news

on september 28, the 2024 tsinghua pbc chief economist forum was officially held. the theme of this forum is "global industrial structural change and economic outlook."

at the forum, liu qiao, a professor at peking university guanghua school of management, said that in the future, a large number of affordable rental housing and long-term rental apartments can liberate 400 million people from the pressure of life and give them more free space to explore themselves. interest will bring more innovative vitality.

the following is the full text of liu qiao’s speech:

liu qiao:thanks for the invitation! i have also prepared a ppt here, but the time is obviously not enough, so i will give you a brief report on some structure and ideas. the main purpose is to give you some reports on some of the driving forces behind industrial changes.

we have seen that after more than 40 years of rapid growth in china's economy, the growth rate of total factor productivity has slowed down. as you can see, this picture is a simple analysis we did. the correlation between the growth rate of gdp and the growth rate of total factor productivity over the past 40 years has been 0.81, which is 81%. we have noticed that since china completed its industrialization process in 2010, our overall growth rate has now dropped to less than 2%. we estimate that it is about 1.8%. however, colleagues including scholars from canada and hong kong estimate that our current average annual growth rate of tfp is about 1.2%, and some scholars have even estimated this to be within 1%.

therefore, generally speaking, total factor productivity growth accounts for about 40% of gdp growth. in other words, if we want to basically realize modernization and maintain a growth rate of about 5% in 2035, our total factor productivity growth rate may be returned to 2%, or even higher. i think this may be a core starting point for us to discuss these issues of new productivity.

this work is of course very challenging. people often use the example of the united states or industrialized countries. after they complete industrialization, their total factor productivity will almost without exception drop. everyone has seen that in the united states, the overall growth rate of the united states in the past 20 years has been within 1%. in the past ten years or more, it has generally been around 0.7%, which is the average annual growth rate. this explains why the long-term growth rate of the united states is only about 2%. i think this may be a number that many scholars like to use when discussing economic growth prospects.

for china, under the current circumstances, we hope that the growth rate of total factor productivity can return to 2%, or even higher. i think we have proposed a systematic strategy called new quality productivity. you have seen our discussion on new quality productivity. you are familiar with it, so i will not expand on it. but in the end, it is particularly important to emphasize that it takes the improvement of total factor productivity as its core symbol. so, in other words, i want to talk about high-quality development and the meaning of chinese-style modernization. ultimately, it may be reflected in the growth rate of our total factor productivity at the level of economic and social development, which may be very important in the future. a gripping point. then, all our future growth momentum, including the source of our new productivity, should be closely centered around the core concept of how to increase the growth rate of total factor productivity.

i think we mentioned here that investment may be very important, because if you look at china’s successful development stories in the past, we actually said that teacher lin also specifically mentioned just now that there is a good government and an efficient market. we have adopted some industrial plans and five-year plans, and we have focused on some key areas and node industries. therefore, i think the node industry is an industry in a place where the industrial chain in the national economy is relatively long and the density of the production network is relatively high. we focus on investment in these industries, hoping to bring huge progress to the development of the entire economy.

what are the challenges we face now? it is how we find new key areas and node industries in the future, form some new node areas and new production networks in china, and ultimately enable total factor productivity growth to return to the 2% level. from this perspective, the force that basically drives industrial change ultimately comes from the source of new productivity, or the source of total factor productivity growth.

as i understand it, there may be two aspects to look for or do some sorting out in this regard: on the one hand, these strategic emerging industries and future industries spawned by the technological revolution will bring about a huge space for total factor productivity. . on the other hand, the improvement of total factor productivity caused by various systems or distortions in the mechanism is currently constrained, and the growth rate of total factor productivity has not been released. i want to release it through further reforms and high-level opening up in the future.

so, roughly speaking, i think it's possible. i briefly sorted it out. since i don't have time to expand on it, i'll briefly explain each point.

for example, in the first point, everyone may talk about strategic emerging industries and future industries. behind them must be technological innovation, industrial innovation, and technological finance must support them. i think there may be changes behind this industry, and we will see some power in this area in the future. for example, r&d may intensify and investment in r&d will be increased. at the same time, some of the core areas we talked about are still "stuck" in some areas, and we may see a lot of investment in this area, and a lot of research and development work at the corporate and industrial levels, especially some basic research. work is in progress. i think this may be a huge structural driving force that we talked about, but i won’t fully expand on it. for finance, we may also be talking about how to better cultivate some patient capital. at the same time, we should reorganize some discussions on shaping our financial system, especially the science and technology financial system, and building a modern financial power.

another point, i would like to highlight some technologically driven industrial changes related to carbon neutrality, ai (artificial intelligence), and big data. behind this, i want to emphasize that it is mainly an investment story. like carbon neutrality, i think there are many estimates in this area. i think that by 2050, when the paris agreement talks about net-zero emissions around the world, china will need an investment of up to 3 million yuan. more than 100 million yuan. i know there is a higher estimate among the public. then, converted, it is basically nearly 10 trillion yuan a year. now, the decline in real estate investment is quite severe. the decline in real estate investment can be fully compensated by new momentum, and investments such as carbon neutrality can completely make up for it. moreover, carbon neutrality itself is also a profound and systematic economic and social change, which will bring about the rise of a large number of upstream and downstream industries. therefore, its multiplier effect and pull effect on the entire economy should be very large.

when it comes to ai and big data, the truth is very simple, because when we talk about the arrival of a new civilization, we look at two characteristics: 1. energy. 2. the mode and intensity of interaction between people. i think ai and big data may allow human society to get rid of time constraints for the first time when people interact with each other. there will be more than 24 hours in a day, which can bring more time. i think this will bring about a change in economic and social development. profound changes, behind them are a lot of opportunities for industrial transformation and a lot of investment possibilities. i think this may be a very important driving force for us to drive the chinese economy and drive the improvement of total factor productivity in the future.

in addition, let me briefly mention, like manufacturing, why do we must emphasize the importance of manufacturing? because so far, our entire manufacturing industry actually still has 27.7%. this is the figure for 2022, which accounts for 27.7% of gdp. in the united states, you can see that it is only 10.7%. in the united kingdom and france, it is less than 10%. in the field of manufacturing, through intelligent manufacturing and the transformation and upgrading to high-end manufacturing, it can bring about a huge possibility of improving total factor productivity. therefore, in the future, i think we may try our best to transform our manufacturing industry into high-end manufacturing and equipment manufacturing while maintaining a certain economic volume and a certain proportion of gdp. i think this will bring about huge room for our future economic growth and total factor productivity improvement. but behind this, we must also prevent some problems of overcapacity, which is a lot of controversy. from this perspective, it is possible to form a large domestic market and increase domestic total demand, especially consumption.

i think some time in the future, we all have made an estimate, that is, if we can truly realize socialist modernization by 2035, basically realize modernization, and double the per capita gdp compared with 2020, our residents' consumption will increase from the current 37 %, 38%, such a gdp ratio will become about 60%, because now the united states and the united kingdom are generally around 60% in industrialized countries. at the same time, our service consumption is less than 50% now, and it may become at least about 60% in the future, and it may even be higher. this will bring about a huge change in the industrial structure. we will see some huge structural adjustments on the supply side and the demand side, and behind this may require a large amount of investment, a large number of entrepreneurs, or the spirit of entrepreneurship. a kind of play. so, i think this is probably an important area. this involves a simple question: how do we increase per capita income and the proportion of disposable income in gdp. now we are 43.4%. how can we increase it to 60% or even higher? i think this may be of great significance to the future development of the entire chinese economy.

and there is a special point behind this, which is our financial market and financial system. because now among our residents’ disposable income, the real income from property accounts for a very low proportion, less than 4%. whether it is investing in real estate, investing in the financial market, or buying financial products and saving, the average annual income is about 3,600. a lot of dollars, it was such a figure last year. our per capita gdp is more than 80,000 yuan, less than 4%, while this figure is 16% in the united states. i think the future will also put forward new requirements for our financial system. how can we make our financial market and the financial market as a whole develop more? this industry can show some great vitality and allow residents' disposable income to come from property. the proportion of income can be significantly increased. i think this is of great significance to us in changing the economic structure and industrial structure.

i think there is another point that i will briefly mention. everyone always feels that income distribution is unequal, and common prosperity is a process of dividing the pie. but in fact, we think it is a process of making a big pie and an area that will form new momentum in the future. because one of our biggest inequalities now is actually the urban-rural dual structure, which is the huge income gap between urban residents and rural residents. the main reasons behind this are two points:

first, the total factor productivity of agriculture is too low, so in the future i want to increase investment in agriculture through transformation and further reform of the land system to form intensive production in the agricultural field, which can significantly improve the total factor productivity of agriculture. productivity will eventually increase the first distribution income of agricultural workers. i think this may be an important measure to shorten the gap between urban and rural areas.

on the other hand, together with the household registration system we talked about, now we often talk about china’s urbanization rate being 65% or even higher. but in fact, 18% of our residents are permanent residents of the city, but do not have household registration. according to data from the ministry of public security, only 47% of the urban household registration population. in fact, these 255 million people have not found a real place to live in the city. they have drifted between the city and the countryside. this is not only good for their consumption, but also brings many problems to all aspects of our public service system. . we estimate that if these 255 million people eventually stay in cities, another 140 million people will be transferred from agriculture. then there will be 400 million people, and these 400 million people may move from agriculture to the secondary industry, the tertiary industry, and even to the urban areas we are talking about. then, they will bring vitality to further economic development, because in places with a large number of people, the service industry is easy to develop, and there are many studies here that once a resident obtains urban household registration, his willingness to consume will increase significantly. i think from these perspectives, this power may become a huge driving force for the industrial changes we are talking about in the future, especially the development of the service industry.

the second is real estate, which has a particularly profound impact on real estate. like real estate, people have complained a lot in recent years. the average annual investment decline in the past three years has been more than 10%, and the decline in housing prices has also been greater. but we want to tell a story, that is, the contribution of real estate to china's economy, if we look at it from the perspective of owner-occupied housing, it can contribute through investment or consumption. we all talk about buying houses now, mainly to contribute to economic growth through investment.

however, if we talk about a large number of affordable rental housing and long-term rental apartments in the future, people will choose to live in the city in the form of housing consumption. this corresponds to two aspects: on the one hand, a new model of real estate development may eventually be formed; on the other hand, it will also release a large number of future new citizens from the pressure of mortgage loans and housing down payments, giving them more wealth, more energy and time to explore more freely. . i think this may be the most fundamental and most real driving force in the future development of china's economy. it will liberate an entire generation of 400 million people from the pressure of life and give them more opportunities. having free space to explore their interests or some career choices, i think, will bring a lot of innovative energy, which we may need in the high-quality development stage.

therefore, i think that the new model of real estate development may be what we need to consider at this stage. let me give a simple example, such as the structure of the united states and the added value of u.s. real estate. resident savers will be approximately us$3.88 trillion in 2021, of which only us$1.1 trillion contributes to gdp through investment in purchasing houses, and the other us$2.78 trillion is consumption (housing consumption), mainly in the form of rent. i think if we talk about the total amount of real estate investment in china in the future, i probably calculated it myself. for example, by 2035, because our current real estate stock has an approximate market value of 400 trillion, if we depreciate it over 50 years, it will be one year. a depreciation rate of 2% may require an additional investment of rmb 8 trillion a year to maintain such an amount. however, if we can make big changes in affordable rental housing, we can contribute another 10 trillion or more through consumption.

then, the overall contribution of real estate to gdp will actually be significantly higher than it is now, rather than said to be lower. therefore, real estate will always be an important node industry in china. this may require us to rethink the real estate model, from a simple developer model in the past to a "developer + operator" model in the future. therefore, i think housing consumption may be an answer to the new model of further development of real estate in the future. behind this is the common prosperity i talked about, the urban migrant population, and the complete urbanization of the rural migrant population.

the last point i would like to mention briefly. we also hope to see some huge changes in china's macro policy system framework. it is to tilt from the current focus on the production side to the consumption side. i think the main background here is very simple, that is, we mentioned that in the context of overcapacity, in the context of the need for new momentum to be formed, in the context of total demand, especially the consumption rate, which needs to be significantly increased, we may really the starting point should be to shift from simply maintaining economic growth and maintaining price stability to more actively changing the industrial structure and changing the momentum of china's economic growth. at present, i think a bigger choice may be to shift the focus of policy towards the consumer side and the demand side. i think that when these forces are combined, they may constitute the underlying forces that we have mentioned may be the most important in driving china's industrial transformation in the next ten or fifteen years.

i share it here, thank you all!