Professor Basu, former chief economist of the World Bank, gave a speech at Fudan University School of Economics. When talking about the Sino-US trade war, he said, "I'm from India. For most of my life, developed countries have used various means to open the markets of developing countries and demand trade. I didn't expect the world to turn upside down one day. "
200 1 After China's entry into WTO, China quickly became a "world factory". The added value of 20 10 manufacturing industry surpassed the United States and became the first in the world. In 20 19, the added value of manufacturing industry has accounted for 28% of the world (Figure 7- 1). China's export products are not only huge, but also the technical content is constantly improving. In 20 19, 30% of export products can be classified as "high-tech products", and China accounts for about a quarter of the total global export of such high-tech products. Therefore, China's export model is no longer a simple "processing with supplied materials", and most of its export value is created by local people. In 2005, for every $65,438+000 exported by China, $26 was the value of parts imported from overseas, and only $74 was from China (including the value produced by foreign-funded enterprises with factories in China). In 20 15, the value from overseas supply chain decreased from 26% to 17%.
In the GDP of 20 18, the final consumption of residents accounts for only 44%, while the United States is close to 70%, and the European Union and Japan are also around 55%. From the 1980s to 20 10, the proportion of China's total consumption (household consumption plus government consumption) in GDP dropped from 65% to 50%, down by 15 percentage point, and then gradually rose to 55% (Figure 7-2). The proportion of residents' consumption in GDP dropped from 54% in 1980s to 39% in 20 10, down by 15 percentage points. The gap between residents' total consumption and final consumption is government consumption, which has been relatively stable and accounts for about 1 1% of GDP.
Behind these great successes, there are also two hidden problems. First, the internal economic structure is unbalanced: production and investment are emphasized, while people's livelihood and consumption are relatively neglected, resulting in a huge production capacity that is insufficient compared with domestic consumption, and products that cannot be digested can only be exported. This brings the second problem: instability of external demand and trade conflict. In the past 20 years, China's share of the world's manufacturing industry has increased from 5% to 28%, while that of the Group of Seven has decreased from 62% to 37%, while the share of all other countries has remained almost unchanged. In 2020, the central government proposed to "promote the formation of a new development pattern with the domestic big cycle as the main body and the domestic and international double cycles promoting each other".
First, low consumption and overcapacity.
In the GDP of 20 18, the final consumption of residents accounts for only 44%, while the United States is close to 70%, and the European Union and Japan are also around 55%.
From the 1980s to 20 10, the proportion of China's total consumption (household consumption plus government consumption) in GDP dropped from 65% to 50%, down by 15 percentage point, and then gradually rose to 55% (Figure 7-2). The proportion of residents' consumption in GDP dropped from 54% in 1980s to 39% in 20 10, down by 15 percentage points. The gap between residents' total consumption and final consumption is government consumption, which has been relatively stable and accounts for about 1 1% of GDP.
When we observe that the proportion of consumption in GDP has decreased, it is nothing more than two situations: either the proportion of disposable income in GDP has decreased, or the citizens have saved a larger part of their income and the savings rate has increased.
High savings of residents
China's household savings rate is very high, reaching 25%-30% in the 1990s. In the same period, the savings rate of the United States was only 6%-7%, while that of Germany, France and other major European countries was 9%- 10%. Japan's savings rate is very high, only 12%- 13%. Differences in savings rates between countries can be explained by culture, habits and even language and subconscious.
Low income share of residents
Residents' insufficient consumption is not only because of the high savings rate, but also because they really have no money.
With the development of economy, the service industry gradually rises, and the labor intensity is higher than that of industry, which also promotes the recovery of the proportion of labor income.
After China's entry into WTO, on the one hand, the tariff on imported capital goods has been reduced, which has increased the capital investment of enterprises; On the other hand, industrial agglomeration in the southeast coast has triggered large-scale population migration, while household registration and land-related policies have raised housing prices and labor costs, which is not conducive to the living and working of migrants. The phenomenon of "labor shortage" is frequent, and enterprises are more inclined to invest in capital.
Nowadays, various information technologies make machines more and more "smart", and they can do more and more things, which is very substitutive to labor. Therefore, after the price of the machine relative to the labor force fell, it did squeeze out the labor force. For example, China is the largest industrial robot user in the world, accounting for 30% of the world industrial robot market in 20 16. An important reason is the rising labor cost.
From the perspective of income, the proportion of residents in the national economic distribution has declined, and the proportion of government and enterprises will inevitably increase. Similarly, from the perspective of expenditure, the proportion of household consumption will decline, while the proportion of government and enterprise expenditure will increase, and most of these expenditures will be used for investment. In other words, residents' income has been transferred to the hands of the government and enterprises, and it has become infrastructure such as highway high-speed rail, factories, machinery and equipment, while the proportion of consumer goods such as automobiles and household appliances has been relatively reduced.
The decline in the proportion of residents' consumption expenditure not only corresponds to the increase in the proportion of investment, but also corresponds to the increase in the proportion of exports. Therefore, for a long time, the main forces driving China's GDP growth are investment and export, while domestic consumption is relatively low.
In this context, the report of the 19th National Congress of the Communist Party of China revised the main social contradiction in China as "the contradiction between the people's growing need for a better life and the development with insufficient imbalance".
Second, Sino-US trade conflict.
The degree of balance of the internal economic structure of each country will be reflected in its balance of payments. China's domestic output is not completely consumed by domestic consumption and investment, so its exports are greater than its imports. The current account (which can be simply understood as the summary of imports and exports of goods and services) is a surplus and a net export.
The United States can absorb the net exports of other countries, of course, without the economic strength of the United States and the status of the US dollar as an international reserve currency. The United States imports more than exports every year, which is equivalent to constantly "borrowing" resources from abroad. It is the largest debtor country in the world.
Employment and political shock
In the Sino-US trade conflict, one of the most frequently mentioned topics by American politicians and media is "Made in China robbed American workers of their jobs". The main arguments are as follows: In the 1990s, the proportion of manufacturing employment in the United States remained relatively stable. However, after China's entry into WTO, China goods hit all parts of the United States, factories moved overseas in succession, and the proportion of manufacturing employment dropped sharply. The more seriously affected by China's commodities, the more manufacturing employment will drop.
Although manufacturing employment has been declining, from 1970 to 20 13, the added value created by manufacturing accounts for about 13% of US GDP. Although there are fewer people, the output has not decreased, which is a typical performance of technological progress and productivity improvement. There is nothing special about the replacement of labor by machines.
Technical shock
The rise of China's manufacturing industry and the impact of Sino-US trade on American employment are actually not important. In contrast, the technological shock and challenge to the United States are more real, which is also the fundamental reason why Sino-US trade conflict and American technology containment may be protracted. Although the proportion of manufacturing industry in employment in the United States is only single digits, it is still the basis of scientific and technological innovation. 60% to 70% of R&D expenditure and company patents in the United States come from manufacturing enterprises.
For countries at the forefront of science and technology, the invention and application of new technologies generally start from scientific research and laboratories, then go to the stage of technology application and patent, and then to the stage of large-scale industrial mass production. But for a developing country, the order is often the other way around: start with the manufacturing process, learn by doing, accumulate technology and experience, and then gradually improve the technology and create some patents according to your own needs. After the sales of products are gradually expanding and the technology is gradually moving closer to the forefront, more resources will be invested in research and development to promote more basic and widely used scientific research projects. 20 10 the added value of China's manufacturing industry exceeds that of the United States. After another 10 year, in 20 19 year, the number of international patent applications in China surpassed that in the United States. According to the current growth rate of scientific papers, China may surpass the United States around 2025 (Figure 7-7).
Therefore, for developing countries, industrial manufacturing is the basis of scientific and technological progress. There is not a country in the world that is not a manufacturing country (at least it used to be). It is also a very correct way to cut into the global industrial chain division from the manufacturing field, because the manufacturing industry not only has learning effect, but also has strong agglomeration effect and scale effect.
Although the high pressure of technology may frustrate China enterprises in a short time, many relatively backward technologies in China have also gained market opportunities, which may increase market share and income, and then increase R&D efforts, enter a virtuous circle of "market -R&D- iteration-bigger market", and finally realize domestic substitution. The premise of all this is that China's domestic market can indeed continue to grow, national consumption can continue to improve, and the "double cycle" model of "domestic big cycle as the main body" can be truly supported.
Third, rebalancing and domestic cycle
So in 2020, the central government proposed to "accelerate the construction of a new development pattern with the domestic big cycle as the main body and the domestic and international double cycles promoting each other". This is a strategic shift in development.
The key to this strategic transformation is to increase residents' income and consumption. Although the government is still emphasizing "supply-side structural reform", the so-called "supply" and "demand" are not two different things, just different perspectives on the same thing. For example, from the perspective of supply, it is to adjust production capacity, and from the perspective of demand, it is to adjust investment expenditure; From the perspective of supply, it is industrial upgrading, and from the perspective of demand, it is the upgrading of income level and consumption structure. From June, 5438 to February, 2020, the Central Economic Work Conference put forward that "we should firmly grasp the main line of supply-side structural reform, attach importance to demand-side management, get through the blocking points, fill the shortcomings, and connect all links of production, distribution, circulation and consumption to form a higher-level dynamic balance in which demand pulls supply and supply creates demand".
The key to reform is to change the role of local governments in the economy, curb their investment impulses, reduce their productive expenditures and increase people's livelihood expenditures. This will have four important effects. First, increasing people's livelihood expenditure can change the urbanization mode of "valuing land over people", make cities "people-oriented" and let residents live and work in peace and contentment, thus reducing savings and expanding consumption. Second, increasing people's livelihood expenditure can limit the productive expenditure of local governments for investment. Once the local government participates, it is not easy to quit (Chapter III). Even if local enterprises are not competitive, the government may continue to give them blood transfusion, squeeze resources and reduce the efficiency of the national unified market.
Third, promoting the domestic large-scale circulation needs to upgrade technology and overcome various key links of "sticking neck". The core element of scientific and technological progress is "people". Therefore, local governments' increasing expenditure on education, medical care and other aspects of people's livelihood is an investment in "human capital", which is conducive to scientific and technological progress and economic development in the long run. Fourth, increasing people's livelihood expenditure and restraining investment impulse may also reduce local governments' dependence on "land finance" and "land finance" development models, restrict their use of land to increase leverage, leverage credit resources and reduce their dependence on land prices, which is conducive to stabilizing housing prices and preventing residents' debt burden from further increasing and eroding consumption (Chapter V).