Michael Spenth: China has entered the market economy stage

China Economic Network Beijing March 21 (reporter Liangmeng Late) Stanford University professor, Nobel laureate Michael Spenth in the 2011 China Development Forum, said that in fact, China has entered the market economy phase, China should abolish the hukou system. In his view, China's "Twelve-Five" plan is in fact a series of policy combinations.　　In his view, this should include at least five changes in the pattern of growth, rebalancing of demand, adaptation of rapidly urbanizing population structures, infrastructure construction, and international accusations. The following is a transcript of the speech: Director Zhang, LU deputy Director, ladies and gentlemen, very happy to be with you this morning, but also very honored to be invited to return to China's Development forum. I would like to first share with you a project I have done, that is, the mercy of the Los Alamos Foundation to support a team of international economists and practitioners, I have been involved in such a team, for China's "Twelve-Five" planning to provide some relevant international experience and our recommendations for reference. Our report has been completed and has been published in China in April, including both Chinese and English versions. Therefore, everyone can obtain such a report, perhaps we will provide some reference for us.　　At the very least, I think it is a very important initiative that has enhanced the transparency of our work. First of all, I also come to the grand launch of an article, I think these content is very reference value, we can see. Now we all know that this "Twelve-Five" plan is not in this past sense of the plan, in fact, China has entered the market economy, in fact, in this case, the role or role of the market is growing, rather than the real plan to dominate the market. Since it's not a plan, what is it? The plan is not so much a plan as a combination of policies that are needed for economic development. There are at least five basic transformations: first, changes in growth patterns, especially in the supply sector, have made China's labor costs rise, global market share becomes big enough to make the pace of expansion less rapid, while the growth trend in developed economies, and possibly headwinds, could lead to a downward trend in the future. Second, rebalancing of demand, particularly from investment and exports, to domestic demand. Third, to adapt to a rapidly urbanizing population structure and ensure that there are enough incentives to make the process as effective as possible. The establishment of adequate social infrastructure to build a harmonious society, with particular emphasis on equal opportunities.　　V to assume international responsibilities in line with China's strength, including some issues in terms of stable growth and sustainability, including dealing with other aspects of climate change. The middle income transition in China has some common and unique characteristics. In fact, few economies now, perhaps only five countries, can achieve such a transition while maintaining high growth. And as big as ChinaSuch a diverse economy as China, such a big country to go such a path is unprecedented. These five transitions are nothing new, and the need for such a demand has been acknowledged in the Nineth five-year plan, but the urgency has become even higher now. We have a consensus in the economy, and now is the question of implementation, which is what I hope to see in the next few minutes as to how to implement such a goal. China has adopted a correct view that the plan and market can coexist harmoniously. On the one hand, international experience also supports such a method, in fact, many of the world's fastest-growing economies can combine plans and markets organically. Each country has successfully achieved a shift from low income to higher and medium-high incomes. No country has made them believe in the so-called free market model.　　and international experience also shows that the balance between the plan and the market will tend to be more market-driven as the country moves towards affluence, and such a structural change will be boosted by market opportunities and some entrepreneurial efforts to support it, creating a new set of businesses and ventures. As regards the hukou system, I feel that we need to cancel it. And the so-called rural immigrants will eventually become a full identity of the city citizens. Of course, if you do not want to do so, more because of fear of urbanisation is too fast, or too unbalanced. Rural people come to the city, not because the city has the opportunity, but the countryside has no chance. Their experience in Latin America is that their land is more concentrated, so that their urbanisation is driven more by rural than by the attractiveness of the city itself. So you can really focus on the problem in this process. But the hukou system may not be the final answer to the problem. At the same time, we see that there are many interrelated parts of the system that need to make progress together, on the one hand we need rising domestic demand and then more response to the financial sector in terms of supply, and then the infrastructure of cities and society needs to be built to support such a process At the same time, there should be enough social incentive mechanism to make people make the right choice, and bring about a regular and orderly process.　　At the same time, with the expansion of the private sector, a corresponding legal framework and policies are needed to support competition, market access and withdrawal, market openness, intellectual property rights, and social security networks. At the same time, in terms of technology, there may be more emphasis on indigenous innovation, which is also a technical aspect of China. China is a large and complex economy with different levels of government, how are they doing? Also plays a key role in success. Thus, particular emphasis is placed on the integration of economic and social objectives, which, in the course of institutional reform, are accompanied by adequate or appropriate incentives, which are also an integral part of a successful implementation plan. It also requires a system of correct measurement and transparency. In this process, the correct indicators and accurate index, it can accurately help peopleDo you know whether the goals of economic society or the environment can accurately reflect the facts? In fact, these international experiences show that a timely response from a civil society, from a business, from a different government can help us find the problem and let us find some corrective measures in the process while improving our service and performance.　　In fact, other countries have benefited greatly from public consultation, in particular, in terms of policy design, in fact, China in the "Twelve-Five" plan is also from various localities, provinces and cities of these people widely recruited experience, but now should be more involved in the public to oversee the "Twelve-Five" plan to implement the process. Let me talk about the public sector in China, whose balance sheets are large, including land, different types of infrastructure, a lot of reserves, and the possession of large amounts of wealth in the state-owned enterprises. State-owned enterprises accounted for about half of China's fixed assets, and accounted for 1/3 of the profits in the market, and in all countries these assets were created in the form of a civic trust, which was then established and, in the course of its application, mainly through social and economic development. China has done a very good job in this area, and the vast majority of countries have invested in their public sector in the hope that he will be able to reach fast enough to support sustainable economic growth.　　China does not need this, because even if it consumes less, it is willing to work hard for future growth, invest in the public sector, and make very good progress in past reforms. But sometimes it may take a long time for a strategy to be implemented, such as when investing in the public sector, which may be necessary for a certain historical period, but in the future it will require enough social return support, whether public or private, to increase investment. At the same time, perhaps in the 90 's, state-owned enterprises because of some historical problems can have relatively high retained earnings and dividends. But the time has now passed, and now state-owned enterprises, if they reinvest, must accept the same, high return standard test, or the growth will eventually slow down.　　At the same time, those that cannot be invested will be able to re-enter the category of High-yield investments, not only in the public or private sector, but also in order to increase household income or to invest in those sectors that can provide basic public services and social security. Of course, state-owned enterprises are now also making their own changes, they must accept the test of market rules and market incentives, especially in product markets, labor markets, capital markets, of course, the latter may not be enough in the capital markets. With rising wages and a reversal in the affluence of the workforce, China's structure needs to change in terms of economic demand, more towards disposable income and government spending, and of course we don't know if consumption will increase. In any case, it will return to high return investment. The problem is, it's notSay it will go back to where, anyway, whether government consumption or the consumption of disposable income of residents, represents the cumulative aggregate demand growth.　　In this respect, the shift from supply to demand is also very important, so changes in such a system are necessary to place the demand for all state-sector and public-sector investment in a test of economic returns. I'm not saying that state-owned enterprises need to be privatized, and that China is actually setting up seven strategic industries, with seven strategic industries in which the state remains the dominant owner, which may not be a completely good idea. I know there are some examples in other countries where the overall privatization could make things worse. International experience has shown that it depends on different sectors, that is to say that each has its own situation, that in some sectors there may be more competition that will yield more benefits, increase its efficiency and lead to more performance improvements. But this is not the main problem, and the most important issue is to shift the total demand to another growth model that will make growth more sustainable and avoid the pitfalls of diminishing marginal returns, which is the way to change existing investments. This is my main point of view summary. Thank you for listening.