1月20日，我院副院长朱宁教授做客CCTV NEWS《Dialogue》栏目，就2013年中国经济增长数据进行点评和分析。

Host: What do you think of the latest GDP figure released by the central government here. It is 7.7. Is that within your expectation?

Zhu Ning: Yes, and actually, I think it is slightly better than what I’ve expected. I think people are more concerned with Chinese economy may hit a hard landing and doesn’t seem they are having that problem at least for the current moment.

Host: What’s the stimulus pace for successfully engineering the soft landing?

Zhu Ning: Well, I think that is a challenging pace because I think as many have suspected, Chinese economy is going into the stage of having pressure from both the inside and the outside. On the inside, I think we are seeing the labor costs have recently flagged considerably which is decreasing Chinese international competitiveness especially in the low value added export areas. And on the export side, I think we will have to see, well, it is not just the neighboring counties, Indonesia, Vietnam and the Malaysia, they are quickly catching up with Chinese manufacturing edge, in many other parts of the world, for example, Brazil, for example, Turkey, for example, Nigeria, they are also trying to emulate what the China has been successfully doing in the past three decades. So, I think on the manufacturing side, China is apparently losing its edge which has been the major propeller for economic growth in the past several decades.

Host: To think nothing of the appreciation of RMB adding to the pressure of the China export as well as dramatic increasing commodity prices?

Zhu Ning: I think those two issues are somewhat related. On one hand, I think, I mean, the appreciation of Yuan is increasing the privileged power of Chinese households, whereas, on the other, it is entering into the bottom line of Chinese manufacturing and Chinese enterprises. To make things a little bit more complicated, I think, the recent announcement of the US Federal Reserve about the tempering off of the quantitative easing is not only shifting the capital flow out of emerging markets back into the developed economics; it is also shifting people’s expectations about how emerging economies, China in particular, would be able to handle this rapid outflow of capital.

Host: There is what about the issue of the three errors of economics the in twice the Japanese central bank has devaluated its currency, the first case being in 1998 when the financial crisis broke out in East Asia and the second case which is of course the cause part of the economics to encourage the job in the value of the Japanese Yuan encouraging export of Japanese products. In both cases, do you think China would be affected, victim eyes or we have basically remained unaffected?

Zhu Ning: Well, I think Chinese economy is clearly affected. I’d rather not use the word of “victim eyes”. So, I think it is a little bit too political. I think it is definitely a domestic policy by the Japanese government which primarily intends to jump start the Japanese economy but of course it will have some very profound effects on Japanese neighbors and some of its competitors. I think China is probably affected in two primary ways. One is, the clear way that, well, the Japanese products are becoming cheaper so there is increasing competition between Chinese and Japanese companies. On the other hand, the depreciation of Japanese Yuan is also reducing Japanese incentives to invest overseas. And let’s not forget Japan remains as one of the major investors of foreign direct investment in China. So, that is also affecting, at least reducing the increase in the investment in China which is also having a native impact on Chinese economy. So, under these double major impacts, in fact, I think, Chinese economy is clearly affected natively in this aspect of economics.

Host: Other than the serious factors, I’m afraid that the dynamics of the Chinese economic growth have been detected largely by its own domestic economic restructuring or rebalancing. It is a sense of relying on export-led growth returned to domestic consumption. However, in this area, we don’t see much of the positive side. What are the fundamental reasons behind the lack luster performance for the consumption-led growth.

Zhu Ning: Well, I think there are probably several reasons that we, one I think of, one being China has been used to this investment-driven growth model in the past decades especially after the global financial crisis. And investment is something that is far more easily manageable by the government as long as you have the capital you can invest in projects which are non-necessary very high returns and as long as you have the capital to keep this game going, I think the economy would be fine at least in the short term. Consumption is a totally different animal, for the consumption, hard to work, one we have to provide incentives not only at the macro level, but also you have to induce or motivate households to be able to spend and have the confidence to spend.

Host: For example, what about the bank deposits? what about the social security program that is set to cover both the rural and urban population. Do you think these have effectively encouraged consumers of the urban and rural alike to increase their privileged power?

Zhu Ning: Yes, I think something like providing social security to not only urban residents but also rural residents and also providing the minimal education and the minimal healthcare to rural residents, that is definitely the good direction to go. But the one we would have to be careful about, one is how fast those effects will really be transmitted into the end users. The second is, whether there is enough recourses being directed because according to some statistics, some of the social security accounts at the some provinces at some provinces are under budgeted or under funded. 

Host: What do you think of the issue of public expectation in terms of domestic consumption, for example, you briefly mentioned that foreign direct investment, Japan remains the biggest source of FDI, but what about the government spending to create jobs. Without creation of jobs, I don’t think consumer’s privileged power would be increased and that would last and how to stimulate the domestic consumption. What do you think of this line?

Zhu Ning: Yeap, I think we are probably talking about two different aspects of a big problem. One is, as you mentioned, there has been a job creation. The other is for the same job. There has been increase in productivity or in the/and compensation to the workers. To the first ground, I think, I mean, the government is probably quite effective. And we have to keep in mind that SOEs, state-owned enterprises remain as the largest employers of labor forces in China. So, as long as there is enough capital to sustain the infrastructure and sustain the SOEs, I think we can still see creation of jobs. The question is really whether those jobs are, one, effective, two, are highly rewarding rewarding enough to attract the labor forces to stay in those jobs, because we have already seen some of abilities in the labor forces, they are trying to get away from the SOEs and getting into some of the entrepreneur activities because some of the younger generation workers do not find those jobs rewarding or promising.

Host: Let’s look at the local governments. Since the government officials are required not to pin their hopes for promotion on land revenue, the central government is obviously strengthening the road of the watchdog to prevent corruption and to, of course, ensure the available land will not shrink to endanger our fiscal security. That is a part of the No. 1 policy document of 2014. In that case, do you think of what would be the policy incentives to encourage local governments to generate enough tax revenue?

Zhu Ning: Well, I think there are probably two directions of the fiscal and taxation reform. I think in the central working, central economic working meetings, I think, there have been some hint about well, there will be some alignments of the responsibilities and the revenues of the local governments meaning that if the local governments can not earn that much money, maybe their responsibilities would be reduced accordingly. But then, I mean, going back to your question, I think the bigger issue here is, I think the property tax or some kind of the tax that is associated with holding the property not just by auction of the land, because there has been the major reason why the Chinese local governments have such strong incentives of developing, keeping on developing their land because they always hope for selling of their land for a higher price or for a higher value. And once that link is broken, I think we could see some of the problems that are in Chinese economy going away gradually. 

Host: Ties between Gulf States and United States may have been frail because of the US inaction on the serious chemical issues as well as the recent between Catherine and Washington. So the Saudi ruling family has threatened a risk with the America. And Saudi Arabia, the biggest member of the Gulf Cooperation Council Countries may even stop using the US dollar as the exclusive currency for oil transaction. What opportunity would that represent for RMB. We are talking about the prospect of internationalizing RMB. And using RMB as a hedge dollar to replace and to reduce the importance of the US dollar could be one major step in the correct direction, do you agree?

Zhu Ning: Yes, I do agree in general. I think, I mean, even without such an instance, the internalization of RMB Yuan has been an undergoing, has been undergoing a lot of progress. So I think we would see a greater presence of RMB in the international monetary and financial world. The question is whether packing RMB with oil, with energy is necessarily the road that China is going to take, because let’s not forget that the oil is also a politically sensitive subject. And I think, I mean, in some of Chinese overseas investment, both in Canada or in Africa, I think, the most sensitive subject is about energy or about oil. So I think even without oil, with Chinese economy, with increasing presence of Chinese companies investing and acquiring overseas, I think the usage of RMB would be increasing. The question is whether the usage of RMB overseas would be catching up with the reform of Chinese economy or Chinese financial system within the country, because sooner or later, there have to be some linkage or there have to be some channel by which the international capital and the domestic capital would be able to equivalate.

Host: I’m afraid that you are a little bit political, given the privileged action and ambition, particularly TTIP and the TPP both are being used largely by the Obama Administration to hedge against the growing economic influence of the PRC. China is not stupid. It is signing heated oil and energy contracts with almost all the major oil producing countries, you name it, such as Sudan, Nigeria, the Gulf Cooperation Council States including Gulf as well as , Caribbean Sea and Russia in central Asia as has been seen. Now, if you look at, if you put the east players into one perspective of China, it is forming its own global strategies to counter against the US conspiracy of the diminishing China’s global expansion, therefore, your analysis sounds a little bit bookish. You have forgotten that Chinese government may have developed its own jury economic policy.

Zhu Ning: Well, I think there probably are two things. One we have to keep in mind. One is, well, there is an economic tie. There are also the jury political ties. And two forces are always at played at the same moment. At the same time, I think one can not replace the other. Being able to establish certain kind of economic or commercial games or connections is non-necessary thing. There is a well foundation for a long term or deeper level of jury political or dogmatical collaboration. So I think what China really wants is probably the latter whereas the former is probably a very good game opener. So I think it’s just, it takes time.

Host: Ok, very quickly, the last question. E-commerce is flourishing in China, when you look at the vows of Alibaba to change and challenge the traditional banking. That means the service industry promises to create more job opportunities than traditional industries. And Premier Li Keqiang met with the Ma Huateng, head of Tencent and the Jack Ma, founding Chairman of Alibaba to deliver a strong message that perhaps the government would pay more attention to the rights of the internet to create the jobs and to discipline the politic society. What do you think of the prospect of the very dynamic, you know, on-line businesses.

Zhu Ning: I am quite bookish on e-commerce or on-line businesses. But then I think I’m a little bit new on whether they would create more jobs as some have hoped for, I mean, let’s look at the US, I mean, in the past, economic expansion in the past three years, I think the US economic is picking up. For them, we can not see as many job creation is a part of that is being credit to the e-commerce. I mean, let’s think about it, we used to have a lot of shopping systems in the superstores. Now the superstores are being replaced by e-commerce companies and those shopping systems are being replaced by employers as Alibaba or Tencent. So, it is not excluded themselves can create more jobs. What I am more hopeful for is, I think, Alibaba is creating a new platform for commerce.

Host: Thank you very much, thanks a lot, well, you are giving us a more complete picture about the balance between the traditional industries and a promising new industry based on internet. I’ll see you next time, until then, goodbye!