Secret China's largest root cause of the economic downturn

Zhou Tianyong the Central Party School, deputy director of the International Institute for Strategic Studies

 

Since entering in 2015, the economy continues downward, the first quarter GDP growth of 7%; 1-4 months, the total retail sales of social consumer goods grew 10 percent; the national fixed asset investment growth of 12%, including real estate investment rose by 6.0%. April, negative export growth of 6.2%. Economic stimulus debt conversion has taken place to improve the deficit ratio, issue special bonds and interest rates drop quasi fiscal and monetary policies. However, if you do not adjust them with the population policy, these policy measures may be difficult to have anticipated and long-lasting results.

 

ll aspects of the national economy, is the basis of human consumption, investment, exports and other activities, population growth and structural change is an important variable factor in the impact of economic fluctuations.We recently did Chinese population growth, structure and flow changes in the number of research and national economy relations, the return of the data in 2013 global 208 countries and regions, the trend is higher fertility rate and natural growth rate, GDP growth rate of Vietnam high; on the contrary, lower. Like China in 2014 fertility rate of around 1.4, the natural growth rate of 5.21 ‰, the return of GDP growth should be 3% to 5%.

 

Population growth from China, the 1987-1994 years is a steep downward curve,

After 20 years in succession will inevitably cause new labor, new entrants into the job growth has eased to reduce the income of the population, getting married lease purchase homes increased ease population decline accordingly. As a result, labor costs continued to rise, labor-intensive industries declining margins or even losses; affected export competitiveness; housing, decoration and home appliances slowing demand shrinking.

 

The 0-14-year-olds from 1999 to 31950 million, was reduced to 22 259 million in 2010, shrinking the size of close to 1 million. That is to say, from 2005 into the beginning of elementary school 2017 Elementary and junior high school education scale, the annual average of 881 million students will reduce huge. This also means that at this stage the age of negative growth of consumer groups, as well as the basis of consumption of negative growth.

 

1979-1987, due to the rural contract reform, economic growth and domestic natural countryside educated youth to get married and have children back to the city a large number of other factors, become another high growth of China's population, for 1999 to 2007, 20 years after China high economic growth, especially in rural surplus labor transfer into the manufacturing, promoting exports of processed products, stimulating economic growth, laid the basis for a huge demographic dividend.

 

But,From 1987 to 2010, due to rural-urban migration, and other market-oriented market mechanism fertility and reproductive administration plans dual regulation, fertility and population growth has rapidly declined. 20 years after it formed, in 2007 China's economic growth downward pressure on the larger consequences.

We return to these two sets of data, even highly correlated.

 

2007, entered the working-age population growth slow, or even reduce, rising wages and social security and other costs tied, the competitiveness of Chinese manufacturing exports gradually lost the advantage. In fact, the consequences of population change in 2008 China's economic growth started down the inner, is caused when the external US subprime mortgage crisis overshadowed by the global economic crisis and confusion. 2009 M2 and loans are a big bang expansion, also implemented a very loose fiscal policy, however, after the 2010 and 2011 high growth, the growth momentum has continued downward.

 

That year, the United States has implemented a strong fiscal and monetary stimulus policies, its manufacturing, employment, stock market, real estate and other gradual recovery of the economy up to the present. The birth and growth of population, the United States in recent years, the fertility rate is around 2, the natural population growth rate of more than 7 ‰, higher than China's current level, more balanced population of all ages. Japan after the US subprime crisis and European sovereign debt, fell into the doldrums. Abe also use expansionary fiscal and quantitative easing monetary policy to stimulate economic growth, however, the fertility rate is 1.4, the growth is negative. In 2014, its GDP growth rate is practically zero. Japan scholars have commented that the central bank can print money, but not the consumer printing money.

 

On China's population growth data, from 1994 to 2006, is still a relatively steep downward curve.2014 population growth rate in the low level of 5 ‰; the current fertility rate is only about 1.4; a rapidly aging population structure, meaning that the national economy will be a sharp rise in pension costs, export competitiveness will deteriorate further.

 

In addition, migration and urbanization, economic growth is an important driving force in developing countries. From China's current nominal and real level of urbanization of view, respectively, 54.77% and 30%. Advance to 70 percent, according to the general experience of the world, there should also be a high growth of the national economy during the 10-15 years. However, China rural to urban migration, and most other countries internationally. From the data, the last two years 270 million migrant workers, with its population of around 300 million migrant families, workers buy homes in less than 1%, and so on around the county to buy a house in his hometown near 14%; migrant workers in the city to purchase The price earnings ratio, the national average of 10 or more, cities and urban is even higher. From 2015 the housing stock in town looking at 3 to 330,000,000 units, remove the population of migrant workers to buy houses in towns, about 140 million urban households, the average household has two houses, the supply has been a serious surplus. 2015 married population decline in demand for housing; with accelerated aging, the population increased mortality, increased residential one-child inheritance; future urban residential problem of excess will be more severe.

 

These data mean? Is China's rural population, youth from the home out to the town to workers; they only force strong, the town works for decades to work, old age, 85% in rural areas or to reflux. Farmers in building residential towns, in addition to urban residents actually live, as their investment property.In other words, 85 percent of the urbanization process has been interrupted, if not adjusted, never again have drivers of the so-called economic growth.

 

As can be seen, the national economy in such a basic pattern of population growth and liquidity under the fiscal and monetary policy to stimulate it, slight bit; after stimulation, will continue downward, the minimum is likely to fall into the range of 3% -5% and into a prolonged downturn in the range.

 

Of course, the response to these national economy down, we can use the knowledge and talent to play a role in promoting overseas talent to return innovation and entrepreneurship, to encourage domestic entrepreneurship and innovation residents, promote technological progress and industrial innovation, in order to strive for a higher level of growth in the external market opening and even into the development of robotics in the field, to support the extension of working age. But, I think,It must be adjusted for population growth and mobility policy, in order to meet these long-term strategies and measures, as well as short-term fiscal and monetary policies on the basis of the national economy gradually restore prosperity.

 

First, in 2016 canceled as soon as administrative family planning, to stop social compensation fee collection. After the implementation of the so-called adjustment alone two children, it had expected 2014 growth 2 million people, but only one million pairs of couples declared, only 470,000 real fertility. I believe that, even if the full liberalization of fertility due to China many families can not cope with limited income higher fertility raising costs, plus about 8 percent of women infertility, as well as with South Korea, Japan and Taiwan to encourage the growth of the degree of difficulty to see , increasing China's new-born population, it may not be optimistic.

 

Social compensation fee, in fact, is not born by the provisions of a tire, over urban and rural residents of the one-child or two-child, especially a tax levied on farmers, on the scale of between 20 billion to 30 billion yuan. Reform and opening up the medium-term, a number of self-employed and small and medium enterprises, farmers founded. Assessments for this purpose, most funds to support the family planning sector and grass-roots government, become a burden on the national economy; the contracted farmers to send their children to school and other aspects of the spending power, but also greatly reduced the farmers' venture capital. After the mid-1990s, the founder of the self-employed farmers and SME growth slowed down, or even negative growth in some places. Therefore, the abolition of social compensation fee collection itself is to reduce the tax burden and stimulate consumption and investment start a fiscal policy.

 

Adjustment of population policy, and gradually restore fertility to 2.In the short term, increase the baby will gradually increase gestation, maternity, babies, young children and other consumer; milk, toys, children, preschool and other expenses will increase, supply will expand these consumer goods production; the nanny and other housekeeping service needs will increase; facilitate small family life and the elderly need quiet, housing demand will increase as a result of increased population. From the long-term perspective, primary, secondary education and gradually will recover, and the University of excessive period of time, increasing their students into the school. Moreover, at this stage of consumption will form from small to multi-cumulative growth, the fight against excessive downward economy. From the long-term perspective, in 2016 20 years after the start of the workforce gradually restored, China's economy to avoid a certain degree of revival, sustained recession and secondary decline.

 

Secondly, migration policy adjustment is not suitable for the reform of household registration liberalization process indecisive, but completely open residence,Forced reform to education, social security and other public services, system migration and urbanization adaptation needs; the reform of rural land system, determine the farmers' land property rights, can trade, no matter what the program, the results need to enable farmers to get reasonable property income; reform construction land, expropriation of rural and peri-owned by the government administrative oligopoly land sales, the collective construction land, provided that they meet the planning, can be through non-governmental and government-regulated market transactions directly into the construction market ; collective land can also be through shares, rent, etc., into the building.

 

Only such a policy, in order to make the rural population like Japan, South Korea and Taiwan, have a venture capital capability, the ability to purchase residential towns, equal access to government education, social security and other public services into the town; to the land and housing prices under control, so that farmers in the workers to buy houses; in order to make the process of urbanization basic interrupted recover, re-growth of the national economy to get migration and urbanization driving force.

 

The economic downturn, is a long-term problem. Require fiscal and monetary policy and population policy adjustment mate, short-term and long-term strategic measures policy coordination, to governance, there is hope that the national economy has maintained at 6% to 7% growth in the high range;Otherwise, based on population trends, economic growth is likely to continue downward, down to 3% to 5% of depressed levels.