Yao Yang: China's economic growth is in a new cycle

5moon6day,The Tsinghua PBC School of Finance Chief Economist Forum is themed "2023Global Financial Turmoil and Economic OutlookThe forum, themed "Finance and Economics Research at Tsinghua University's PBC School of Finance," was held at the Tsinghua University PBC School of Finance. This forum was hosted by the Tsinghua University PBC School of Finance and co-organized by the Tsinghua University PBC School of Finance International Finance and Economics Research Center.CIFEROrganized by [organizer name], combining online and offline methods, with live streaming in both Chinese and English, and shared globally across the entire network.Professor and Dean of the National School of Development at Peking University, and Director of the China Center for Economic ResearchYao YangAttending the Roundtable Discussion"China Economic Outlook",around“China's economic growth is in a new cycle.”Share your views.

Yao YangSpeech Shorthand：

China's economic growth is in a new cycle.

Yao Yang

Zhang Yandong:Next, we would like to invite three guests to the stage. One is the president of Shanghai University of Finance and Economics, and the other is a member of the China Macroeconomic Forum.CMFThe co-founders include Liu Yuanchun; another is Yao Yang, professor and dean of the National School of Development at Peking University and director of the China Center for Economic Research; and the third is a chair professor and vice dean of the PBC School of Finance at Tsinghua University.,Teacher Tian Xuan, please come in.Professor Yao Yang recently proposed the concept of a new cycle. How do you explain this new cycle in the Chinese economy?

Yao Yang:Good morning, everyone! I believe the Chinese economy is in a new growth cycle. This new cycle can be understood from two perspectives. One is from the perspective of long-term technological cycles. You may have noticed that some economists abroad, especially in the United States, have suggested that the world has entered a period of long-term stagnation. However, in the past...5、6Over the past few years, we have witnessed the continuous emergence of new technologies, but this time China has gained a head start in these new fields. For example, in many technology areas where applications are now widespread, China holds a significant advantage.AIIn fields such as new energy, new energy vehicles, and biotechnology, China is consistently among the top performers, or even holds a dominant position.AILet's not talk about the field.AII just thought ofChatGPTThis kind of thing actually has a wider range of applications.AIIn addition to applications of automation, China is absolutely a world leader in this area. China has the most industrial robots. If you look at the automated management of cities across the country, the so-called smart city management, it's beyond our imagination. Not to mention new energy, China's advantage over the world can be described as overwhelming. In new energy vehicles, it seems that only Tesla can compete with China right now. I think it will be extremely difficult for other traditional car companies to catch up.

In some future technologies, China is absolutely not lagging behind, and is consistently among the world's leading nations. Examples include quantum computing, quantum communication, nuclear fusion, and photonic chips. When we hear about nuclear fusion, we immediately think of the largest energy level ever achieved by the Americans, which was widely circulated online. However, China actually has the longest continuous research and development period in the world for this technology.403Sstill405SThis achievement isn't widely known domestically, but it's actually a remarkable accomplishment, one that China has maintained for the longest period of time, and China is not lagging behind in these fields. Therefore, in this new technological cycle, China is at least in the leading group, if not the leader, which is very important.

Secondly, there's the issue of the inherent cycles within the Chinese economy. Since the reform and opening up, the Chinese economy has generally experienced...10A cycle of one year80During our era of high growth,90Era adjustment, the beginning of the new century10Extremely high annual growth2010After that year, we will enter a period of adjustment. If this cycle holds true, we should see that we have reached...2020This era should be a new growth cycle. Moreover, in the last round of adjustments, we have firmly established the concept of shifting from virtual to real economy. The real economy and hard technology have become the goals pursued by every enterprise. Therefore, I think from these two perspectives, we have entered a new growth cycle.

Zhang Yandong:Thank you very much. In fact, the new cycle you mentioned is driven by science and technology. China's science and technology are already at the forefront of the world. As far as I know, China and France are cooperating on nuclear fusion, and their nuclear fusion is different from that of the United States. The United States uses laser ignition. Technically speaking, I asked Bai Chunli, the former president of the Chinese Academy of Sciences, and he said that from an application perspective, there is still a long way to go. However, the US technology does have something that can ignite and generate energy, which we in China do not have, but their time is very short. So, from an overall perspective, I don't know how the scientific community views this. Whether we have reached the forefront is a question. I also saw you mention the scale of China's manufacturing industry. In terms of scale, China's scale is certainly large, but does large scale necessarily mean strength? Of course, we hope that China's science and technology will be at the forefront, but I don't know if we are so optimistic. Professor Yao Yang, what is your opinion?

Yao Yang:I remain relatively optimistic. Leaving aside technologies that haven't yet been applied, China already has a significant advantage in areas like quantum computing and nuclear fusion. Take the new energy vehicle sector, for example. As mentioned earlier, the commercialization of nuclear fusion might take decades. During this transition period, what will we use? When fossil fuels become unavailable, what will we use? Solar energy, because wind power is too scarce. China holds a dominant, if not 100%, advantage in solar energy. We firmly control this market, and the main technologies are all in our hands.

New energy vehicles may disrupt the entire gasoline-powered vehicle market. China is firmly in the leading group in the new energy vehicle sector, and is far ahead of the competition. Recent data shows that NIO is a prime example.ET7Its sales in Germany have surpassed those of BMW.3,BMW3It is the best-selling electric car in Germany, and Germans are beginning to accept Chinese electric cars. We cannot say that China is leading the world in all fields, but we can see that, at least in this visible wave of technological innovation or application, China has taken a leading position.

Zhang Yandong:Excuse me, Professor Yao Yang, you raised the issue of domestic demand at a financial index release conference a long time ago. I think you have done in-depth research on domestic demand, the private economy, and consumption. Could you share your views? I remember there were rumors online that consumption would be done in cash. Did you say that?

Yao Yang:I've been saying this for three years, and I completely agree with Professor Tian Xuan's point. There's no other way to stimulate consumption in the short term. Over the past three years, our country has focused more on the supply side in its fight against the pandemic. Of course, the supply side has its reasons; protecting market entities is important. However, if demand doesn't pick up, protecting market entities is ineffective, which is the problem Professor Liu Yuanchun just mentioned. We've reopened, and the economy is recovering, but you'll find prices aren't rising. Why aren't prices rising? Because there are many market entities, supply is still there, but demand hasn't picked up. For any country to boost consumption in the short term, there's no other way but to give everyone money. There's no other way. If you want to consume, people first need money. If incomes haven't increased for three years, people won't consume. Future expectations need to be positive; if future expectations are poor, people will consume even less. Other countries have adopted this method—giving cash.

Now that this is all in the past, and the World Health Organization declared the pandemic over yesterday, I guess we don't need to mention the cash handouts anymore. However, consumption this year shouldn't be too bad, and growth...6%、7%The problem isn't serious; things will gradually return to pre-pandemic levels by next year, with annual growth.7%、8%It is still worth looking forward to.

Zhang Yandong:One last question for all the teachers: Everyone probably agrees that domestic demand and consumption are very important and crucial levers for driving the economy. However, this leads to a paradox: when people have concerns about the future, they need government public spending on improving people's livelihoods. As the teachers have mentioned, local governments are facing this issue, and government finances are also tightening. How can this problem be solved? Only when people have no worries about the future can they spend money freely, and these worries need to be addressed by the government. How can this problem be solved?What do you think, Professor Yao?

Yao Yang:We just discussed the limited number of consumer-related measures. Given China's current unique circumstances, I'd like to mention two points that might be effective in the short term. One is the issue of the automotive industry, as Mayor Huang mentioned. Our country still has great potential in the automotive industry. I've done some preliminary calculations myself, and I think our peak car sales reached...4000Ten thousand vehicles shouldn't be a problem, we're now...3000There are still many vehicles, even with tens of thousands of units.

As Mayor Huang said, all the cities in our country are imposing purchase restrictions, which I think is unnecessary, completely unnecessary, especially for new energy vehicles. Since everyone is using new energy vehicles, why impose purchase restrictions? You could adopt some methods to encourage people to drive less. In fact, this is how it is done abroad. For example, we could impose a congestion fee, like in Singapore and London. In Beijing, you are charged to enter the Third Ring Road. If you adopt this method and don't restrict people from buying, but instead go with the flow of this wave of new energy vehicles, if purchase restrictions can be lifted on a large scale, car sales will surge.

Secondly, the real estate market is still declining, albeit at a slower pace. While real estate is now acknowledged as one of our pillar industries, our methods for addressing the decline are insufficient. Currently, local governments are pushing hard to ensure property deliveries, which, while well-intentioned, inadvertently increases moral hazard. Why not use another approach? Remove the restrictions on bank lending to real estate companies. Currently, banks are still restricted, hesitant to lend. In other words, can the demand for property delivery be transformed from an external government-driven initiative into an internal demand generated by each real estate company itself? If it becomes an internal demand, they will be willing to deliver, and there will be an incentive to do so. Furthermore, price reductions should be allowed. Currently, real estate companies are penalized for price cuts, but price reductions are a good way to stimulate the market.

Zhang Yandong:However, housing purchases are still subject to restrictions.

Yao Yang:The policy of restricting home purchases and preventing price drops is very strange. Aren't home prices high? Why can't they fall? Real estate companies would prefer to sell their properties quickly. If prices dropped to a certain level, ordinary people would buy them. Real estate has a huge impact on our consumption. After buying a house, we need to renovate it, which involves a lot of expenses. These are all major expenditures. The potential of real estate is enormous, and we should pay more attention to it.

Zhang Yandong:Finally, everyone left a message with their outlook on the Chinese economy.

Yao Yang:In short, I have confidence in the Chinese economy.