Feel the pulse of China's future economic growth Weiying

 Weiying: feel the pulse of China's future economic growth
Weiying (Dean of Guanghua School of Management)
each person's life or career, a peak is also low. It is easy to over-pessimistic at low tide, the peak has often carried away. A country or society as well. Today's world economy, at a relatively low stage, the impact of the global financial crisis has not been eliminated. how to view the future of China and the world economy? best put it in a longer historical perspective. < br> populous country will return to the economic power
recorded history of mankind is five thousand years. According to economic historian Angus. Madison research in the history of mankind for a long time, countries (regions) Population size and economies of scale highly correlated; or that the size of the population decided to economies of scale. Population size and economies of scale separation between the last 200 years occurred. measured by GDP per capita over the past little difference between countries, such as AD 1500, richest countries per capita GDP is 3 times of the poorest countries; and now, a few developed countries like the United States and per capita GDP, is a backward country several times, or even a hundred times.
Madison-based data, can calculate the size of the population and correlation coefficient of economies of scale in the year 1500 for the 0.9972,1700 0.964,1820 still as high as 0.9423 in, but then declined sharply: in 1870 for the 0.3404,1950 years 0.6393,1913 0.1554, 1973, 0.148mm That is, until 1973 when the population size has nothing to do with economies of scale, such as 54.6% of the world population in Asia (excluding Japan), GDP accounted for only 16.4% of the world; and 18.4 of the world population % of the developed countries, GDP accounted for 58.7% of the world. This situation in the past began to reverse 30 years: Population size and economies of scale in the correlation coefficient increased to 0.5185 in 2003, is expected to rise further in 2030 to 0.733.
the size of population and GDP correlation coefficient (1000-2003)
why the past 250 years, GDP per capita gap between countries, economies of scale and the approximate size of the population no longer have reciprocity? simply because different different countries embarked on the road system, the first mm in some countries embarked on the road of market economy, and some countries do not. Although there are various debates on the details, but modern economic theory and social practice has shown that market economy is economic development and the most effective means to improve people's livelihood. If the economic system is no longer whether or not the difference between the market economy, that the world market economy, differences in per capita GDP will gradually disappear. This is what happened in the past 30 years . China's market reforms and other countries began to reverse the past 200 years, the worldwide emergence of population size and divergence between the economies of scale.
So, I have a bold speculation, according to current trends, the next 50 years , 100 years later, humans may then return to the 19th century the state before, that a country's economic size and population of similar size, large population but also economic power. today's world, except China, India, the largest population, the Asian population of the world for nearly 60 %. The so-called 21st century is the century of Asia, which is the relationship between population size and economic scale of the return, or is Adam. Smith's 1776 This trend can be seen now.
major economies of the world GDP, GDP (Click to see a larger clear)
Madison on the map is the estimated proportion. Broadly speaking, in accordance with the purchasing power parity calculation, Year 0 in the Western Han Dynasty, India's GDP of the world the proportion of 1 / 3, to 1820, China's GDP of the world's 1 / 3, to the World War II after 1950, the U.S. GDP of the world 1 / Top 4 (27.3%).'s future status will be like? He speculated that the year 2030, which is another 20 years, China's GDP may reach 23% of the world's total, 10% in India, the United States 17% Western Europe, amount to about 13% of the world.
from, you can see China's changes over the past 30 years. a country's international weight and the right to speak, depends on its economic strength. In recent years, the world China really can not do without, whether good or bad, people do not take you originally play, G7, G8, OECD, etc., are not the Chinese copies; now you gotta do is talk, you have to take . This is in the current financial crisis is most evident.
the most crucial changes: First, from the mainly rely on exports to drive growth in the domestic and foreign markets are more balanced growth; second is from the low-cost, low-cost resources, cheap labor support growth, innovation-based, higher value-added type of growth; third is the natural mode of growth from the enterprise, integrated into industry growth. The progress of these changes, but also depends on China's reform, including economic reform and political reform. Globalization is the background of these changes. < br> globalization on the world and the Chinese economy
economic globalization is a long historical process. upsurge of globalization occurred in the first 1870 to more than 40 years between 1913, the World War I began to 1950 is the Although non-belligerent trade is increasing. In 1929, the popular trade protectionism, coupled with the impact of World War II to 1950, world exports-GDP dropped to 5.5%, only 0.9 more than 1870 high- percentage points (see below).
major economies around the world and of its GDP, the value of merchandise exports (Click to see larger image clarity)
1950 years later, a new wave of globalization, especially after the 1980s, globalization further accelerate the wave of .2007, the average world GDP, exports accounted for 25.6%. Equally important, this way of globalization has also undergone a huge change, that is, trade in products from the simple to the division of the global value chain . it's you produce apples, peaches I produce, you sell me the apple, I put the peaches to sell you that someone special nursery, some special fertilizer, was specifically picked more detailed division of labor. The point is not the final product between trade, but the value chain of trade between different regions; the value chain to make a link edge, companies can succeed. This is a feature of current globalization.
globalization changed the world economic and political structure. If the first globalization, China is the biggest victim, then this time of globalization, China is the biggest beneficiary mm although overall, countries are the beneficiaries of globalization. Without this globalization, the Chinese economy can not maintain 30 years of rapid growth, China's international status would not be present. The globalization of production of every aspect of separated, non-integrated production process, to achieve the economic growth of countries in the world, China is seizing the opportunity to become the manufacturing superpower .100 100 years ago after years of globalization and the globalization of the fate of the Chinese had the opposite effect. < br> 2008 financial crisis since the 1929 crisis will not repeat the mistakes to globalization? my personal judgments, the export share of total GDP growth will stagnate or even decline, but not large-scale regression. last time lesson has taught us that trade protection is not a solution to the problem. the United States in 1931 published the Most of the trade protection policies, some people are fighting under the banner of the name of national self-interest. This is the revelation of the financial crisis. If the world and then to impose trade protection policy, we stay in recession longer, rather than the more short.
export-driven economic growth in China is no longer sustainable
in the past 30 years, most years, China's international trade growth rate is higher than the GDP growth rate. Generally speaking, China's actual GDP annual growth rate of about 10%, exports 15% of the actual annual growth rate. in accordance with the nominal value of the count, in 2008 the export of 553 times in 1978, GDP is 83 times in 1978, the former is 6.7 times the latter . As a result, trade accounts for a substantial proportion of GDP rose. in accordance with the National Bureau of Statistics, the proportion of Chinese exports and GDP in 1978 to 4.6%, 16.1% in 1990, the year 2000 is 20.8%, 37.5% in 2007. This year, China's trade surplus accounted for 8% of GDP, while the U.S. deficit is 8% of its GDP by the end of .2008, China's foreign exchange reserves more than 2 trillion U.S. dollars.
China Import and Export-GDP ratio (Click to see big picture clarity )
2001 years later, China's export growth there is a leap forward. There are many reasons, including to join WTO and to enhance the competitiveness of China is undeniable, but also with the RMB exchange rate related. because the yuan is undervalued, and for enterprises, International trade is more profitable than domestic trade .2008 financial crisis, the government continued to export subsidies, export subsidies but did not consider this much is good, if only for export and export. the first half of this year, exports reached 8,000 billion, equivalent to 5% of GDP. This is the number of export subsidies there? worth it to pay these subsidies? needs careful study.
the crisis, China's exports were hindered, I think it is not a year or two short-term crisis, but a long-term adjustment process. Why? In general, the greater the economies of scale, the smaller the proportion of trade in GDP, (the extreme, the world's only one country, this proportion is 0). We can see a set of data, the world ten large economies, only Germany's export-GDP share (39.9%) than Chinese (37.5%). other countries, the United States 8.4%, Japan 16.3%, UK 15.7%, France 21.6%, Italy 23.4%, Spain 7.4 %, Canada 29.2%, Brazil 12.2%, including 25.6% of the world average, are lower than China (see below). What does this mean? One possibility is that our GDP has been underestimated, another possibility is that we export dependence is indeed too high.
exports accounted for the major economies, the proportion of GDP ((2007, sorted by economic size) (Click for larger image clarity)
is also worth noting that, according to China's official statistics, 55% of the population are agricultural population, in which case, the export share of GDP, should not be so high, at least not compared with other industrialized countries, because many products are self-sufficient farmers. Now, China's exports such a high proportion of GDP, while there are so many farmers, indicating which problems.
if this financial crisis and trade imbalance, and that the export growth that we can no longer be maintained. regardless of whether the implementation of trade protectionism in other countries policy, the future for China to export to boost the growth of GDP is almost impossible. The next step how to do? will need to balance the two markets, especially the development of the domestic market. here that the development of the domestic market, not what we often hear larger, deeper degree of provincial economic zones, economic zones if we are to each as a separate mm top four China provinces of Guangdong, Shandong, Jiangsu and Zhejiang. Guangdong as an independent if the economy, the size of its economy in 2008 can be ranked 18th in the world (according to the GDP, exchange rates, the same below), then in Turkey (equivalent to 67% in Turkey), more than Poland, Indonesia (the world's 4th largest population of the country), Belgium, Switzerland, Sweden, Saudi Arabia;
mm No. 2 and No. 3 in the Shandong and Jiangsu, economies of scale more than Norway, Austria, Iran, Greece, Denmark, Argentina;
mm Zhejiang No. 4, economies of scale over Venezuela, Ireland, South Africa;
mm ranked No. 5 in Henan economies of scale over Finland, Thailand, Portugal, Colombia;
mm ranked No. 6 in Hebei, economies of scale over the Czech Republic, Hong Kong, Nigeria;
mm ranked No. 7 and No. 8 in Shanghai, Liaoning, economic size of more than Romania, Israel, Malaysia;
mm No. 9 of Sichuan, economies of scale than Singapore, Ukraine, Algeria, Chile;
mm No. 10, Hubei, economies of scale over Pakistan, the Philippines; < br> mm number 11 in Hunan, economies of scale over the United Arab Emirates, Egypt;
mm No. 12 and No. 13 in Fujian, Beijing, economies of scale in excess of Hungary;
mm ranked 14th in Anhui economies of scale over Kazakhstan, New Zealand, Peru;
mm No. 15 and No. 16 in Heilongjiang, Inner Mongolia, economies of scale in excess of Kuwait;
mm number 17 in Guangxi, Shanxi Province No. 18, Article 19 in Shaanxi, economies of scale in excess of Libya;
mm ranked 20th Jiangxi, economies of scale over Slovakia;
mm No. 21 and No. 22 in Tianjin, Jilin, economies of scale are more than Vietnam and Morocco;
mm ranked No. 23 in Yunnan, economies of scale over Angola and Bangladesh;
mm ranked No. 24 in Chongqing, the economic size of more than Croatia;
mm ranked No. 25 in Xinjiang, economies of scale over Belarus, Sudan, Luxembourg, Qatar, Serbia, Bulgaria;
mm ranked 26 and 27 in Guizhou, Gansu, economies of scale over Lithuania, Dominican Republic, Sri Lanka, Uruguay, Panama;
mm No. 28 Hainan, economies of scale over Cyprus, Tanzania, Jordan, Bolivia, Iceland;
mm ranked 29th in Ningxia, economies of scale than of Ghana, Jamaica, Uganda;
mm No. 30 of Qinghai, economies of scale than Zambia, Honduras, Nepal, Myanmar;
mm at the bottom side of Tibet, Mongolia, the economic scale than other countries ..
look at the population. population size is an important determinant of market size. China Mobile will become the world's largest telecommunications company, is because China's large population, the rise of .200 years ago, the United Kingdom, the world's population but 10 million, accounting for 2% of the UK population, the British colony of the reasons to engage the local population size is too small; 100 years ago, the United States rise, the world's 1.6 billion population, however, the U.S. population accounts for about 5%. Today, China's population has more than 1.3 billion, almost equal to the total population of the world 100 years ago than today's developed countries is also higher than the total population of 1 / 4. This is why the Chinese market attention because countries in the world.
provincial point of view, the population of many provinces in China has great power over many of the world total population. China's three most populous provinces are Guangdong, Shandong, Henan, a population of over the Philippines, Vietnam, Germany (4th largest world economy); Ningxia, Qinghai, more than Singapore, New Zealand; Tibet is also over Mongolia.
comparison of these two areas is to illustrate the market potential of China itself how much . between provinces varied, mutually beneficial trade and division of very promising. if we can do a good job of trade between provinces in China, China itself will be able to create a world-class market. two hundred years ago, the founder of economics Adam . Smith to exclaim to: the size of the domestic market as much as all European countries combined size of the market. Now to the real development of this huge market of the time!
development of the domestic market, is inseparable from the Midwest development. In the past coastal-led economic growth and export-led growth is matching. In the future, the central and western regions will become more important. The good news is that the regional structure of China's economic growth has begun to shift to the benefit of the Midwest . reform and opening up 10 years after the first, the second 10 years, the growth rate over the middle east and the west, but in the third 10 years, especially in the past 5-6 years, the western and central growing faster than the east. the first 10 annual growth rate of the top four are: Guangdong, Zhejiang, Fujian, Shandong, all the eastern provinces; the second 10 years, the former four are Fujian, Guangdong, Zhejiang, Shandong, coastal provinces are still ; but the third 10 years ago four of Inner Mongolia, Shaanxi, Tianjin, Ningxia, the Midwest accounted for 3. Over the past 6 years, from 2003 to 2008, the first is the Inner Mongolia, Henan is the second, followed by Shaanxi , Shandong, Shanxi.
This shows China's regional economic growth is the transfer, also shows the gap between China began to shrink, so do not easily believe that the growing difference between China's claim. domestic market development, we must will lead to the eastern, central and western equalization of per capita income, the gap between eastern and western China are expected in the next round of significant contraction in 30 years, and gradually eliminate.
rely on to develop the domestic market?
general, support a national economic growth has several elements: first, protection of property rights; the second is a scientific and rational thinking; third is the development of capital markets; Fourth, transport and communications.
past 30 years, the traffic situation in China changed dramatically in 1988, only the first expressway in China (100 km), 1995 Highway is 2,100 km in China, to 2008, is already more than 60,000 km and an annual rate of 4,5 thousand kilometers increase. rough estimate, compared with 20 years, the transit time between two points reduced by 50% to about two-thirds (of course, except within cities). This is a very important thing, like 20 years ago do not think cost-effective business between the two places, now a bargain. the economic crisis, China's road construction (including highways and high-iron) into very large, which has a huge future impact of economic development. In short, lower transport costs , is bound to be more developed division of labor and exchange. Without the steam engine, railways, ships, the world economy can not be integrated. The rapid development of China Communications, China will lay a good foundation for economic integration.
However, the development of the domestic The main obstacle to the market, not the transport and communications infrastructure such hardware, but institutional costs. International trade and domestic trade, the main difference is the division of sovereignty due to transaction costs are different. As international trade between different sovereign states the emergence of currency exchange, customs inspection, customs duties and non-tariff protection and other matters, the cost of making international trade more than domestic trade costs. Therefore, reducing the costs of international trade, world economic development trends, such as the establishment of the European Union, that is, make between different European countries, .
Unfortunately, China's administrative division and the government-led economic system, so in many cases the transaction costs of domestic trade is higher than the international trade. Thus, not all regions of the comparative advantages into full play, seriously affecting development of the domestic market. This is over-dependence on exports of China's economic growth is an important reason. the future adjustment of the administrative region of China is divided, the market should respect the property of the region itself, weaken the administrative function, otherwise, people would cut off the regional administrative division of between the reasonable market division of labor. In addition, all kinds of local protection policy must be repealed. When China held high in the international free trade banner, do not forget the needs of the domestic market to free trade.
Another factor impeding the development of the domestic market is the business culture and integrity. If you ask China's export manufacturers, why 70m80% of the products are exported, rather than do the domestic market? he might answer: the domestic market difficult. The challenge is signing the contract, has paid a stock , but can not get money for a long time; and exports, as long as signed the contract, will be able to receive payment in the contract period. Therefore, some companies prefer low-priced exports, domestic customers do not want to sell at high prices, the domestic market uncertainty sex too. see, if not strengthened the rule of law, the contract is not effectively implemented, there are rampant local protectionism, then there is no confidence in the Chinese entrepreneurs to open up the domestic market.
, of course, do not think opening up is not important a. to GDP, exports accounted for the provinces, the provinces are very different, the situation in 2007 were: 91% of Guangdong, Shanghai 85.6%, 61.3%, Jiangsu, Tianjin, 57.4%, 55.4% Zhejiang, Fujian, 40%, and then other provinces, no more than ten per cent. Many provinces in the proportion of international trade is very low, only 4.7% of Inner Mongolia, Henan is China's fifth largest economy, but the proportion of exports accounted for only 4.6% of GDP, which shows in the Midwest there is a huge space development of international trade.
the future development of Chinese economy will also accompanied by urbanization. China's current urban population 45% of the total population, the reform and opening up this ratio is 18%, the next 30 years may an increase of 75%. It is not impossible, it should be said is necessary. an agricultural population accounts for the majority of countries, developed countries can not become a real economic. Over the past 30 years, China's 100 million population increase of roughly 200; future 30 years, China has 400 million people into cities from rural areas, if a city's population at 100 million calculations, China to increase such cities 400.
enterprises to make market forecasts, including real estate development, should see this point. the country's development strategies, including new rural construction, also should consider this point. Since there are so many people come to the city, but also spend so much money in the rural areas, is reasonable and cost-effective? after completing construction of those facilities, who use? spend a lot of resources, is there value? help the rural population into the city if not better? are worth considering.
industrial innovation and integration
In addition to developing the domestic market, economic development, the second change from low cost to high value-added industrial upgrading. Over the past 30 years, Chinese products to open the international market, the reason the price. The problem is that low-cost but also how long? the past three or four years, Beijing has nearly nanny wages doubled; in coastal areas, there have been , production of higher value-added products.
how the innovative capability of Chinese enterprises? in the Chinese Patent Office granted the patent in all, broadly divided into three categories: invention patents, utility model patents and design patents. which patent embodies the core competence of the rigid target, the other two types of patent somewhat , only 11% of Chinese enterprises and more; from the time series point of view, the proportion of foreign firms is much higher than China. China's many patents solely for competitions, awards, set up, technical content and very little commercial value. Chinese enterprises ability to innovate is not optimistic.
Historically, the rise of a country, along with some revolutionary technology, the emergence of industries, such as Britain's steam engine and textile industry, the German chemical industry, the U.S. automotive, electronic communications , IT industry, the technology has changed the economic structure, which changed the world. do not create new industries, countries can not become a true world economic power. However, the creation of new industries can not rely on government investment. to grasp market trends is not a government official's strong suit. There was the local government has spent heavily to introduce video recorder product line, the resulting product not yet off the assembly line, the market has been the VCR obsolete. not to mention a large number of government investment in the hidden corruption, waste, fraud opportunities.
Industry upgrade process is a market-oriented, rely on entrepreneurs to discover. the benefits of the market is always able to anticipate future trends in selected entrepreneurs to enable them to become the new industry leader. Chinese entrepreneurs need to work to see, What kind of technology can have a decisive impact on the future, what kind of industries can lead the economic development in the future. Unfortunately, however, Chinese entrepreneurs also need to spend too much energy on non-market, non-technical side, foreign entrepreneurs together discuss the industry, future of the industry structure, and Chinese entrepreneurs together to discuss the most or the political or policy issues. so to further reduce government intervention in the market.
a national innovation capacity, not the leader of one or two words can be determined. education system is especially important. We have to foster scientific and rational thinking. not the formation of the Enlightenment after the Renaissance the scientific, rational thinking, there would be the rise of the Western world. China's education has not little progress, but still too much ideological influence on people's thinking too much control, and efficiency of the education system is too low, must be big changes.
the last change, from the number of firms increased to industrial integration. general the past 30 years China's economic growth depends mainly on the new small and medium enterprises continue to increase. the crisis, China may experience growth from enterprise to enterprise-scale expansion of the number of changes, industry mergers and acquisitions (both domestic and cross-border M & M) will form a new wave, industrial concentration will be greatly enhanced. Western countries in the development of regional, large-scale multinational corporations in the crisis there is more. crisis also has a positive side. dead is completely gone; business is dead, is actually a reorganization of assets, so that assets become more effective. The state should adjust its policy in this regard, rely on loans to enterprises is not a way to save, the bankruptcy of the bankrupt to make it the only way to truly outstanding enterprises grow up and become the economic driving force.
vigilance , depending on the market-oriented reforms are not carried out in the end. the so-called market-oriented reform, that is, price liberalization, enterprise privatization, decentralization, liberalization and globalization. China's reform is not well designed or thought can be accomplished, a lot is forced out. life easier when no one wants reform, not live to think about the days of reform. Do not forget how we came to be.
to price liberalization, for example, in 1978, 100% of the industrial national pricing, roughly 15 years later, the proportion of the market pricing of industrial products accounted for 81%, to 2004, close to 90%.
there are state-owned enterprise reform. the first 15 years, the state-owned enterprise property right system has not changed, However, access by non-state enterprises, the development of state-owned economy in reducing the relative weight; after 15 years, turned to its own system of state-owned enterprise reform, including the listing and auction. the results to the urban population employed, for example, in 1978, there 78.3% of the urban population employed in state-owned enterprises, by 2006, this proportion dropped to 22.7%.
before and after the crisis, there has been a phenomenon that state-owned enterprises forced acquisition of private enterprises, it is need to guard against. In the long run, this crisis is more likely to spend money on state-owned enterprises, the more likely bankruptcy. by past experience, a few years of bad and doubtful debts of these state-owned enterprises will increase, the bank will carry out debt restructuring .1990 years ago, the state-owned enterprises to find money to banks, accumulated a large number of bad debts, ultimately, sold. has been restructured once, this is not a major crisis in China, because A few years ago has spent trillions to solve this problem. In addition, increasing the welfare state promised, future revenues can not support the normal, the only way to solve the funding problem is to sell shares in state-owned enterprises.
state-owned economy the proportion is now around 36% by 2040 should be 10% or less, whether willing or unwilling, the result could only be the case. the basic tasks of state-owned enterprises has been completed, no need to open national congress to discuss the direction problem. Those state-owned enterprises has the largest market, after only a technical, operational problems, that is, how fast reduction of the state-owned shares. institutions such as the China Central Television, the future is also likely to take the privatization. due to network, local station competition and its advantages will continue to decrease, in the end may be no one out. Taiwan is the case, the original Business short-term ups and downs, but the results of the reform over the past 30 years, the general trend of market reform has not changed. now live in a good state-owned enterprises, the basic is to make money by monopolizing the efficiency is very low; state-owned enterprises account for two-thirds of the society financial resources, but only one-third of the value created, they are after privatization, imagine what China's economic potential will be brought out.
the direction and path of political reform in emerging
developed countries, China's reform point most worth learning, is to engage in the market, and then engage in democratization. This is the place of Deng Xiaoping's wise. democratize walk in the country before the market, the effect is not very good, including India. Why did the market have to go Prior to democratization? because democracy is a political system, with the political system is forced to solve the problem, and should not be the first choice.
market decision-making and political decision-making What's the difference? For example, in a group, there 300 people want to eat, market decision-making is a personal choice, each person's preferences can be met. like all democratic political decisions by voting to eat meat or vegetarian; that if more than 50% meat, all to be eat meat. democracy is compelling way. If a country before the establishment of a good system of property rights, the government also controls a large number of resources, that democracy can solve the problem, to engage in electoral democracy, it is easy to solve the original should be left to the market decision-making to the government, not only led to efficiency loss, but will breed corruption seriously. Therefore, we should first define the role of a good range of markets and governments, as far as possible options to the market.
another one, the rise of the middle class is important. If there is no broad middle class, democratization is likely to become a populist, and even lead to mob rule. Democracy is the basis to establish the rule of law, which requires every citizen with basic civic awareness and responsibility. the middle class have a certain private property, but not rich enough to the extent of casual bullying; they are willing and able to bear the responsibility, hope and social stability, do not like chaos. If a majority of people in a free society ...