Three relationships that must be faced in supply-side structural reform

Core viewpoints

With regard to China's supply-side structural reform, there is a question worth thinking about: can we really unify the free competition required by the market and the conscious planning required by socialized production in terms of economic philosophy. In terms of mechanism, if we really deal with the relationship between the government and the market, then macroeconomics with Chinese characteristics can stand in the world. From this point of view, China's supply-side structural reform actually puts forward deeper problems, that is, the problems of economic theory and philosophy and value orientation under the basic system.

As China's economy has entered a new normal, some new views have emerged in the society's understanding of China's economic situation. Here, I would like to discuss three issues mainly from the particularity of China.

The first question: how to treat the anti-crisis policy in China's macro-control?

Since the world entered the anti-crisis trend, the social views on the choice of policy direction are not quite the same. From the perspective of practice in our country, there are also some arguments. This is mainly concentrated in the following aspects.

First, is it too late for China to put forward its anti-crisis policy proposal? This is a question with Chinese characteristics. China's economy is still booming in 2007 and 2008, which is different from that of other countries. Therefore, the policy goal put forward in the 2008 government work report is "double prevention": first, to prevent inflation from structural inflation to overall inflation; second, to prevent overheating caused by excessive economic growth. These two aspects are related, and if the goal is "double defense", then macroeconomic policy should be tightened across the board. However, when we tightened in May and June 2008, we felt that the situation was wrong, so after all kinds of data came out, we made corresponding adjustments, that is, instead of emphasizing "double prevention", we changed to "one guarantee, one control and one adjustment": maintain growth, control prices, and adjust the structure. The price issue has not been deleted from the macro-control objectives, and the dual goal is to "maintain growth and control prices." China's real adjustment has come to the fourth quarter of 2008. Therefore, China's anti-crisis policy came out more than half a year later than the global anti-crisis measures.

Second, is our country's anti-crisis policy fierce this time? The cause of macroeconomic imbalance in China is different from that of the United States, Europe, Japan and so on. The financial crisis in the world is mostly caused by the collapse of the financial system, but there is no big problem in the real industry, which is in the case of the imbalance of the money market, there is a demand for money and lack of money supply. But what is the situation in our country? The world economic recession has led to a setback in China's exports, resulting in overcapacity in domestic demand. In this case, there is nothing wrong with China's banking system itself, but there is no effective demand for money in the real industry. therefore, the direction of China's imbalance is opposite to that under the world economic crisis-the world economy has money demand but not money supply, and China has money supply but not effective money demand. Therefore, it is important for our country to cultivate the demand for money to stimulate the real economy, and it is important for western countries to increase the money supply and smash money into circulation. However, the policy adopted by our country is similar to that of the western anti-crisis policy, injecting a large amount of capital into circulation, resulting in no effective demand in the real economy, resulting in the retention of a large amount of money. Therefore, some people have raised the question of whether our monetary and fiscal policy stimulus is too drastic.

Third, is it too early for our country to withdraw from the anti-crisis policy? It was in October 2010 that my country announced its withdrawal from the anti-crisis policy track. After quitting, our country faces a series of difficulties in cost digestion in the process of anti-crisis and a new form of economic imbalance after entering the new normal. Among them, there are not only objective economic cyclical reasons, but also complex and uncertain macro policy functions, which is actually the shift period of economic growth rate and the digestion period of anti-crisis policy cost in the post-crisis stage. the "three-phase superposition" of the labor pains period of overcoming deep-seated structural contradictions in the economy. Compared with the more complex economic imbalances, especially the new imbalances with the coexistence of "double risks", some people ask whether it is too early for our country to withdraw from the anti-crisis policy.

In fact, there are special national conditions of our country behind the above three aspects. We should clearly recognize that China's anti-crisis policy is very different from that of other countries, pay attention to summing up experience, and then upgrade it to economic theory and system.

The second question: how to treat the imbalance of China's macro-economy under the new normal?

Since the reform and opening up, China's macroeconomic policy can be divided into three stages. The first stage: from 1978 to 1998. At this stage, except for a few years, generally speaking, the inflationary pressure in our country is relatively large, and the macro policy has been tightened for a long time. The second stage: from 1998 to the end of 2010. At this stage, except from 2002 to 2007, it is mainly due to the lack of domestic demand, coupled with the lack of growth momentum caused by the impact before and after the Asian financial crisis and the world financial crisis. Therefore, the main macro policy of our country is to expand domestic demand, which we call "proactive" fiscal policy and "prudent" monetary policy. In 2008, we further proposed a "more proactive" fiscal policy and a "moderately loose" monetary policy. The third stage: from the end of 2010 to the present. In a sense, China's macro-economy has entered a stage of imbalance, and the characteristics of this stage can be summarized in one sentence: both the potential pressure of inflation and the serious threat of economic decline, which is the coexistence of double risks.

At present, under the situation that double risks coexist, what should our country do? Developed countries encountered similar problems in the late 1960s, but they have not been solved since the 1970s, a lot of problems have been accumulated, and many adjustments have been made in economic theory. now it seems that it is difficult to obtain a systematic summary of experience and unified understanding. As a developing country, China has also encountered this problem, facing comprehensive and profound challenges in macro-control, so it may be unsolvable to start with the total demand. Therefore, China has introduced supply-side structural reform, which is not only a reflection on the characteristics of China's macroeconomic imbalance, but also a deepening of the understanding of China's macro-economy.

The third problem: how to understand several problems in the implementation of supply-side structural reform in China

With regard to China's supply-side structural reform, there are several issues that need to be deeply considered in theory and policy.

First, how to deal with the relationship between demand and supply in the supply-side structural reform. Supply-side structural reform not only requires demand-side policies, but also needs to be coordinated in two aspects. On the one hand, supply-side structural reform needs a certain effective demand as the premise; on the other hand, demand should be moderately expanded in the short term and the economy should be properly controlled.

Second, how to deal with the relationship between the government and the market in the supply-side structural management. There is a big difference between supply-side and demand-side policies, that is, supply-side policies directly affect producers, while demand-side management policies more affect consumers and stimulate demanders or buyers. In this case, there will be two problems: first, the policy of supply-side structural reform directly affects enterprises, and if the rights of enterprises as market subjects are not fully protected and respected in the economic and legal system, then it may lead to excessive and arbitrary government intervention in the behavior of market subjects, and may even return to the planned economy. The second is whether we can really integrate the free competition required by the market and the conscious planning required by socialized production in terms of economic philosophy. In terms of mechanism, if we really deal with the relationship between the government and the market, then macroeconomics with Chinese characteristics can stand in the world. From this point of view, China's supply-side structural reform actually puts forward deeper problems, that is, the problems of economic theory and philosophy and value orientation under the basic system.

Third, the question of how to link up short-term and long-term policy objectives in supply-side structural reform. Demand-side management has a certain short-term, supply-side management must be long-term. Supply-side management is more important for predecessors to plant trees and future generations to enjoy the cool. Relatively speaking, there will be more room for local governments to play a role in supply-side structural reform, because demand management is limited for local governments, currencies are not under your control, and deficits are not under your control. What can you do? But the supply side is different. In the process of supply side adjustment structure, improving the education structure and capital investment structure of this place all belong to the supply side, so there is a lot of room for local governments to play a role. But there is one, local government officials need to have a long-term concept, do not consider the long-term is inaction, so supply-side management actually requires local government officials to be responsible for the local for a long time, which puts forward higher requirements for their sense of responsibility.

In short, the development of China's macro-economy has its own characteristics, whether it is anti-crisis policy, imbalance under the new normal, or supply-side structural reform, all have Chinese characteristics, and these characteristics actually come from the Chinese practice in the process of reform and opening up.