Analysis of the hottest economic trend in China

Analysis of China's economic trend (Part 2)

III. outstanding performance of Supply Improvement

driven by the above policies and measures, China has seen some areas with improved ownership structures and the common development of multiple ownership economies at the turn of the century. The good enterprise system and business environment in these regions have unleashed the entrepreneurial talent and enthusiasm contained in the Chinese public, forming a huge force. Such regions as Zhejiang, Southern Jiangsu, and the Pearl River Delta have experienced GDP growth of more than double digits year after year, social investment has rebounded rapidly, foreign trade has been unprecedentedly active, foreign direct investment has poured in, and the employment situation is good, social stability, becoming the dragon head of the country's sustained and sound economic development

the most prominent is Zhejiang Province, where private enterprises developed relatively early. Its private enterprises first developed from the southernmost districts of Wenzhou and Taizhou. These areas have poor land and poor resource conditions. After liberation, as they are the front line of national defense, there is almost no state investment and very few state-owned enterprises. Now, this disadvantage has become its advantage. There are two advantages: one is that when the party's focus turns to economic development, it has no state-owned enterprises to rely on, so it has to work together to help the development of private enterprises. The other is that there are no strong pressure groups trying to prevent the development of private enterprises. Wenzhou and Taizhou are booming. Ningbo, Hangzhou, Jiaxing and Huzhou in the north also learned from them, so the practice of Wentai was promoted throughout the province. By 2001, the proportion of state-owned enterprises in Zhejiang's total industrial output value was only about 6%, and the proportion of private enterprises in retail commerce was higher. The economy of the whole province has also witnessed rapid growth

Zhejiang Province was a moderately developed region before the reform and opening up, and has developed very fast since the reform. Now its per capita GDP and per capita disposable income are second only to Shanghai and Beijing, accounting for the third place in the 30 provinces and cities in the mainland of China. The export of Zhejiang developed rapidly after the state allowed private enterprises to export by themselves in 1999. Although the total export scale ranked fourth in China in 2001, lower than that of Guangdong, Jiangsu and Shanghai. However, its benefits are good, and the foreign trade surplus accounts for about 60% of the national foreign trade surplus

followed by Jiangsu. Jiangsu's economic development has experienced some twists and turns. Township enterprises in the "Southern Jiangsu model" once showed great advantages in the 1980s, but their performance has been poor in the late 1990s. In my opinion, the main reason is that after the development of "Southern Jiangsu model", township enterprises become more and more like state-owned enterprises, including various external performance and internal management, which lead to the decline of economic efficiency. Every time there was an economic recession in the past, Jiangsu was always the first to get out of adversity and drive the recovery of the national economy. For example, in the economic recession of 1988 and 1989, the first rebound was the township enterprises of the "Southern Jiangsu model". But not this time. The performance in 1998 and 1999 was even worse than the national average. After the 15th National Congress, the southern Jiangsu region has made great efforts to "liberalize the small". But soon there were two problems: one was that the people in power sold the enterprise to their own people at a very low price, which was called "half buy, half give away" or "half sell, half give away". Another problem is that when the system was restructured into a joint-stock cooperative system, not only did it not compensate for the arrears of labor insurance, but also forced members to pay for shares. In this way, it caused a great reaction from members. In response to our decision to replace the Shanghai Pavilion in the fourth quarter of 2016, the State Economic and Trade Commission issued a notice to stop this trend. In some places, we misunderstood the spirit of the Central Committee and stopped letting it go. In southern Jiangsu, when life was really unbearable, there was a enthusiasm to learn from Wenzhou and Taizhou. By 2000, township enterprises were basically restructured and became real enterprises. Since then, the economic situation in southern Jiangsu has changed dramatically. GDP growth, industrial production and investment are very active, showing the vitality in the ascendant. In particular, its foreign economy is in a very good situation

it turns out that the export-oriented economy in southern Jiangsu is stronger than that in Zhejiang. In recent years, the Suzhou Industrial Park jointly constructed by China and Singapore has introduced a full set of "software" (i.e. rules and regulations) managed by the Singapore government. The development zones in southern Jiangsu have learned and transplanted this set of rules and regulations, which has greatly improved the investment environment of the region and attracted a large number of foreign investors. In 2001, the total export volume of Jiangsu and the contract amount of foreign direct investment were close to or higher than that of Shanghai, the first metropolis of China. Although this was achieved through the radiation effect of Shanghai, it was amazing anyway. In the past, Taiwan businessmen's largest investment was in Dongguan, Guangdong Province. At that time, they were the pacesetters in the country in improving the investment environment. But in 2001, they felt the gap between themselves and the Yangtze River Delta, so they sent people to Jiangsu to investigate and learn how to further improve the investment environment

the other is Guangdong. Guangdong is an old reform experimental area, and the pattern of multi ownership economy has long been formed. However, in recent years, its domestic and foreign economic performance is inferior to the rapid development of Zhejiang and Jiangsu. There have even been foreign-funded enterprises moving northward to the Yangtze River Delta. Now some regions in Guangdong have caught up in improving the investment environment and promoting state-owned enterprises. In the first quarter of 2002, various indicators such as GDP growth and total export growth in Guangdong Province showed good signs of revitalization

through investigation, we can see that the development of private economy has not only improved the growth rate of these regions, but also solved many problems that have plagued us in recent years:

first, it has played the role of "supply creates demand", forming a virtuous circle of economy. Keynesianism emphasizes the role of demand pulling supply. In fact, supply also creates demand. An enterprise has good benefits. It has more funds to expand production, buy machinery and equipment and hire people. This has increased the demand for means of production and consumer goods production enterprises. If all enterprises are in such a state that they create demand for each other, the total demand will increase. This is a multiplier effect caused by supply. Judging from the situation in Zhejiang and other regions, the economy is indeed developing in this way

second, it is conducive to the diversion of laid-off workers from state-owned enterprises. For example, the laid-off workers in state-owned enterprises in Zhejiang province need to be diverted. According to the statistics at the end of June 2002, there are only more than 60O0 people, and some of these people are not employed because they are too picky

third, it helps to solve the "three rural issues" of agricultural stagnation, rural poverty and farmers' poverty. I believe that the root cause of the "three rural issues" now lies in the fact that China has too many agricultural populations and too few resources. First, the per capita possession of land is too small, so that agricultural productivity and farmers' income cannot be improved. Therefore, the fundamental way to deal with food related products with high risks, such as packaging materials in direct contact with food, is to transfer the surplus labor force to modern non-agricultural industries. At present, the minimum estimate of the number of people who need to be transferred is 150million. The rapid development of small and medium-sized enterprises has created a large number of jobs, which can not only provide job opportunities for laid-off workers of state-owned enterprises, but also attract a large number of migrant workers to work in cities. This has greatly alleviated the "three rural issues" and even achieved a well-off society in rural areas. Since 2001, Zhejiang Province has begun to implement the minimum living security measures for the whole people, including the rural population

fourth, the massive development of private small and medium-sized enterprises can narrow the income gap. The income gap across the country has widened rapidly. The Bureau of Statistics announced that the Gini coefficient in 2001 was 0.39, which was a little less than the recognized warning line of O.4. According to the surveys of various independent institutions, China's Gini coefficient had exceeded this warning line as early as the mid-1990s. There are two reasons for the income gap: on the one hand, it is the poor such as farmers and laid-off workers. On the other hand, they are upstarts who can use their public power to make a fortune. Therefore, the more those market systems have not been fully established and administrative intervention is widespread, the more rent-seeking opportunities to make money by virtue of power. I have been to a province where the average disposable income of families ranked last in the country in 2000. I found that on the one hand, you can feel the poverty of laid-off workers and farmers, and on the other hand, you can go to high-end shopping malls to have a look. They are selling so well. The boss of a high-end shopping mall told me that some foreign high-end companies were originally unwilling to open franchised stores in such a poor place, but after trying, they found that those extremely expensive goods sold very well, because they formed a class that became rich by power. On the contrary, where a large number of small and medium-sized enterprises have developed, their income gap is smaller because they are generally well-off. For example, Zhejiang is the province with the highest per capita income level in China, but their income gap is much lower than 0.4

fifth, the development of private enterprises has strongly supported urbanization. Urbanization is a correct policy. It not only meets the general requirements of industrialization, but also can stimulate demand. However, urbanization requires a certain material production base. If there is no development of private small and medium-sized enterprises as the material production base, even if the government spends a lot of money to build cities and towns, it is impossible to maintain empty cities for a long time

now local private enterprises are developing in depth, such as Zhejiang and southern Jiangsu, which are roughly shown in the following aspects: 1. Enter high-tech. An important experience of the development of high-tech industries in the 20th century is that it is clear that the main source of innovation lies in small enterprises. This situation is recurring in some areas of our country. 2. Invest in western development. There are two ways to develop the western region: one way is the way of planned economy in the past. The government plays the leading role in formulating plans and dividing money, materials and people into projects. The other is the method of market economy. The government only cares about things that the market can't manage, such as investment in public infrastructure, and other things are decided by enterprises independently. Now some regions in the West have done so, and the introduction of foreign enterprises to participate in local development has played a very good role. 3. Invest in agriculture and promote agricultural industrialization and modernization. After accumulating capital and technology in cities, entrepreneurs in turn sublet land in rural areas, use their own funds, advanced production technology and scientific management, and use the surplus labor force in rural areas to establish large farms. 4. Private enterprises have now moved towards the big stage of the world market, and their positioning is inaccurate. Some small and medium-sized enterprises are struggling to operate in foreign countries. As long as they improve their cultural level and their study of the operating rules of the developed market economy, it is entirely possible for them to enter the world market

Fourth, expand the bright spots and meet the challenges

I want to emphasize that today's Chinese economy has not only many bright spots, but also many dark spots. Some problems in China's economic and social life are quite serious. We need to continue to deepen reform. First, the layout adjustment of the state-owned economy and the reform of state-owned enterprises have not yet been in place, and a large number of laid-off workers will continue to be diverted; Second, our financial system is very fragile, especially the accumulation of huge non-performing assets in the banking system, which contains extremely