yusheng
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Wen Tiejun: why can China Overcome crisis?
Where is exactly China's real advantage? We often say "Chinese national conditions", "Chinese characteristics", but what really they are?
…….
5, China's experience in solving the crisis
One story
China's previous export tax rebate is 13% meaning that the Chinese government gave financial subsidies to overseas consumers 13%. Right? When the financial crisis broke out in 2008, foreign trade went down. Colour TV sets, refrigerators, washing machine, cars are all in the storehouse. What should I do?
The central government turned 13% of the export tax rebate to encourage farmers to buy the goods. As long as you are rural household register, the price discount of 13% was granted immediately, and the preferential policies were only available by the end of 2010! As a result, peasant TV ownership rate is up to 104 units per 100 household! In this way, relying on the huge purchasing power of peasants, crisis of export was overcome.
However, this is still a small policy, only to subsidize foreign consumers to subsidize the old Chinese peasants
What is the premise of this policy?
To use a color TV you need a TV network. to use a washing machine you need water don't you? You have to have electricity to buy the refrigerator, right? As soon as Wen Jiabao came to power, he attached great importance to the interests of farmers. From the beginning of his term as prime minister, the government made great efforts to promote the “construction of new countryside”.
Wen Jiabao put forward new rural construction at the September 2005 meeting of the Political Bureau in 2006 he began to increase investment in rural areas in a large scale. 2006-2009, over trillions of yuans has been invested. by 2015, investment up to dozen trillion yuans This is a historic massive investment hitherto unknown, not only to resolve the overcapacity in the city, but also to realize the balance of urban and rural again.
But investment in rural infrastructure has little to return. Is that private capital going to try? Of course not. Who can do it? Only country.
For example, the national grid expanding to rural power suffer 80% line loss rate, the national grid took the burden, if it become bad debts, and then national bank took together. When we hear that state-owned enterprises are not efficient, it is half right, half wrong.
National net grid company could not collect more electricity charge because grid here spend more 80% , farmers will not accept it. Same happen in water supply, telephone, broadband, country invest and do the all “rural five links”. No private capitals do that even with subsidies, the return rate is too low, recycling period is too long.
China has increased most of its liquidity to infrastructure. As long as there is room for investment, you win, no room for loss. So Yifu Lin, the world bank ex president, told everyone that China still had 20 years of high growth because our inland space is vast,
………
6, the reform of ecological civilization
More than once, we have entered into the same crisis as the western capitalist overproduction in the past 1929-33 years.
The first overproduction crisis occurred in 1997 after the East Asian financial turmoil in 1998. domestic economists openly discussed China's overproduction crisis, and the only possible solution was Roosevelt's new deal. I remember the Beijing Economic Center, when I was in the policy department, I saw the reports they submitted. What was the problem China faced after the financial crisis? Answer: Overproduction.
Western overproduction is the main cause of the two World War. If China does not want to fight, it will have to build new countryside. If so, the new rural construction is a new policy of Roosevelt with Chinese characteristics. Therefore, the Western way to solve the problem of overcapacity is the war, and China's means of solving excess production capacity is the construction of new countryside. The main way out of the crisis depends on the investment of national debt and the construction of new countryside.
China has experienced overproduction crisis in the past two times since the late 90s.
Since it has suffered two consecutive stages of industrialization overproduction crisis, and overcome the crisis by coordinating its large geographic advantage. Now what is the new adjustment under collective leadership for the next crisis? Answer is Ecological civilization.
(I omitted a deep theoretical analysis of economic ecological civilization)
Just story:
I tell a story of my own as an independent director of the Agricultural Bank of Chinese, we have a board of directors to discuss an investment project, because the European Photovoltaic Industry sued China by anti-dumping, all export orders were torn up, that is not the trade barriers, if you believe that the market economy, the Chinese photovoltaic industry should be sorry. Immediately bankruptcy, all loans should become bad debts, then all the workers all fired, this is the market economy, right? What about China? The State Council issued an order to build four stated owned commercial banks to compose a syndicated loan, maintaining the Chinese photovoltaic industry.
When will it end? The loan maintained until the resumption of overseas markets appears. Today China PV industry is still the world's first, right? To maintain “counter-cyclical adjustment”, country took the unlimited responsibility for economic security. So what is the economic base of such unlimited responsibility?
As an intellectual, my head are full of freedom, democracy, equality and fraternity. However, the Chinese nation is faced with such severe global challenges; can we listen to those ideas in our hearts only? Have to see how the country do ?
According to the general principle of political economics, economic foundation decides superstructure, therefore, as political reform, many people think that the government should reform into the west style, which is the limited government, no tax, will shut down, even bankruptcy. Look at Detroit, the place where I studied in the United States, and even the police stopped. Why? No financial, this is called limited liability government. Do you like a such government?
And again, do any of you believe that the four Chinese basic banks will fail? Why doesn't anyone believe it? Because of that moment they must have been bankrupt several times, the most typical time was the 1997, 1998, the outbreak of the Asian financial crisis, suddenly, their non-performing assets were all above 1/3, supposedly immediately bankrupt, if advocating market economy. How did China do? The central government established four major asset companies, all the bad assets buyout, and then injected, so that they become in line with the Basel agreement banks, and then restructuring into commercial banks.
So why do state-owned enterprises bear the state's unlimited responsibility? Because more than 80% of the capital is state owned. When we open the board of directors, the president of the bank, the chairman will tell you clearly, major shareholders decide, and who is the major shareholder? Country. All other investors add up to less than 20%. The majority shareholder is the state; of course, the state’s will is the people’s will. That is communism.
Where is exactly China's real advantage? We often say "Chinese national conditions", "Chinese characteristics", but what really they are?
…….
5, China's experience in solving the crisis
One story
China's previous export tax rebate is 13% meaning that the Chinese government gave financial subsidies to overseas consumers 13%. Right? When the financial crisis broke out in 2008, foreign trade went down. Colour TV sets, refrigerators, washing machine, cars are all in the storehouse. What should I do?
The central government turned 13% of the export tax rebate to encourage farmers to buy the goods. As long as you are rural household register, the price discount of 13% was granted immediately, and the preferential policies were only available by the end of 2010! As a result, peasant TV ownership rate is up to 104 units per 100 household! In this way, relying on the huge purchasing power of peasants, crisis of export was overcome.
However, this is still a small policy, only to subsidize foreign consumers to subsidize the old Chinese peasants
What is the premise of this policy?
To use a color TV you need a TV network. to use a washing machine you need water don't you? You have to have electricity to buy the refrigerator, right? As soon as Wen Jiabao came to power, he attached great importance to the interests of farmers. From the beginning of his term as prime minister, the government made great efforts to promote the “construction of new countryside”.
Wen Jiabao put forward new rural construction at the September 2005 meeting of the Political Bureau in 2006 he began to increase investment in rural areas in a large scale. 2006-2009, over trillions of yuans has been invested. by 2015, investment up to dozen trillion yuans This is a historic massive investment hitherto unknown, not only to resolve the overcapacity in the city, but also to realize the balance of urban and rural again.
But investment in rural infrastructure has little to return. Is that private capital going to try? Of course not. Who can do it? Only country.
For example, the national grid expanding to rural power suffer 80% line loss rate, the national grid took the burden, if it become bad debts, and then national bank took together. When we hear that state-owned enterprises are not efficient, it is half right, half wrong.
National net grid company could not collect more electricity charge because grid here spend more 80% , farmers will not accept it. Same happen in water supply, telephone, broadband, country invest and do the all “rural five links”. No private capitals do that even with subsidies, the return rate is too low, recycling period is too long.
China has increased most of its liquidity to infrastructure. As long as there is room for investment, you win, no room for loss. So Yifu Lin, the world bank ex president, told everyone that China still had 20 years of high growth because our inland space is vast,
………
6, the reform of ecological civilization
More than once, we have entered into the same crisis as the western capitalist overproduction in the past 1929-33 years.
The first overproduction crisis occurred in 1997 after the East Asian financial turmoil in 1998. domestic economists openly discussed China's overproduction crisis, and the only possible solution was Roosevelt's new deal. I remember the Beijing Economic Center, when I was in the policy department, I saw the reports they submitted. What was the problem China faced after the financial crisis? Answer: Overproduction.
Western overproduction is the main cause of the two World War. If China does not want to fight, it will have to build new countryside. If so, the new rural construction is a new policy of Roosevelt with Chinese characteristics. Therefore, the Western way to solve the problem of overcapacity is the war, and China's means of solving excess production capacity is the construction of new countryside. The main way out of the crisis depends on the investment of national debt and the construction of new countryside.
China has experienced overproduction crisis in the past two times since the late 90s.
Since it has suffered two consecutive stages of industrialization overproduction crisis, and overcome the crisis by coordinating its large geographic advantage. Now what is the new adjustment under collective leadership for the next crisis? Answer is Ecological civilization.
(I omitted a deep theoretical analysis of economic ecological civilization)
Just story:
I tell a story of my own as an independent director of the Agricultural Bank of Chinese, we have a board of directors to discuss an investment project, because the European Photovoltaic Industry sued China by anti-dumping, all export orders were torn up, that is not the trade barriers, if you believe that the market economy, the Chinese photovoltaic industry should be sorry. Immediately bankruptcy, all loans should become bad debts, then all the workers all fired, this is the market economy, right? What about China? The State Council issued an order to build four stated owned commercial banks to compose a syndicated loan, maintaining the Chinese photovoltaic industry.
When will it end? The loan maintained until the resumption of overseas markets appears. Today China PV industry is still the world's first, right? To maintain “counter-cyclical adjustment”, country took the unlimited responsibility for economic security. So what is the economic base of such unlimited responsibility?
As an intellectual, my head are full of freedom, democracy, equality and fraternity. However, the Chinese nation is faced with such severe global challenges; can we listen to those ideas in our hearts only? Have to see how the country do ?
According to the general principle of political economics, economic foundation decides superstructure, therefore, as political reform, many people think that the government should reform into the west style, which is the limited government, no tax, will shut down, even bankruptcy. Look at Detroit, the place where I studied in the United States, and even the police stopped. Why? No financial, this is called limited liability government. Do you like a such government?
And again, do any of you believe that the four Chinese basic banks will fail? Why doesn't anyone believe it? Because of that moment they must have been bankrupt several times, the most typical time was the 1997, 1998, the outbreak of the Asian financial crisis, suddenly, their non-performing assets were all above 1/3, supposedly immediately bankrupt, if advocating market economy. How did China do? The central government established four major asset companies, all the bad assets buyout, and then injected, so that they become in line with the Basel agreement banks, and then restructuring into commercial banks.
So why do state-owned enterprises bear the state's unlimited responsibility? Because more than 80% of the capital is state owned. When we open the board of directors, the president of the bank, the chairman will tell you clearly, major shareholders decide, and who is the major shareholder? Country. All other investors add up to less than 20%. The majority shareholder is the state; of course, the state’s will is the people’s will. That is communism.
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