Liu Shangxi: Few investments in new infrastructure that the market cannot participate in
Recently, 31 provinces have launched a 40 trillion infrastructure investment plan, and the call for a new round of large-scale infrastructure construction is also rising.In essence, the “new infrastructure” was named by high-level officials.On March 4, members of the Standing Committee of the Political Bureau of the Central Committee of the Communist Party of China should choose investment projects, strengthen policy support for land use, energy use, and funds, and accelerate the construction of major projects and infrastructure that have been clearly defined in the national plan.We must increase investment in public health services, emergency supplies, and accelerate the construction of new infrastructure such as 5G networks and data centers.Pay attention to mobilizing the enthusiasm of private investment.Does China need a new round of infrastructure investment to promote economic growth?Liu Shangxi, the dean of the China Academy of Fiscal Sciences, said in an interview with that large-scale stimulus policies cannot solve the current problems of the Chinese economy and require careful consideration.However, he also said that he is not opposed to the government’s investment in infrastructure, but to focus on the development of China’s economic scale, the focus of government investment should be changed from hard infrastructure investment to soft social investment, and investment based on “things” should beTurning to investing based on “people” will not only solve the short-term economic growth problem, but also take into account the long-term sustainable development of the Chinese economy.At the same time, Liu Shangxi believes that urbanization still has huge room for development. Infrastructure investment can make a fuss about urbanization, but infrastructure construction investment and public services around urbanization are forward-looking, and they must “follow people” accordingly.Instead of investing everywhere.Regarding the new infrastructure that has been booming recently, Liu Shangxi believes that the so-called new infrastructure is mainly digital infrastructure, which can advocate new infrastructure, but should be replaced by the market.”At present, the market is completely non-existent and there are very few so-called new infrastructure projects that cannot participate in investment at all.If the government invests instead of the market, it may be inappropriate.”Liu Shangxi said.What role should the government play in including infrastructure investment within the new infrastructure?Liu Shangxi believes that if the government wants to create good conditions for market investment, it should make the resolution of conflicting market investment enthusiasm a top priority, and speed up reforms in the market economic system and business environment.”If the government does not work on a substandard scale to solve the obstacles and problems encountered in market investment, or implement short-term expansion stimulus policies, this is the inversion.”” The stimulus policy cannot solve the problems of the current Chinese economy. “Sauna Night Net: Recently, the 40 trillion investment plan launched by 31 provinces across the country, while the call for support for the new infrastructure is also rising.What do you think of these phenomena?Liu Shangxi: I think there may be multiple reasons behind these phenomena: First, before the outbreak of the epidemic, China’s economy continued to decline, and the impact of this year’s epidemic may worsen the Chinese economy.The two factors are superimposed, and a large number of people have proposed to stabilize the economy through investment in infrastructure and prevent large displacements in economic growth.Approximately, 2020 is the 13th Five-Year Plan, the year of ending the comprehensive construction of a well-off society and the achievement of the first 100-year goal, and also the year of preparation for the start of the 14th Five-Year Plan.The local government has launched a series of infrastructure investment plans, which are basically based on the actions required in the 14th Five-Year Plan. At the same time, it also hopes to ease the huge pressure on local economic and social development goals through infrastructure investment.But the question is whether the government can solve the current economic problems of China through large-scale infrastructure investment. What role can large-scale infrastructure investment play in the end, and what alternatives does it have?Will there be new risks?The phrase “the digestive period of the previous policy” is still in our ears, and these issues all require in-depth research.At present, the main problem of the Chinese economy is not on the demand side or on the supply side. It is the supply of factors (especially the resumption of trucks) that has been affected by the epidemic. The flow of people and logistics have not been fully opened.The lack of necessary conditions for enterprises to resume production.Under such circumstances, it is ineffective to use stimulating demand to solve problems such as sufficient supply, poor logistics, and difficulty in resuming production and resumption of production.Even after the end of the epidemic, companies started to resume production, and the use of stimulus policies could not solve the problems of the Chinese economy.What are the prerequisites for the stimulus policy?It is because stimulus policies have an enlarged multiplier effect, but now the multiplier effects of stimulus policies are getting smaller and smaller-in fact, we have found in research that the multiplier effects of many stimulus policies are less than one.If the multiplier effect of the stimulus policy is getting smaller and smaller, and the investment efficiency is getting lower and lower, how can the government’s investment achieve the effect of four or two thousand pounds, and how can it stimulate economic growth?In my opinion, it is not necessarily effective to engage in “large-scale” infrastructure investment like 2008 to stimulate economic growth, and it cannot solve the current problems of the Chinese economy, so it needs to be carefully considered.”The focus of government investment should shift from rigid infrastructure investment to soft social investment.” Sauna Yewang: Do you not admit that economic growth is driven by infrastructure investment?Liu Shangxi: The government-led infrastructure investment is very important. I have no objection to the government’s investment in infrastructure.But the question is how large-scale is the government’s infrastructure investment, investing in certain fields and projects?The current Chinese economy is aimed at expected development. Around this goal, the focus of government investment should shift from rigid infrastructure investment to soft social investment, from investment in things to investment in people-this includes both public healthInvestment, people’s livelihood improvement investment directly related to people’s lives, also includes investment to enhance human capital-instead of the previous investment stimulus mainly for the purpose of stimulating economic growth.In particular, the Chinese economy pursues long-term development, and innovation-driven development needs to be based on and replaced with expected human capital.However, human capital with the largest number of people is precisely one of the biggest shortcomings of current growth and development-the lack of human capital accumulation and inequality has led to a gap in capacity, unequal opportunities, and further led to the widening gap between rich and poor.At the same time, in the context of an aging population, investment in human capital has become more urgent and important than ever.Therefore, the government should increase investment in human capital construction to improve people’s basic cultural qualities, labor skills, social moral standards, and health qualities.In the short term, including social investment in human capital investment can expand demand, and in the long term, social investment can improve supply.In this way, social investment can not only solve the problem of short-term economic growth, but also take into account the requirements of China’s long-term transformation and development, and organically combine short-term stable growth and long-term transformation and development.If we only consider the requirements for realizing steady growth through large-scale infrastructure investment, we may involuntarily divide the requirements for economic scale development.”Infrastructure investment around urbanization should follow people” Sauna Yewang: But the current consensus in the economics community is that there is still huge room for urbanization, and many people invest in infrastructure around urbanization.Liu Shangxi: There is still huge room for development in urbanization, I think there is no problem.Infrastructure investment can make a fuss about urbanization, but it needs to focus on urban agglomerations, metropolitan areas and central cities-because population, manpower, and resources are all spatially concentrated in this direction.At the stage of urbanization that has not yet been completed, society is a dynamic, mobile society, and people are moving towards cities.In this case, even the rigid infrastructure investment around urbanization should be based on the needs of “people”, the flow and distribution of people-where do people go, and where do infrastructure investments and public services follow?, Not the other way around.Without considering the mobility of people and the development trend of urbanization, static layout according to the registered population will only result in a waste of investment.For example, many villages have implemented village-to-city links, but too many villages may be empty in a few years, and many people have moved to work and live in cities.Therefore, infrastructure investment and public services cannot be considered and arranged according to the regional distribution of static household registration population.In the past, the title of leaning resources to underdeveloped areas and leaning to poor areas was no problem, but from the perspective of the current urbanization process, this meaning is not accurate-the population has already gathered in cities and developed areas, focusing on urbanization’S infrastructure investment is indeed forward-looking, and accordingly “follow people” instead of investing everywhere.”There are very few new infrastructure projects that the market can’t participate in.” Sauna Yewang: What do you think of the new infrastructure that has been clamoring recently?Liu Shangxi: The so-called new infrastructure is mainly digital infrastructure. This has a very important question: Should the investment in the new infrastructure be led by the government or market intervention?At present, the market itself is investing in digital infrastructure such as 5G, artificial intelligence, cloud computing, and data lakes. If the government invests instead of the market, it may be inappropriate.In the digital infrastructure investment, we must deal with the relationship between the government and the market, and let the market play a decisive role in the allocation of resources before considering how the government can better play its role.The government must not intervene, interfere with or even destroy the market ‘s decisive role in the allocation of resources. If the government deviates from the basic principle that the market plays a decisive role in the allocation of resources, large-scale stimulus will not solve the current economic downturn in China.This problem, at the same time, brings greater risks to the Chinese economy-this is not to suppress the risk, but to manufacture or even expand the risk, causing the risk to further escalate.It is conditional for the government to function better. If these conditions are not clear, the government will become blind. The result is self-evident.Sauna Nightnet: Are all new infrastructure projects invested in a sustainable market?Liu Shangxi: Infrastructure investment projects can be divided into three categories: projects with expected investment in the market that do not require government participation in investment; projects that the market is unwilling to participate in and require government investment; projects with partial market participation and government intervention in investment.If the project portfolio is implemented and a new infrastructure construction model is adopted, the market cannot participate very little.The rapid development of domestic infrastructure is precisely due to the full use of market forces, and construction by government investment alone cannot reach today’s level.With the improvement of traditional infrastructure and the construction of new-type infrastructure, especially digital or information infrastructure, the market plays a leading role in it, and the scope of government and market promotion is constantly changing.In my opinion, the market is completely non-existent and there are very few so-called new infrastructure projects that cannot participate in investment at all.It is possible to advocate new infrastructure, but it should be transformed by the market.The technical content of digital infrastructure is very high, and the forward-looking requirements are also very high. The government may not have an advantage over the market. The government is mainly for strategic guidance, strategic coordination and creating conditions.”The government should make the issue of investment enthusiasm in conflict markets a top priority.” Sauna Yewang: But the enthusiasm of most private investment is not high.Liu Shangxi: Many factors now lead to low market investment enthusiasm, and private investment is growing rapidly. At this time, the government will play a role and create better environmental conditions for market investment.The government should make solving the problem of investment enthusiasm in conflict markets a top priority, and should focus on solving the problems of plugging, difficulties, and pain points encountered by social capital in the investment process.It is necessary to sort out exactly what factors are interfering with the market’s enthusiasm for investing in the market. If the market mechanism is not perfect and the business environment is not perfect, then we must make great efforts in these areas and make the greatest efforts.If we do n’t work hard in this regard, and when the market investment is sluggish, the government will charge forward and the government charges ahead, blindly resisting government forces to expand investment to stimulate the economy to supplement the downturn in market investment, I think this is useless.Regarding investment in infrastructure, I think we must fully mobilize the enthusiasm of the market and the government. Combining both hands, digital infrastructure investment should go in this direction-this can alleviate the risk of local debt.At the same time, it can optimize resource allocation.This requires innovatively handling the relationship between the government and the market, starting from reality and creating a new model of construction that includes market forces.At present, we should innovate and develop the PPP model, form an effective carrier of social capital and local government cooperation, and mobilize the enthusiasm of social capital to a greater extent.For example, the developmental government-society cooperation (developmental PPP) model that has been formed in practice provides a new path for local governments to break through debt through development.When we explored the localities, we found that the local government mobilized social capital to participate in the construction of infrastructure through the mode of government-social cooperation.But after the local government issued special bonds on a large scale, a lot of social capital was squeezed out.Of course, there are irregularities, but you can waste food because of choking.Under the current trend, it is necessary to avoid the emergence of this expansion effect, otherwise it will inhibit the role of the market, and it is not conducive to the cultivation of new economic momentum.The economy of the mainland of China has reached the level of 100 billion, and it is increasingly necessary to fully mobilize the initiative and creativity of the broad masses of the people.With the people as the center, the market mechanism is an effective carrier. If there is a more complete market mechanism, it can rely more fully on the people to develop the economy.In short, I am not opposed to stimulating economic growth through investment, but the problem is that investment is used to spur economic growth in some way.I think that we must rely on market investment to promote economic growth, and the government must create good conditions for market investment, accelerate the reform of the market economic system and business environment, and thus mobilize the enthusiasm of private investment.If the government is not the next level of effort to solve the obstacles and problems encountered in market investment, or implement a short-term expansion stimulus policy, invest in projects, I think this is the end of the book.”The market plays a role in the field of digital infrastructure to transform old kinetic energy into new kinetic energy.” Sauna Yewang: Can the new infrastructure investment carry the banner of steady growth?Liu Shangxi: At present, China’s economy is shifting from rapid growth to development. An important point in the transformation and development is to change the situation of insufficient new kinetic energy and low technological content.This requires a digital technology revolution, and the digital technology revolution requires digital infrastructure to support it.In these new infrastructure areas, the market can play a huge role in transforming old kinetic energy into new kinetic energy and enhancing the momentum of economic development.How can we better stimulate the power of this economic development?There are also some specific problems that need to be solved.Now the construction and investment of digital technology platforms are developing the best. The fastest is in the market. In enterprises and governments, the application of digital technology is quite lagging behind, far behind enterprises, but affecting the construction of enterprises in digital infrastructure.And investment.For example, market investment in digital infrastructure requires a comprehensive grasp of large amounts of data, and various government departments are data islands, and society cannot share these data, which will affect the market’s investment in digital technology platforms to a certain extent.For example, the construction of digital financial infrastructure has been extended to the segmentation and closure of government data.For investment in digital infrastructure, the government should provide better services to the market-provide planning, standards, laws, promote the replacement of government information, connect big data in various departments and gradually open to the market.If these can be achieved, it can reduce the market’s investment in digital infrastructure, whether it is to promote economic growth or development, improve the level of social governance, and facilitate the people, etc., will have a great role.Sauna, Night Net Editor Hou Runfang Chen Li proofreading Chen Diyan

Posted in 桑拿