news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

in a recent quantitative study on post-epidemic economic recovery, we found that the revenue of manufacturing companies above designated size has experienced a rapid recovery, and the recovery trend is better than the average of the three years before the epidemic. however, the income situation of non-manufacturing sectors, especially the entire service industry and construction industry, is not optimistic. this finding is actually not surprising, because the service industry and the construction industry have suffered a much greater negative impact from the epidemic than the manufacturing industry, and their recovery since last year has been slower. the situation in the construction industry has been deeply affected by the contraction of the real estate industry and has been greatly affected.

considering that the entire service industry and construction industry provide most of the sources of household employment and income growth, after experiencing the severe impact of the epidemic, these fields have been severely damaged and have been unable to recover, which will naturally directly affect the disposable income of households and lead to urban the slowdown in residents' income growth will inevitably affect the recovery growth rate of consumer spending. we found from the data released by the national bureau of statistics that the part of residents’ disposable income that has been hardest hit by the epidemic is residents’ operating income and property income, and the sources of these two parts of income are related to the service industry and the construction industry. and it has not returned to the trend value before the epidemic. for this reason, the per capita consumption expenditure level of residents is still lower than the trend before the epidemic.

on the other hand, while the service industry and construction industry have recovered slowly, the production capacity of the manufacturing industry has recovered rapidly in the past four years, and production continues to expand. this is because our growth stabilization policy mainly focuses on the growth of the manufacturing industry. as a result, on the one hand, large state-owned enterprises in the upstream, especially those in the equipment manufacturing field, still maintain production capacity expansion with the support of national policies; on the other hand, in order to survive, the vast majority of downstream small and medium-sized manufacturing companies continue to operate even if they are not making money. this has led to a more severe involution in the manufacturing sector: production is expanding, prices continue to fall, and in most cases it is a fact that companies are not making money.

macro deflationary pressure also arises from this. precisely because the focus of growth-maintaining policies is on the manufacturing industry rather than the service industry, we have seen that although demand has continued to be weak and making money has been difficult in recent years, manufacturing production has continued to expand, with nominal gdp still growing by about 5%. . this creates a "temperature difference" between macro and micro. in fact, in recent years, ppi has been in the negative range most of the time, and the overall price level has declined, but supply is still expanding.

in this case, if the export growth of the manufacturing industry is better, deflationary pressure will be alleviated. without the relatively strong export growth in recent years, deflationary pressures would have been even greater. however, given the geopolitical development pattern, the degree of certainty facing exports in the future is not high. under this assumption, the focus of policies to stabilize growth is naturally to stabilize domestic demand, but the focus of stabilizing domestic demand is to stabilize employment and household income, rather than stabilizing production. to this end, the policy tendency to stabilize growth must shift from focusing on manufacturing to focusing on service and construction industries. since the service industry and construction industry have been seriously damaged and are lagging behind in recovery, if a package of financial and fiscal stimulus policies can be introduced to help the service industry and construction industry recover faster, employment growth can be maintained and expanded, and residents' income status can be significantly restored and improved, allowing them to returning to or even exceeding the trend value before the epidemic, it is possible for gdp to maintain a growth rate of about 5% this year and next, without the need to introduce stimulus policies focusing on expanding government infrastructure investment similar to those from 2009 to 2011.

we emphasize the need to better restore and develop our service industry and construction industry because our employment is dominated by private employment and construction industry. if the service industry and construction industry do not develop well, the growth of residents' income will be a problem. the epidemic has mainly impacted the service and construction industries in the past three years, resulting in a sluggish supply and demand cycle in the economy. even if there is no major impact event such as the epidemic, if the structural problems that make the manufacturing industry outstanding are not well corrected, it will eventually bring about macro-tightening pressure as economic development enters a new and higher stage. this problem will also last for a long time. trouble japan's economy. theoretically, deflation caused by involution or excess supply is endogenous and is not caused by external shocks to demand.

fundamentally speaking, this is caused by the government’s cognition and behavior of over-relying on manufacturing and underestimating the service industry in promoting gdp growth. even our entire government system is formed around production. this approach played an important role when we needed to accelerate industrialization 30 years ago, but now this model is difficult to maintain in the long term. otherwise, we will inevitably face internal and external pressures for rebalancing at the macro level.

the author noticed that many years ago, senior leaders realized the urgency of solving this problem. in 2016, they began to make some adjustments to macro policies, proposing to strengthen supply-side reforms, hoping to reduce excessive inefficient production capacity and emphasize the future. to prevent over-investment, we hope to gradually adjust supply and demand to a new equilibrium with a moderate level of aggregate demand. under this guiding ideology, the central bank's monetary policy and interest rate control ideas have also begun to emphasize the combination of cross-cyclical and countercyclical, innovate more structural tools, and try to avoid sudden brakes and sharp turns.

however, for such a policy to produce the desired effect, the internal and external environment must be relatively favorable. later, not only did the external situation change rapidly, but the epidemic outbreak also created new challenges. in this complex situation, high-level officials have re-proposed a general macro-policy framework that combines the expansion of domestic demand with supply-side reforms, and have once again emphasized the need to strengthen countercyclical adjustments. but to prevent the policy of stabilizing growth from simply returning to the old path, we need to find a good breakthrough. even if a monetary and fiscal stimulus policy package is launched, the expansion of domestic demand and supply-side structural reform can only be implemented if the target is adjusted to the recovery and development of the service industry and the construction industry, and real money is used to support private employment and increase in residents' income. the breakthrough point of combination. in short, if the economy must make progress while maintaining stability, and stimulus policies must have the desired effect, they must start from areas that help expand private employment and restore residents’ income growth and confidence. this is precisely where the economy has been hit by the epidemic. crucial.

in this sense, the central bank and the china securities regulatory commission jointly issued financial policies to support the recovery and prosperity of the stock market on september 24, which is better than policies to support infrastructure investment. policies that support capital market prosperity have significant benefits in improving market confidence and residents’ wealth effects. in the same way, the politburo meeting on the 26th proposed that it is also very important to fully support the real estate market to "stop falling and stabilize". on the one hand, it will help restore and boost confidence in the real estate market. on the other hand, it will also help to better restore the operating conditions of the construction industry and drive the growth in demand for more residential services is also of great significance to improving residents' income and expanding consumer demand.

in fact, as early as september 15, the central committee of the communist party of china and the state council jointly issued guidance on prioritizing employment and promoting reasonable growth in labor remuneration, proposing to accelerate the move towards an employment-friendly development model. prior to this, guidance on promoting residents’ consumption was also issued. these are very important guiding ideas. when considering the implementation of a new round of stimulus policies to stabilize growth, we must rely on these opinions to use real money to help the lowest-level employment groups in the economy, and effectively promote the service industry and construction industry to return to their pre-epidemic conditions faster and better , thus restoring its revenue expectations and confidence.

(the author is the dean of the school of economics, fudan university)

zhang jun