special period and cannot be used normally for a long time. Third, we should strengthen the expected management and forward-looking guidance of monetary policy to give public confidence and stable expectations. Fourth, actively promote the structural reform of the supply side, eliminate the distortion of the economic and financial system, and accelerate the reform of interest rate marketization.

Wu Ge: In order to ensure the realization of the annual development goals, monetary policy should be more active, flexible and moderate on a sound basis. Make good use of existing financial support policies, introduce new policies in a timely manner, seek a dynamic balance among multiple goals, properly deal with the short-term impact of the epidemic on the economy, and do not engage in "flooding". First, continue to maintain a reasonable and sufficient liquidity and guide the financing cost of the real economy to decline. Comprehensive use of open market operation means, standing loan facilities, medium-term loan facilities and other medium-and long-term liquidity delivery tools to maintain a reasonable total. Adjust the benchmark interest rate of deposits in a timely and appropriate manner, and reasonably reduce the cost of bank liabilities. Second, continue to make good use of structural monetary policy tools. We should accurately implement the policies that have been introduced, compact the responsibility of loan banks, strictly screen enterprises, and ensure that loans are used in the field of epidemic prevention and control. At the same time, it is necessary to improve the efficiency of examination and approval and lending, and effectively reduce the actual financing costs of enterprises. The third is to take targeted support measures according to the time and place. It is necessary to pay close attention to the development of the epidemic, rationally adjust the policy rhythm and take targeted measures according to local conditions. According to the evolution of epidemic situation in different regions, the progress and plan of resumption of work and production in different industries, targeted support programs are designed. Fourth, we should pay more attention to financing support for small and medium-sized enterprises and private enterprises. According to the epidemic situation in different regions, we can consider extending the support for enterprises to repay the principal and interest in a special period, and do not submit overdue credit records for enterprises that fail to repay in time due to the epidemic situation.

Strive to maximize the utility value of fiscal policy in many ways.

At present, the finance is in a tight balance, especially the debt pressure of some local governments is even greater. How to implement the policy orientation of "active fiscal policy" in the process of responding to the epidemic?

Chen: At present, the finance is generally under the pressure of increasing revenue and reducing expenditure, and the financial operation will still be in a "tight balance" state. As a counter-cyclical adjustment tool, fiscal policy should strengthen efficiency and make the limited financial resources under "tight balance" play a greater role. Specifically, we should start from the following aspects: First, appropriately raise the deficit ratio goal in 2020. Appropriately raising the deficit ratio target reflects the positive fiscal policy orientation, which can alleviate the current financial revenue and expenditure pressure to some extent. Second, fiscal policy should be precise. For industries and enterprises seriously affected by the epidemic, it is necessary to further introduce more targeted tax reduction and fee reduction policies to further reduce the corporate tax burden and help enterprises, especially small and medium-sized enterprises, tide over the difficulties. Third, fiscal policy should improve quality and efficiency. While reducing tax revenue, we should avoid the increase of non-tax revenue, effectively reduce the macro tax burden, and stabilize economic growth at the lowest cost.

Wu Ge: Under the background of increasing economic downside risks and increasing financial revenue and expenditure pressure, in order to actively hedge the impact of the epidemic, we should continue to implement targeted fiscal and taxation policies and further optimize the expenditure structure. Make full use of special debt and other policy tools to implement policies and maximize the utility value of fiscal policies. The first is to implement tax reduction and fee reduction more accurately. We can consider studying and introducing phased and targeted tax and fee policies, and the policy orientation will shift from "larger scale" to "precise landing", pay close attention to the tax burden changes of different industries, and focus on supporting industries that have been seriously damaged to resume work and production. The second is to optimize and adjust the fiscal expenditure structure. It is necessary to implement the concept of zero-based budget, attach importance to evaluating the financial affordability of major projects, cut expenditures on non-essential and non-key projects, and compress general expenditures. Financial funds should be invested in key areas with large leverage ratio, and the demand that cannot be met by the market should be borne on the principle of marketization. The third is to expand the issuance and use of special bonds. In view of the advantages of low cost and flexible use, it is suggested to further expand the issuance and use of special bonds in the future.

Help the market restore confidence with a package of policies

Besides monetary policy and fiscal policy, what other important measures should be taken to help the market and the public restore confidence faster and better?

Chen: From a more comprehensive point of view, we should also adopt a package policy of "flexible micro-policies+precise industrial policies+realistic reform policies+supporting social policies" to help the market and the public restore confidence. First, efforts should be made to implement the policy combination of "reform policies should be realistic+social policies should be supported" to better enhance consumer confidence. As far as the reform policy is concerned, the core is to increase the per capita disposable income and reverse the situation that the growth rate of disposable income of middle-income people has fallen too fast. At the same time, it is necessary to speed up the establishment of a long-term mechanism for the stable and healthy development of the real estate market and reduce the crowding-out effect of housing on household consumption. As far as social policy is concerned, the core is to improve the social security system and assistance system, so that residents can reduce preventive savings and better release consumer demand. The second is to focus on the implementation of the policy combination of "micro-policies should be flexible+industrial policies should be precise" to better enhance the confidence of entrepreneurs. As far as micro-policy is concerned, it is necessary to further simplify administrative examination and approval and optimize the business environment. As far as industrial policy is concerned, it is necessary to strengthen the implementation of functional industry policy with deregulation and competition promotion as its core features, so as to provide entrepreneurs with more development space and more development opportunities.

Wu Ge: First, strengthen epidemic prevention and control, and do a good job in communication with the society. During the epidemic, the primary task is epidemic prevention and control. Only when the epidemic situation is properly controlled can the economy develop normally. The second is to stabilize employment and the supply of agricultural products and ensure basic people's livelihood. Offline recruitment is difficult to carry out at present. We can create online employment training programs and carry out online recruitment. And use the internet to solve the employment problem. At the same time, it is the season of spring ploughing and sowing. It is necessary to restore farming and animal husbandry in an orderly manner, reduce the impact of the epidemic on the output of agricultural products, and stabilize the supply and price of agricultural products. The third is to promote orderly resumption of work, resume social production as soon as possible, and implement the policy of dividing epidemic areas. The epidemic situation in most epidemic areas in China has eased, and all regions should promote the progress of enterprises' resumption of work in an orderly manner according to the local epidemic situation. High-risk areas attach importance to epidemic prevention and control, medium-risk areas arrange for timely resumption of work, and low-risk areas restore industrial production capacity as soon as possible. The fourth is to strengthen the public health service system and fill in the shortcomings of the system. On the one hand, it is necessary to establish a disease prevention and supervision system to find the possibility of potential special disease outbreaks at the first time. On the other hand, we should pay attention to cultivating senior talents for the prevention and control of major diseases. At the same time, strengthen the information disclosure of departments at all levels, give play to the role of media public opinion supervision, and create an atmosphere of seeking truth from facts and encouraging telling the truth.

Editor-in-chief Mao Jinghui and editor-in-chief Cao Yang