The 19th National Congress of the Communist Party of China clearly pointed out: "China’s economy has shifted from a high-speed growth stage to a high-quality development stage, and it is in the key period of changing the development mode, optimizing the economic structure and transforming the growth momentum. Building a modern economic system is an urgent requirement for crossing the barrier and a strategic goal for China’s development." 2018 is the first year to implement the spirit of the 19th National Congress. In accordance with the ideas and requirements of high-quality development set by the 19th National Congress of the Communist Party of China and the Central Economic Work Conference, we should concentrate on major events that are beneficial to both the present and the long term, and achieve higher-quality, more efficient, fairer and more sustainable development by improving efficiency, so as to lay a solid foundation for the construction of a modern economic system.
First, the basic judgment of economic trends
The global economy has moved from "new mediocrity" to "slow recovery", and the external environment has improved. Most of the comprehensive leading indicators of developed economies and emerging market economies have stabilized and improved, indicating that the global economy is gradually coming out of the trough, and the trend of world economy from differentiation to synchronous recovery is more obvious. From the perspective of developed economies, positive factors such as active manufacturing industry, strong financial market, and generally good employment and inflation situation are expected to continue, with major developed economies such as the United States, Japan and Europe heading for 2.0%— The growth range of 2.5% is close. From the perspective of emerging market economies, favorable factors such as warmer trade, improved market investment environment and relatively stable commodity prices are expected to continue, with emerging markets and developing economies heading for 4.0%— The growth interval of 4.5% converges. The International Monetary Fund and the World Bank have steadily raised their global economic growth forecasts for 2018, and they are also optimistic about China’s economic growth. The global economy has improved more than in 2017, and external demand has accelerated export growth, creating a favorable external environment for China’s economic growth than in the previous two years.
Domestic supply and demand have formed a "rebalancing" trend, and the coordination of development has been continuously enhanced. China’s economy has been going down for six consecutive years, but it has always kept running in a reasonable range. From the supply side, the development of traditional industries and emerging industries tends to be more coordinated, industries tend to be stable after de-capacity, the proportion of emerging industries and service industries increases steadily, and their contribution to economic growth increases. It is estimated that the added value of industries above designated size and tertiary industry will increase by about 6.5% and 7.8% respectively in 2018. The growth of the "Troika" on the demand side is more balanced, the reduction of investment growth rate is basically in place, the momentum of consumption upgrading remains unchanged, exports continue to pick up, and the growth rates of the three major demands tend to be synchronized. 1— 2017; In November, investment in fixed assets, total retail sales of social consumer goods and exports increased by 7.2%, 10.2% and 8.0% respectively, down by 1.1 percentage points, down by 0.6 percentage points and accelerated by 15.5 percentage points respectively compared with the same period in 2016. It is estimated that investment in fixed assets, total retail sales of social consumer goods and exports will increase by 8.0%, 10.2% and 7.0% respectively in 2018.
The market continues to show a stable phenomenon of moderate prosperity. The overall price level will be moderate and controllable, and the sufficient supply of agricultural products will create conditions for the basic stability of prices. There are not many new price increase factors in industrial products and services, the terminal demand of important commodities is relatively stable, and the pressure of imported inflation is weak. 1— 2017; On average, the producer price (PPI) and consumer price (CPI) in November increased by 6.4% and 1.5% respectively year-on-year, up by 8.4 percentage points and down by 0.5 percentage points respectively compared with the same period in 2016, ending the situation of "expansion and contraction coexisting" for many years. It is estimated that the inflation level (CPI) in 2018 may be slightly higher than that in 2017, and there will be no obvious increase. After a certain degree of fluctuation in the past two years, the market will return to rationality, and the five major markets will maintain a stable operation overall. The production and sales of the automobile market have returned to a stable growth pattern, the "just-needed" and improved demand of the property market are well supported, the stock market has shown signs of "slow cattle", the bond market continues to be calm, and the two-way floating foundation of the RMB exchange rate is relatively solid. The great potential and resilience of China’s economy, supplemented by a good market and price environment, provide a basic guarantee for the economy to maintain a stable and positive development momentum.
The macro-policy orientation is moderate, and the sustainability of development is guaranteed. In 2018, we must still adhere to the general tone of steady progress, and the orientation of a proactive fiscal policy and a stable and neutral monetary policy will not change. From the perspective of monetary policy, the era of global monetary policy is basically over, and China’s monetary policy will gradually turn to overall tightening. However, according to changes in the situation, various policy tools will be flexibly used to inject reasonable liquidity into the market. From the perspective of fiscal policy, optimizing fiscal expenditure structure and structural tax reduction are still the policy priorities, and we will still make a fuss about making up shortcomings and reducing costs. In recent years, China has comprehensively promoted the pilot reform of the camp, and the accumulated tax reduction has exceeded one trillion yuan, and investment in short-board areas such as agriculture, transportation, water conservancy, environmental protection and public facilities has been significantly strengthened. In addition, the supply-side structural reform has entered a new stage of paying equal attention to "addition and subtraction", paying more attention to the institutional supply of reform and the coordination and matching of reform, so as to improve efficiency and promote both "stock optimization" and "incremental improvement" of the supply system and promote high-quality economic development. These policies are conducive to accelerating the continuous transformation of old and new kinetic energy in the structural optimization of the economy, and the simultaneous efforts of old and new kinetic energy provide a solid foundation for the economy to maintain a stable and healthy operation. It is estimated that China’s GDP will increase by about 6.8% in 2018, which is basically the same as that in 2017.
Second, the outstanding problems in economic operation
At present, the structural contradictions that restrict the stable and healthy operation of the economy are still outstanding, and the problem of insufficient development imbalance has not been solved. Mainly in the following six aspects.
(A) the real economic benefits are low
The profitability of entity enterprises is not strong. At present, the profit rate of main business income of industrial enterprises is only about 6%, which is far lower than the average profit rate of more than 15% in the financial sector, and a large number of enterprises in some industries have been losing money for a long time. In 2017, the profit growth of entities rebounded significantly, but the profit growth rate in the past five years did not reach the 2011 level. Under the double squeeze of internal and external, rising costs and insufficient innovation have become the key factors restricting the transformation and upgrading of entity enterprises.
(B) Investment efficiency tends to decline.
In the first three quarters of 2017, the total investment in fixed assets in the whole society accounted for 77.3% of GDP. The rapid expansion of investment scale brought about a significant decline in the marginal efficiency of investment, mainly reflected in the substantial increase in the incremental capital output ratio (ICOR). 2007— In 2016, the total amount of capital formation required for new unit GDP increased from 2.21 to 6.11, and the investment cost of creating unit output in China increased by about 2.8 times in the past 10 years. This high investment model is being constrained by the high local government debt and the decline of private investment enthusiasm.
(C) Financial services to the real economy is not strong.
The imbalance in the allocation of financial resources is mainly manifested in the fact that the main service targets of the financial system dominated by state-owned banks are still state-owned enterprises and large and medium-sized enterprises, and private enterprises, especially small and micro enterprises, have been marginalized for a long time. At present, the number of small and micro enterprises in China accounts for more than 75% of the total number of enterprises, but the proportion of credit received is less than 20% for a long time. The problem that funds are divorced from reality is prominent. The main performance is that the manufacturing industry accounts for about 30% of GDP, and the credit funds obtained from financial institutions are less than 20%, while the credit funds are concentrated in real estate, local government financing platforms and other fields, accounting for more than 30% of the total, and some funds are idling within the financial system by adding leverage. The financial organization system, service system and supervision system are imperfect, which seriously restricts its initiative and initiative in serving the real economy.
(D) Policy tightening effect may bring economic fluctuations.
All localities have strengthened real estate regulation and control policies. In addition, the trend of monetary tightening and environmental protection policies have maintained a high-pressure situation, and the management of financial chaos has become stricter, which may lead to an increase in the risk of fluctuations in the real estate market, the rigid redemption of financial markets has been broken, the problem of difficult financing has become more prominent, and the overall compatibility and coordination of the industrial chain has declined. Resonance effect and chain reaction may lead to changes in social expectations and even trigger panic in some areas.
(E) the people’s livelihood security policy is ineffective.
The structural contradiction of employment is prominent, the phenomenon of "labor shortage" and "employment difficulty" coexist for a long time, the vocational skills of laid-off workers do not meet the needs of re-employment posts, the number of low-end jobs in traditional industries is reduced, and the shortage of high-skilled talents is more serious; There is a structural mismatch in the employment of college graduates, and the "quantity" and "quality" of employment do not match. The task of getting rid of poverty is very arduous, the cost of getting rid of poverty is higher and more difficult, the stability of getting rid of poverty is not enough, and the risk of returning to poverty due to illness, school and disaster still exists. The pressure of social security fund’s balance of payments has increased, and the areas where the pension fund can’t pay for the current period have increased, and the pressure of pension payment has increased.
(six) the impact of external uncertainty still exists.
The Trump administration tax reform in the United States has been passed, and it is expected to be implemented in 2018. Britain, France and other countries are also planning large-scale tax reduction policies, which may put continuous pressure on China to attract international capital. The attraction of the United States to the manufacturing industry will squeeze the development space of China’s real economy. Trade protectionism continues to rise, and the United States, Europe, India and other countries and regions have launched "double-opposition" investigations against China, and related actions may trigger other countries to follow suit, which will make it more difficult for China to deal with trade frictions. The geopolitical situation is unstable, and issues such as the Korean Peninsula, Palestine, Israel and Syria continue to ferment, which may affect the construction of the "Belt and Road" and international capacity cooperation.
III. Policies and Measures to Achieve the Economic Work Target in 2018
The Central Economic Work Conference pointed out that promoting high-quality development is the fundamental requirement for determining development ideas, formulating economic policies and implementing macro-control at present and in the future. Considering the short-term, medium-term and long-term convergence of economic objectives and tasks, we should take efficiency improvement as an important starting point of economic work in 2018, focus on major events that are beneficial to both the present and the long-term, achieve higher quality, more efficient, fairer and more sustainable development through efficiency improvement, and lay a solid foundation for the construction of a modern economic system.
(1) Reduce costs and burdens for enterprises and improve the real economic benefits.
In the past two years, the five major tasks of "three to one, one reduction and one supplement" have achieved remarkable results, which have promoted "stock optimization" and "incremental improvement". At present, the supply-side structural reform has entered a new stage from "subtraction" to "addition and subtraction". To deepen the supply-side structural reform, we should start from the fundamental interests of market players and solve practical difficulties. Vigorously reduce the cost of entity enterprises, increase structural tax reduction, focus on reducing the tax burden level of manufacturing value-added tax, enterprise-related service charges, "five insurances and one gold" payment rate that enterprises are eagerly awaiting, clean up unreasonable hidden costs such as intermediary fees, financial expenses and institutional transaction costs attached to enterprises, deepen the reform of electric power, oil and gas, railways and other industries, and reduce energy consumption and logistics costs. Enhance the innovation ability of entity enterprises. At the macro level, through policy support, we will formulate an action plan for the development of innovative industries, promote the transformation of scientific and technological achievements, improve the soft environment such as market competition and intellectual property protection, implement the policy of protecting property rights, and stimulate entrepreneurship; At the micro level, it helps enterprises in the real economy to use new technologies, new models and new methods, establish modern management systems, improve management and technical level, tap potential and increase efficiency in a market-oriented way, and improve labor productivity.
(B) in the "short board" to activate the vitality of private capital, improve investment efficiency.
Optimizing the government investment structure and stimulating the vitality of private investment pay equal attention to creating more and higher quality economic output with the same capital investment. We will implement a proactive fiscal policy, increase investment in key areas and weak links such as industrial development shortcomings, industrial development standards, people’s livelihood, environmental protection, reduce budget arrangements for projects with low performance, and increase balanced transfer payments and financial subsidies for difficult areas. We will fight a tough battle against pollution and continue to strengthen investment in ecological civilization construction such as air pollution prevention and control and land greening. Formulate supporting policies and implementation rules for private investment as soon as possible, further relax market access, enhance the willingness of private capital to participate in PPP and other projects, boost private investment confidence and release effective investment potential.
(3) Overcoming difficulties and improving the reform performance in key areas
The reform has entered a deep-water area and a critical period, and its complexity, sensitivity and arduousness are unprecedented, especially in the areas of administrative system, state-owned enterprises and income distribution. It is necessary to strengthen the implementation of existing policies. In particular, we should deepen the reform in streamline administration, delegate power, strengthen regulation and improve services and further improve the system of power list and responsibility list. Accelerate the promotion of negative list management pilot, establish a government regulation toolbox for traditional industries, and innovate prudential supervision methods for new industries, new formats and new models. Combine the reform of state-owned enterprises with "deleveraging", accelerate the reform of mixed ownership of state-owned enterprises and the management system of state-owned capital, promote the bankruptcy and reorganization of zombie enterprises with long-term losses and insolvency, and improve the efficiency of state-owned capital investment. Vigorously promote the reform of the income distribution system, standardize the income distribution system of farmers’ land circulation, and increase farmers’ property income. Establish an open and fair comprehensive evaluation mechanism for factor utilization efficiency, establish and improve the support and guarantee mechanism for financial and talent factors and the convenient and efficient factor trading mechanism. Accelerate the market-oriented reform of factor prices, integrate and upgrade the functions of factor trading platforms, and promote the free trade and market-oriented allocation of resource elements such as land, emission rights and energy use.
(D) communication channels to prevent risks and improve the efficiency of financial services to the real economy.
We should flexibly use all kinds of short-term and medium-term policy tools to serve the needs of the real economy. Optimize the credit allocation structure, establish a linkage mechanism between financial and real economic interests, expand the pilot scope of investment and loan linkage, accelerate the development of various regional small financial institutions, community financial service organizations, village banks and other financial entities at their own risk, actively develop platforms and channels for direct financing services, steadily develop financial derivatives, and expand the financing space of entity enterprises. We will fight hard to prevent and resolve key risks, improve the efficiency of financial supervision and the ability to prevent risks, closely monitor the risks that may be brought about by financial format innovation, and study and introduce supporting policies such as expanding the transfer scope of non-performing loans in the banking industry, improving batch transfer and expanding the autonomy of non-performing loans write-off.
(5) Develop the digital economy and cultivate new industries, new formats and new economic models.
The 19th National Congress proposed to build a modern economic system, mainly to solve how the real economy can realize the deep integration of digital economy and real economy by using big data, internet plus and artificial intelligence. The so-called digital economy actually refers to the application of digital knowledge and technology in economic activities. Looking at the development of digital economy from the global and China perspectives, in 2016, the digital economy accounted for 25% of the total global economy, and a quarter of production organizations were related to the digital economy. China’s digital economy is ahead of the world. At present, the scale of digital economy in China has reached more than 22 trillion yuan, accounting for more than 30% of the total GDP. Globally, the digital economy has developed mainly in the United States, China, Japan and Britain.
To develop digital economy, we need a good policy environment first. Preferential policies have played a great role in promoting the development of digital economy in various places. Relatively speaking, the policies of the Yangtze River Delta and other pre-developed areas are favorable for promoting the development of digital economy. The second is talent. The development of digital economy needs high-end talents. Some regions have many effective policies in attracting talents, which have played a great role in promoting local talent gathering.
(six) to promote technological innovation and promote the transformation and upgrading of manufacturing industry.
In January 2018, the National Development and Reform Commission issued the "Three-year Action Plan to Enhance the Core Competitiveness of Manufacturing Industry (2018-2020)" (hereinafter referred to as the Action Plan), which plans to organize and implement key technologies in key areas such as rail transit equipment, high-end marine and marine engineering equipment, intelligent robots, smart cars, modern agricultural machinery, high-end medical devices and medicines, new materials, manufacturing intelligence and major technical equipment in the next three years.
To enhance the core competitiveness of manufacturing industry in the future, we should pay attention to the following three aspects. The first is the upgrade in the value chain, that is, the horizontal upgrade. Extending from manufacturing section to upstream, that is, advancing to R&D, design, creativity and standards, such as rail transit equipment industry; Extending downstream from the manufacturing section, that is, promoting to brands, channels, logistics and services, such as household appliances industry. The second is the upgrade on the value network, that is, vertical upgrade. Even in the manufacturing sector, it has been upgraded from a module supplier to a system integrator, and further upgraded to a rule designer, such as high-end ships and major technical equipment industries. The third is the innovation in value integration, that is, to create an "industry of the times". There have been major breakthroughs in the knowledge, informationization, intelligence, greening, service and human culture development of the manufacturing industry, and even the effect of "overtaking in lane change and overtaking in lane change" has taken place, and intelligent robots and other fields have been at the forefront of the world.
(7) Further explore new paths of opening up and coordination, and improve the effectiveness of two-way opening up and regional development.
Promote the formation of a new pattern of comprehensive opening up, relax market access in an orderly manner, continue to streamline the negative list and promote the pilot reform of the free trade pilot zone. We will implement the results of the first "Belt and Road" international cooperation summit forum, run the first China International Import Expo, and comprehensively improve the level of economic and trade cooperation with countries along the Belt and Road. Accelerate the docking with key national plans, platforms and projects such as Pakistan and Russia, and promote the construction of the main skeleton of "six corridors, six roads, multiple countries and multiple ports". Steadily promote the capital increase of Silk Road Fund and the establishment of capacity cooperation fund, promote the implementation of a number of influential capacity cooperation projects, and build a number of demonstration parks and demonstration bases. We will implement the strategy of regional coordinated development, accelerate the construction of major projects in key areas of ecology, transportation and industry in Beijing, Tianjin and Hebei, complete the planning of xiong’an new area with high quality, and push forward the construction vigorously, orderly and steadily. Do a good job in the construction of "one corridor, two corridors and three groups" in the Yangtze River Economic Belt, and comprehensively improve the quality of economic development and the ability of sustainable development in this basin.
(8) Take concrete measures to promote employment and benefit people’s livelihood, and improve the effectiveness of social security policies.
Safeguard the bottom line of people’s livelihood and promote social harmony and stability. Carry out vocational skills training on a large scale, provide accurate employment assistance to people with special difficulties, actively explore new employment channels, encourage entrepreneurship to promote employment, and promote multi-channel employment and entrepreneurship of young groups such as college graduates and new generation of migrant workers. We will fight a tough battle against poverty with precision, focus on deep poverty-stricken areas, adjust measures to local conditions, make decisions according to people, households and villages, highlight industrial poverty alleviation, organize ex situ poverty alleviation and relocation, increase cooperation in poverty alleviation services, implement education poverty alleviation and health poverty alleviation policies, and reduce the number of poor people by 11 million. Make overall plans to promote the provincial-level coordination of endowment insurance, clean up and standardize the payment policy of endowment insurance, implement the central adjustment system of basic endowment insurance funds, and balance the burden of endowment insurance between regions. Efforts should be made to solve the problems of "school choice fever", "large class size", infant care and early childhood education services. We will speed up the establishment of a housing system with multi-agent supply, multi-channel guarantee and simultaneous rent and purchase, and improve the long-term mechanism to promote the stable and healthy real estate market.
(The author is a researcher and doctoral supervisor of the Institute of Economics of China Academy of Social Sciences, former director and secretary of the Party Committee of the Institute of Economics of Chinese Academy of Social Sciences, and a member of the evaluation group of theoretical economics in the State Council).
