The dividends of China's reform in the past 30 years are disappearing, and resource monopoly should be broken in the future

The dividends of China's reform in the past 30 years are disappearing, and resource monopoly should be broken in the future. Recently, Vice Premier Li Keqiang of the State Council stated that my country’s great achievements over the past 30 years...

The reform dividends of the first 30 years are disappearing

In the past 30 years, China has developed through a series of reforms to become the world's largest manufacturing power and exporter, and has become the world's second largest economy. The lives of the Chinese people have also become richer day by day. However, as the saying goes, "30 years in Hedong, 30 years in Hexi." The dividends released by China through reform in the first 30 years are disappearing, and the dividends of economic growth in the next 30 years need to be re-explored and tapped.

” In the past, China’s rapid economic growth benefited from low labor costs, high savings, high investment, and high capital formation. However, with the impact of the global economic crisis and supply shocks, China’s rapid economic growth relied on demographic dividends, land costs, energy costs, and environmental impacts. The so-called capital cost depression that has been formed should gradually weaken. The era of 'low factor costs' is gone forever. China's previous national profit model has issued an early warning in the face of rising prices of most factors," said Zhang Monan, associate researcher at the World Economic Research Office of the Economic Forecasting Department of the National Information Center.

Zhang Monan believes that since the beginning of this year, under the combined effects of shrinking internal and external demand, cyclical and structural factors, China's economy has faced the second threat to growth since the financial crisis: investment, consumption, and exports have fallen simultaneously, and the supply and demand sides have tightened simultaneously. Corporate profit margins, fiscal revenue, industrial production, export orders, etc. have all declined. She said that China, which has always relied on low prices to subsidize the dividends of globalization, is embarking on an adjustment path of revaluation of factor values. China must transcend its low-cost advantage to truly tap its economic growth potential.

Reforms can maintain 8% economic growth

Experts point out that China's economy is now facing difficulties such as the difficulty of maintaining the low-cost growth model, the slowdown of the export engine, the consumption carriage has not yet started, and the end of the investment-driven economy. If it wants to continue to move forward, it must put forward greater requirements for reform dividends. Li Keqiang pointed out: "There is huge market demand in structural adjustment. Combining stable growth with structural adjustment and reform can enhance the vitality and sustainability of economic development."

Ha Jiming, vice chairman of Goldman Sachs Investment Management Department in China, believes that in the medium to long term, reform and opening up will be China's biggest dividend in the future. This requires improving efficiency, achieving marketization of factor prices, and also requires reforms in income distribution to promote higher levels of growth in low-income areas and develop more service industries. Fan Jianping, director of the Economic Forecasting Department and Chief Economist of the State Information Center, analyzed that if the dividends of reform can be obtained, China's economy should have no problem maintaining 8% growth at least during the "Twelfth Five-Year Plan" period.

"When China's low-cost advantage and cheap capital dividends no longer exist, China must resolve the pressure brought by rising costs through technological innovation, human capital accumulation, intellectual property protection, and the improvement of total factor productivity, optimize the allocation of resource factors, and accelerate the gradual move from the low end of the value chain to the mid-to-high end." Zhang Monan believes that bidding farewell to the inefficient economic growth model will be a lasting challenge facing the Chinese economy.

Adjust the interest structure to guide the deepening of reform

Experts pointed out that future reforms need to achieve three major adjustments and transformations from the outside to the inside. Zhang Monan said that the first is the transformation from external economic growth to connotative economic growth. The growth model that relies too much on increasing the input of production factors such as labor and capital is no longer sustainable. China needs to upgrade its industrial structure, accelerate the formation of human capital, technological progress and institutional reforms to have a spillover effect on economic growth. The second is the transformation from export-oriented economic growth to domestic demand-oriented economic growth. Today, as the main supplier of the world economy, China is facing the problem of insufficient external demand. This trend has forced China to shift its development driver to domestic demand. The third is to shift from relying mainly on international capital to cultivating and strengthening local capital.

Zhang Monan believes that the focus of the new round of reform must first break the resource monopoly and power cycle, and place economic fairness and social fairness in a more important and prominent position. Secondly, if we want to deepen the reform, we must make adjustments to China's existing interest structure, which will inevitably require reform of the existing ones. Third, the government cannot replace the market, and the market cannot replace the government. It is necessary not only to break monopoly resources and reduce market distortions and negative externalities, but also to reduce the blindness of government behavior and reduce the risks and costs of reform. Finally, reforms must be implemented into actions. China's economic reform must be designed at multiple levels, and all aspects are "overwhelming". Only through the interaction between top and bottom, as well as the continuous trial and error at the bottom, and the gradual accumulation of experience, can we truly stimulate the vitality of reform and creation, and find a reform model and template suitable for ourselves.