Abstract Recently, Lin Yifu, honorary president of the National Development Research Institute of Peking University, put forward the idea that “abandoning the investment-driven growth model is because of squandering foodâ€. The academic circles and the media have triggered “who should invest and consume as the main force of economic growth...
Recently, Lin Yifu, the honorary dean of the National Development Research Institute of Peking University, put forward the argument that “abandoning the investment-driven growth model is because of squandering foodâ€. The academic circles and the media have triggered the debate about “who should invest and consume as the main force of economic growthâ€. In this regard, relevant experts pointed out that investment still occupies an irreplaceable position in China's current economic growth, and investment should not be ruthless for all issues. It is imperative to solve the institutional root causes and negative effects of blindly expanding investment and get out of the right path of rational investment to drive economic growth as soon as possible. 1 Investment has become a hot potato
As China's economic growth slows down and the downward pressure on the economy continues to increase, the past model of relying on investment-driven growth has been increasingly questioned, and the voice of increasing consumption-driven economic growth has gradually become mainstream. In this context, Lin Yifu went against the trend and publicly stated that “the driving force for sustained economic growth is investment rather than consumptionâ€. Once his views were reported, he immediately caused many criticisms in the society.
"'Investment' has become a bad synonym, even some Internet critics think it is the root of all problems in our economy, and I am one of the few economists who still emphasize the importance of investment," said Lin Yifu, a resident. A series of problems such as a decline in the proportion of income, over-currency, lack of innovation, pollution, and corruption all boil down to the scourge of investment. Therefore, China believes that China should abandon the investment-driven growth model and use consumption to stimulate China’s economic growth. Obviously it is a headache, a waste of food, and the idea of ​​"pour out the baby and bath water together."
“Investment†suddenly became a “hot potatoâ€. Wu Jinglian believes that every time the macro economy has problems, the usual method is to adopt the so-called "China model", that is, a strong government to mobilize massive resources to save the city. He pointed out that in fact, this is the way to drink and quench thirst. The problems caused by extensive growth at the macroeconomic level are currency overshoot, debt accumulation, and finally macroeconomic fluctuations and slowdowns in growth.
2 Investment is still the main force at this stage
Behind the argument, there is a deep point. Columnist Liu Shengjun said that the debate surrounding the "investment-driven growth model" is important because it points to the core proposition of economic reform: whether to continue to maintain high investment rate or reduce investment rate and increase consumption rate, the government continues to get involved in infrastructure, etc. The economic sector is still resolutely withdrawing from the economic field.
“The driving force for sustained economic growth is investment rather than consumption.†Lin Yifu believes that the reason is that the continuous increase of consumption is based on income growth, while the latter depends on the continuous improvement of labor productivity. The improvement of labor productivity comes from technological innovation. And industrial upgrading, both must be based on investment. Sustainable economic growth also depends on continuous improvement of infrastructure to reduce transaction costs and eliminate bottlenecks in growth. Without investment, there will be no technological innovation, industrial upgrading and continuous improvement of infrastructure. Labor productivity does not increase, and increasing consumption becomes a passive source of water. If it continues to increase, it can only rely on borrowing, and the more it accumulates, the crisis will come when it comes to debt service.
Indeed, investment-driven economic growth patterns can lead to many problems, but investment still occupies an irreplaceable position in the current Chinese economy. Xu Hongcai, director of the Information Department of the China International Economic Exchange Center, pointed out in an interview with this reporter that today, China’s industrialization, rural urbanization, modernization, informationization and other development paths have only gone halfway, and more than half of the journey has not been completed. Need a certain investment. Increasing consumption depends on the increase in income and investment of ordinary people. On the issue of investment and consumption, it cannot be over-corrected. The rise of consumption status and the decline of investment require a process.
3 Reforming investment methods to improve efficiency
Investment should not be a black pot for all issues. Columnist Wang Wei believes that the reason why Mr. Lin Yifu's investment in the release of potential demand has been backed up is a lot of black pots. The main reason is how to solve the institutional root causes and negative effects of blindly expanding investment, and how to get out of the right path of reasonable investment.
"A reasonable and moderate investment is needed. The key is to reform the investment method and improve the quality and efficiency of investment." Xu Hongcai said that investment should break the monopoly of the government, simplify the administration of power, let private capital enter, and bring into play the potential of society. The investment method needs to be changed, diversified financing and delivery, and market-oriented operation, in which the government can play the role of correct guidance and standardized management.
Putting aside the dispute between “investment†and “consumptionâ€, experts pointed out that what should really be concerned is the problems that need to be solved behind them. “We should jump out as early as whether investment or consumption drives economic growth. Because pure domestic demand drives growth, the concept of total demand is still discussed. From the perspective of long-term sustainable growth, the core issue is the internal total demand. Produced at the office," said Zhang Monan, deputy director of the World Economic Research Office of the National Information Forecasting Department.
Zhang Monan pointed out that what is now focused on the structural contradictions behind China's high investment rate is that there is an urgent need to adjust the supply structure and factor structure as soon as possible, from external demand to internal supply, rather than internal consumption. Re-examine the boundary between the government and the market, and exert the fundamental role of productivity in improving the total supply, in order to break the supply constraints, truly release the productive forces, and achieve sustainable economic growth.
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