Why Should China'S Potential GDP Growth Be Less Than 6%?

Although China's economic growth trend is obvious in the first four months of this year, and most of its economic data have weakened from weak to strong, the performance of the stock market has been very weak. I am afraid this is consistent with the market. It is expected that the GDP growth rate in the first quarter may be a high point in the whole year, and it is also related to the tightness of financial regulation expected. Historically, there is little correlation between the trend of China's stock market and the economic trend: Although China's GDP growth is much faster than that of the United States, its stock market trend is far behind that of the United States. Why? economic spanition Slow and weak corporate profitability.

Over the years, China's economic growth has been in the downward process. Multiple statistics show that China's economic growth from high speed growth to the dividing line of medium speed growth is 2010. In 2010, it was not only the turning point of China's GDP growth, but also the peak of commodity prices, the number of new migrant workers in China or the growth rate of urbanization rate. It was also the highest proportion of China's second industry added value to GDP, reaching 57.4%, and now it has dropped to 39.8%.

There are many signs of economic spanformation. Let us take the two data of electricity generation and GDP as an example: in 2002, China's electricity generation and GDP were 2.8 times that of India. After that, China's power generation grew very fast, and it reached 4.1 times that of India in 2007, but GDP was still 2.8 times that of India. In 2015, China's generating capacity was 4.5 times that of India, and GDP was 5.3 times that of India. GDP was 5.3 times that of India. The above data show that the proportion of China's third industry has increased, and energy consumption is decreasing compared with GDP, while India is still in the stage of industrialization.

This means that China's economy has also undergone obvious spanformation since 2011, that is, the proportion of the third industry has begun to increase, and the proportion of advanced manufacturing and modern service industries has increased. Meanwhile, the problem of overcapacity in traditional industries is becoming more and more serious, and the number of dead enterprises has increased significantly. In the face of these problems, one way is to continue to increase investment in infrastructure, to digest excess capacity, and to give preferential financing to the dead enterprises; the other is to supply side structural reform, deleveraging, inventory and capacity. The former approach may achieve steady economic growth or even rebound in the short term. The latter should bear the downward pressure of the economy, but it will be conducive to economic restructuring.

Since 2011, the Central Committee has economic work The guiding ideology is obviously inclined to the latter approach, but from the actual operation situation, many ministries or committees have taken the previous approach, resulting in increasingly severe overcapacity, higher lever level and more and more risk of financial crisis. financial regulation Where is the logic?

For now, even 6.7% of GDP's actual growth is probably higher than the potential growth rate. As for Germany, Japan and South Korea, the three big manufacturing powers in the world, when their economy has entered a moderate growth stage, the actual GDP growth rate is almost half that of the high growth period, Germany has dropped from 7.9% to 3.1%, Japan has dropped from 9.4% to 3.7%, and South Korea has decreased from 8% to 4.6%. Therefore, China's potential GDP growth rate should be below 6%.

In addition to the exception of the "half increase" in the preceding paragraph, we must return to the "core population" factor that determines the potential of China's economic growth. Mainland China, Hong Kong and Taiwan, Japan, Korea and Singapore are all deeply influenced by the Confucian culture, and almost all have been rebuilt after World War II, but now they are among the top income countries or regions except mainland China. Why is China lagging behind? In the early stage, it was mainly dragged down by the planned economy era, and later was delayed by the family planning policy. In the future, the rate of population aging will accelerate. This is also the phenomenon of "not getting rich before the old age".

The fact that investment drives the economy makes the actual economic growth exceed the potential growth rate is obvious. GDP is just a traffic concept. The accumulated GDP can not fully form social wealth. For example, repeated digging and filling on the road can not effectively increase social wealth, but it can increase the scale of GDP and the scale of money, and at the same time hamper the economic spanformation. For those countries or regions that did not take GDP as a goal and have successfully entered a high-income economy, their economic spanformation process was relatively smooth, despite the negative growth of GDP during the period. Therefore, if we deliberately smooth the GDP growth curve, it is difficult to smooth the rising curve of the stock index at the same time, because the former is the quantity or flow index, and the latter is the quality index.

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