But for enterprises, it is necessary to have a clear judgment on the future trend in order to find the correct weather vane.
How should the future trend be defined?
On July 9th, at the 10th Private Equity Investment Summit Forum in noah wealth, Li Daokui, Dean of China Institute of Economic Thought and Practice in Tsinghua University, delivered a keynote speech entitled "The First Year of the 14th Five-Year Plan, China's Economic Opportunities and Challenges", in which he generously shared his thoughts on the challenges, goals, changes, risks and opportunities of China's development in the next 5- 10 years.
The following is a compilation of Professor Li Daokui's speeches (some of which have been deleted). Please enjoy it.
Oral Statement: Director, China Economic Research Center, Tsinghua University, Li Daokui.
Editor: Zhang Qiyu
Source: Zhenghe Island
0 1. In the next 10 year, China will face three major challenges.
First of all, share my judgment on the whole situation, because without the judgment of the big situation, it is impossible to see so many challenges and details that I have to face every day.
What will be the general situation in the next 10 year? I summed up three major challenges that China must face in its future development.
1. Challenges in the international situation
The first challenge, as we all know, comes from the international community.
The international situation is becoming more and more complicated, so it may be difficult for China to hide its strength and bide its time, and the previous era of economic win-win and political seeking common ground while reserving differences may no longer exist. Now they all know that China has great development potential, and China's development ideas and governance system are different from those of western countries. If they don't understand, it's easy to have some friction.
These concentrated manifestations are that the contradiction between China and the United States will continue to evolve in the next 10 year.
If Trump was a prelude to the drama before, we are now in the drama. Biden's new administrative team is very professional, and they will have a deep game with China. How to play the game? I can simply sum it up as follows: economy, finance, science and technology and military are relatively separated, but they work together.
1) Economic field: Biden's team and the future president, I believe we will still maintain some economic cooperation with China, but key areas will definitely take countermeasures against China to curb our development.
2) Financial field: The situation is extremely complicated and in a game. One thing we should keep in mind-we must make some financial cuts. Many of our listed companies have gone to America. China's fastest-growing star companies are almost invariably listed overseas, mainly in the United States.
This will change in the future, because there are risks and opportunities. The risk is that the Chinese stocks previously issued in the United States will encounter twists and turns. The opportunity is that a good company will return to A shares and Hong Kong stocks in the future, and its valuation will be higher.
China and the United States are still playing a game in the financial field, which is far from a foregone conclusion. We don't think the United States has considered it, because the interests of Wall Street and the White House are not necessarily the same. We are also studying whether our listing in the United States is good or bad, whether it is safe or not, and there is no unified strategy in China.
However, the general trend is that I think more and more growth enterprises will come back and list on Hong Kong stocks and A shares first, which is a small result of the game between China and the United States in the financial field.
4) Military field: Both sides will test each other's bottom line. The United States will come to provoke, and China will give a certain response.
The future is a stage of multi-directional, all-round and deep-seated game between China and the United States. My personal view is that China can use this 10 year to build a new relationship of equal cooperation or equal competition between China and the United States. But there is a premise that Americans must accept the political and social reality in China. At present, they have a great psychological influence on it and don't accept it.
2. The challenge of China's economic development itself
In the next 5- 10 years, China will face many challenges of its own economic development, and I will only talk about one today. Frankly speaking, this may be the most critical one-local debt. At present, China's local debt level is very high. Why is this important? Let's cut it open and analyze it
What is the most direct factor affecting the economic growth rate of China at present? Investment. There should be no dispute about this. China's consumption is relatively stable, and the proportion of export fluctuation in import and export is limited. The main impact is investment.
What is the most important factor affecting investment growth? This is a government-led project, including various infrastructure investments.
What will affect the fluctuation of government investment or limit future growth? Local debt.
I have a doctoral student doing a doctoral thesis, and we have regular meetings every week. At first, he studied China's debt problem, and finally found that China's high debt level was not due to China enterprises or the central government, but to a large number of local governments. Moreover, this kind of debt is hidden, usually in the form of financial service groups, which is manifested in financial services and business investment, making the debt level always high.
Including my own research, I found that many places issue new debts to make up for old debts, and the interest rate is still very high. After listening to the data, I felt very scared and said how they could still sleep.
In addition to a few areas, there are a large number of local governments in China, and their tax revenue growth is limited. What they collect will also be handed over to the central government in large quantities, and on the other hand, they will incur a lot of debts. This situation will definitely be adjusted in the next five years.
China's economic growth faces many challenges. Let's not talk about the rest. The most important issue in the next few years is local debt.
3. Challenges at the social level
Now our China society has entered a situation that has never appeared in history.
400 million people have reached the level of middle-income development, nearly 200 million people have received higher education, and150% of the people aged 8-22 have gone to college. This is a very good thing. China hasn't reached this level for thousands of years, but there are other meanings behind it-diversification of social contradictions. Give two examples.
1) Education: The higher the income level, the more attention families may pay to education. Everyone wants their children to receive a good education, which is mixed with competition. From kindergarten to universities, school districts, good schools, extra-curricular counseling ... government decision makers do not want children's education to be completely controlled by profit-seeking institutions, but there are objective problems behind this.
02. Three very important goals of the Tenth Five-Year Plan.
The new idea of coping with the challenge can also be summarized as three goals in the "14 th Five-Year Plan" and the long-term plan for 2035.
1 technology
Among these three goals, the most prominent one is "science and technology". It can be said that without the progress and breakthrough in the field of science and technology, our national rejuvenation cannot be completed and will always be contained by others. Some local governments say that science and technology should be regarded as a key development field, preferring to develop science and technology with less tax revenue, less GDP, less other resources and less employment. This is actually very good. Because this is the trend of China's economic development, which is closely linked with all aspects.
2. Safety
In the past, we never put safety and development together, but in the Tenth Five-Year Plan and the development goal in 2035, we talked about a lot of safety in one breath, mainly in three aspects: food safety, energy safety and industrial chain safety.
This is actually about risk control, and we can't blindly pursue development speed and ignore safety.
3. Low carbon
Low carbon is very prominent in the 14 th Five-Year Plan, and I am afraid it will be "overweight" in the implementation process. The reason why low carbon is placed in such a high position is simple: China must make its own contribution to global public affairs if it wants to develop and become a big country respected by the world.
For example, China should change from a student who studies well and makes rapid progress to a student role model who helps the whole class review exams and get good grades together. Only in this way can we break through the western containment, which is a strategic height.
Low carbon/carbon reduction is the only area that westerners recognize or are willing to cooperate with China.
The three principles of "science and technology", "safety" and "low carbon" are very important, but they are still somewhat empty. What do they have to do with us? Next, I will talk about the pattern and trend changes of China's economy and finance in the next 5- 10 years caused by the above-mentioned series of challenges and goals.
There are six main changes with different emphases, but all of them revolve around a theme-opportunities and risks.
1. The economic growth rate has declined in stages.
In the next five years, even 10, we should be mentally prepared that the economic growth rate will be below 6% or even 5.5%.
Faced with the superposition of international containment, economic debt problems and social problems, if the economic growth rate is too fast at this time, it is very easy to expose risk points. In my opinion, about 5.5% is a relatively safe medium and low speed.
However, this decline is phased. I firmly believe that if it takes five years to solve important problems, especially the debt problem, the growth rate of China will go back. Remember, there are still 1 100 million people in China who have not reached the level of middle-income development and have great development potential.
Some people here will mention the influence of population aging on economic growth. I don't think this is the fatal factor. It can be calculated that although China's population growth rate has decreased, our healthy population continues to grow, and the national education level is also constantly improving. Combining these two factors, we can draw the conclusion that China's human resources are still rising before 2050.
Therefore, although the economic growth rate will slow down, such changes are phased. By properly adjusting the current problems, there is much to be done in the future.
2. Large-scale industrial restructuring
To put it simply, due to the slowdown in economic growth, some poorly managed enterprises are likely to close down, while leading enterprises will become bigger. There will be many invisible champions.
Invisible champion refers to an enterprise that is unknown to ordinary people and consumers, but has a very special position in the middle of the industry and a very high concentration. For example, only one enterprise produces a certain kind of parts, and if something goes wrong, the global industry will stop. There are many such enterprises in Jiangsu, many of which are supporting. It is a major industrial restructuring to build a market position in the future.
The risk is obvious, that is, the enterprise closes down, and the opportunity lies in investment. Like an elevator. According to the survey two years ago, there are 800 elevator factories in China, but outside China, there are only 10 large elevator factories in the world. With the decline of real estate in the future, there will definitely be a number of major reorganizations in the elevator industry, which is both a risk and an opportunity. If we can choose the right enterprise and invest in the right enterprise in this process, the profit will go up.
3. The scientific and technological innovation chain is complete.
It has been said repeatedly before that science and technology is the foundation of our foothold, and the state will vigorously support the science and technology industry, and an industrial chain will emerge around the science and technology industry in the future.
In the chain, there are some basic industries, such as biological raw materials, basic testing, and some investment in technological innovation, such as private placement to help enterprises go public. In this way, science and technology innovation chain will promote the large-scale development of a series of industries, such as finance, science and technology testing and raw materials.
Among them, risks and opportunities still coexist, and it is necessary to choose a suitable industry, which involves many professional fields.
4. Diversification of consumption
There are two kinds of products that sell well now. The first one is aimed at consumers, and the general products sell well.
Give a small example. We all like instant noodles, but in recent two years, it is interesting that snail powder in Guangxi is partially replacing instant noodles, especially among young people and college students. I didn't understand what was going on at first, so I went to place an order and bought it myself. I read it again and got it.
Comparison between snail powder and instant noodles;
5. Finance is upgrading.
In the next five years, there will be great changes in the financial industry, which can be divided into three points:
1) Supply side transformation of non-standard products
At present, a large number of non-standard products may be trusts or companies on the surface, but behind them are local bonds, which are guaranteed by local governments. I believe that this non-standard product will be converted into open and standardized national debt in the next five years, because the debts of many places should be borne by the central government in essence, so the localities have done a lot of work that the central government should do, which makes some current practices unsustainable.
2) Structural changes of listed companies
In the future, I personally think that in the general trend, large and medium-sized enterprises and a large number of technology-based enterprises will be listed mainly in A shares and Hong Kong stocks, rather than going to the United States. On the one hand, Americans have concerns, on the other hand, they also have many details. Such as information disclosure. The related laws and regulations are very complicated.
I asked professionals yesterday and found that the rules formulated by the International Securities Regulatory Commission were still too complicated. In this respect, we should call for reform, and hope to simplify the process more reasonably and let more good enterprises come back.
3) Different types of assets have different investment returns.
In the future, different types of assets and the return on investment within each type of assets must be distinguished. Take fixed income as an example. The future is definitely a part of high-interest and high-risk local debt and low-interest and low-risk national debt. In this way, market pricing will definitely be opened.
We must specialize in financial investment in the future, instead of relying on hearsay as in the past. Let me tell you the truth. China's finance will have opportunities in the future, but it will be more complicated, requiring professionalism, professionalism and professionalism, and rationality.
regionalization
In the future, our economic development and financial development will have another feature-regionalization.
Generally speaking, in the future, mass exhibitions will be held in southern and coastal areas, as well as in several big cities including the Yangtze River Delta, Greater Bay Area, Chengyu and Changsha, while the capital cities of many cities will develop faster and have more concentrated population resources.
It is said that we should choose the right place to engage in economic construction.
04. Conclusion: Be more patient for a long time.
Finally, regarding the development in the next 10 year, it can be said that the economic and social development will continue and China will go up.
But at the same time, in the next 5- 10 years, we will face a more complicated environment, and investment opportunities will still exist, but it will become more complicated.
In this case, we must remain rational and objective. We can't clap our heads, bottoms and breasts to decide things like in the past, but we should be professional and rational.
The upward development of China is a long-term trend in the future. Although there are many practical problems to overcome in this process, it must be upward, and entrepreneurs and economists should be patient for a long time.