13-06-26 li zuojun - 2013 crisis
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WANT CHINA TIMES
Chinese investors are holding their collective breaths to see if the banking crisis predicted twoyears ago by renowned Chinese economist Li Zuojun will come to fruition in the next coupleof months.
Li, the deputy director at the Development Research Center of China's State Council, pennedan article in Sept 2011 predicting that there will be a major banking crisis in J uly or Augustthis year caused by excessive local government debt or a housing bubble.
Born in 1966 in south-central China's Hunan province, Li graduated with a doctorate ineconomics from Hubei's Huazhong University of Science and Technology in 1992. Mentoredby some of the most famous economics professors in China, Li has worked as a researcherand professor, teaching classes at his alma mater Huazhong and the Chinese Academy ofSocial Sciences, as well as real estate companies, investment banks and property developersacross the country.
He has been involved in several major domestic and international research projects andpublished dozens of articles in major national newspapers. He has also been a leader of morethan 20 major research reports for the State Council and penned more than 50 internalpapers while working in the private sector. Over the years, his writings have won four ChinaDevelopment Research Awards.
Li said back in 2011 that property developers were experiencing worsening cash flowproblems after their four main sources of funding sales, credit, the capital market and trustfinancing had all been on the decline or have hit bottlenecks. Despite having made a lot ofmoney from China's housing market in recent years, the developers believed they would notbe able to hold on for much longer if conditions did not improve.
Housing prices will definitely take a dive, Li said, though it is not clear how far. It is possiblethat the new Chinese government, led by president Xi J inping, could maintain tight controls tolimit the drop to about 10%-20%, though Li did not rule out the possibility of a US-like collapsewhere property prices dropped by as much as 50% to nearly 100% in some cases.
Li's astounding accuracy in predicting China's economy has led to him earning the nickname"China's most successful doomsayer."
GOOGLETRANSLATION
ZuoJun:ChinainJulyandAugust2013economiccrisiswillerupt
ThisarticlecomesfromFinancialNetwork
Rightnextgovernmentleaders,facedwithachoice,achoicetotakeoverfoam,meticulously
maintained,nolaterabletomaintain2015,or2016,thenthatisanevenbiggercrisis.The
secondoption,donottakethisbubble,thebubblesosoonaftertakingofficetorip;sothatthe
economiccrisismaybeinJulyandAugust2013
ZuoJun,the StateCouncilDevelopmentResearchCenterofResourcesand
Environmental PolicyResearchInstitutedeputydirector,was hiredasaconsultantor
apluralityoflocalgovernmentchiefeconomist.Underthe tutelageofeconomist.The
followingishis September27, 2011shouldbeinvitedHuazhong UniversityAlumni
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Association, inareportwillbemadewithinthe 2013Chinawillbethe outbreakof
theeconomiccrisis, the reportcontent.
The firstbig problemthe firstpoint the situation;
The firstbig problemofthe secondpoint the socialcrisis;
Onsocialissuessecondangle;
The firstbig problemisthethirdpoint the internationaleconomiccrisis,but
alsocontinued;
The secondmajorproblem the international economicoutlook.
Thefirstquestion,whatkindofcurrentdomesticand international situation,how,
howevolution?
And
future
situation
of
how
you
look,
how
evolution?
It
may
be
we
are
concernedabout.The secondquestion,insuchanew situation,our businessand
entrepreneurs, aswellaseachofushowtodo?
Thefirstbig problem the situation.The situationinthe future,thissituationis
reallyverysubtle,Iwouldliketofocushereonthe situationand totellyou three
questions:thefirstquestion,the futurewefacesomerelativelylargeadjustmenteven
crises.Thesecondquestioniswhetherthe futureishow the internationaleconomyan
evolutionarytrend.Thethirdisourdomesticshorttermeconomictrendsoverhow
big?The firstmostaroundthesethreeissues.
Thesecondmajorproblem,businessesand individualshow wedo? Thisrelatestochoosewhatkindofsectorinvestment,includingthechoiceofwhatkindofinvestment,
thereisacomprehensiveenterprisehowtorespondand soon.
Firsttalkaboutthe firstonebig problem the situation.
Thefirstsituationisaprobleminthe TwelfthFiveYearperiod,wemay haveto
happensomething.Onemightwanttohappenduringthesecondfivepossiblean
economiccrisistooccur.Itwas strange,isnot justaneconomiccrisisbrokedo? Just
outbreakoftheU.S.subprimemortgagecrisistriggeredadeclineinour exports,
economicgrowthdeclined.However,weChinesepeopledonot own the outbreakof
the economiccrisis,ourbanksdonotgobankrupt, weChinesepeopleseconomiccrisis
is brewing,and thatwhenitbroke? Ithinkitwas in2013,and why?For everyoneto
analyzefourreasons:
Thefirstreason,for economicreasons,economicreasonsleadtothe possibilityof
the outbreakofthe crisisthereare two,one isthe realestatebubble burst, theotheris
the localdebtcrisis.Ofcourse,thesetwo issuesare related,Ifocusfromthesecond
anglewitheveryonetalkingaboutthe localgovernmentsmainsourceofincomehas
two blocks,one isthe industrialand commercialtaxes,aswellasthe mostrecent
comingin2012,becausemanyofthesmalland mediumprivateenterprisesisnot the
economy.Some
local
governments,
industrial
and
commercial
tax
to
be
reduced
accordingly,the secondsourceofincomeisincomefromlandsales.Beginningthis
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year,manylocalgovernmentshavebeenlargereductionsinland,afew yearsago,50%
oreven3040%.Afew yearsago all weask the governmenttogivelanddevelopers
haverecentlybecome popularfor sometimethe governmentaskeddevelopers,when
you cometobuy myland.Why?Becausetheyare alreadyfacingbalanceofpayments
gap pressure,Beijinglandreserveloansayear250 billion,and theresinterestpressure
is verylarge,lightChaoyangDistrictlandbankloaninterestamonthonmorethan10million.Ifthe landcannotbesold,thenbalanceintrouble.Therefore,toreduce
businesstaxes,aswellasthereductionoflandrevenue,manylocalgovernmentsunder
alot ofstress.
Spendingit, butisincreased,two blocks spendingachunkisthe usualexpenditure
fromthenationallevel,thisisadefensespendingincreaseintroopswageincreases,the
SouthChinaSea,the aircraftcarrierwillneedtoincreaseinvestmentfromlocal
governments, ,but alsolargescaleinfrastructuretomoveforward,36millionunitsof
affordablehousingconstructionneedsgovernmentspending,strengtheningthe social
securityspendingtwo fullcoverageofthe needfor governmenttostrengthenwater
conservancyfacilitiesrequiregovernmentspending,vigorouslydevelopstrategic
emergingindustryneedsgovernmentspending,atall coststomaintainsocialstability
requiresgovernmentspending,sothe pressureisverygreatexpense.Theotherone,not
before,nowhave,and thatisthe arrivalofcentralizedrepayment,debtservicepressure
soon.Afew yearsago,fourtrillioninvestmentintheamountofdaysofcredit,was
veryhandsome,but not comeoutofthe pie,istoalso,fromthesecondhalfofthisyear,
the arrivaloftherepaymentperiodbegins,Mingaftertwo yearstorepaya4.6
trillion.WhytherecentYunnanRoad,Shanghai,ChangshaCityInvestmentand our
highways,etc.,begantoshowsomeoftheproblems,infact,thisisjusttip ofthe
iceberg,becausethearrivaloflargescalecentralizedrepaymentperiodand revenue
streamsasymmetrycausedenormouspressure,Soovertime,toaround2013,some
localgovernmentsmay gobankrupt, ofcourse,thereisthe army,putaguntoputhere,
who saidthe governmentgobankrupt? Governmentisnotbankrupt. Whosebreaking
capacity?Breakingthe banksassets,the moneyfromthe bank,the banksmoneycomes
fromwhere?Fromthe majorityofenterprises and peopleare breakingtheir
production.Thisisthefiscaland financialsystemicrisk,thisisthefirsteconomic
reasons,the reasonsfor the crisis.Beforeapotentialrealestatebubble burstcrisis
becauseofthe timedoesnot expand.
Thesecondreasonis the reasonthatthe internationalexternalreasons,afew years
ago our countrysrapideconomicdevelopment,whichhas animportantforce,isthe
largenumber
of
international
hot
money
flowing
into
China,
support
our
economy
bubble generation,thehot moneyisthebenefitsorreducethe ,speculative,thatcome,
say you can walkaway,heismainlydependingontheregionofthe returnon
investmentprofits.Thereasonnow tostayinChina,becausethe pastfew yearsChinas
economyhas maintainedrapidgrowth,thesespeculativereturnsstillrelativelyhigh,
but the Chineseeconomyisgoingdown,Chinaisgraduallyemergingrisks,thereare a
numberofinternationalorganizationsbeganrampantshortChinaconceptstocks.U.S.
economyisslowlyrecovering,the appreciationofthe U.S.dollarislikelytooccur,the
UnitedStatesalsomay raiseinterestrates,sotheseinternationalhot moneyatsome
pointtheremay bealargescalewithdrawal.ThiswillcauseusChineseeconomic
bubble burst, itisour responsetothe Chinesegovernmentisnot good.
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Thethirdreasonispoliticalreasons,the Chinesemustalsohavepoliticaleconomy
perspective.Why in2013,becausein2013the changeofgovernment.Beforethe change
ofgovernment,the currentgovernmentstermofofficeinthelastyear,thehighest
guidingideologyisnot anaccident,maintenanceofstabilityatall coststomaintainthe
stabledevelopmentofthe economy,whichisthe mainthing.
Rightnextgovernmentleaders,facedwithachoiceoftwo options.Alternatively,
thefoamfollowedinthe past,and thenmeticulouslymaintained,thenhewill
maintainituntilwhen?By2015atthe latestbeabletomaintain,or2016,thenthat
timeisanevengreatercrisis.The crisisofthattimewho istoblame,whodonot
know,thisisanoption.The secondoption,donot takethisbubble,the bubbleso
soonaftertakingofficetorip.Ruinedafterthe firsttimewillbringthepain,but for
anew leaderisagoodthing,becausethe responsibility isveryclear,isnot causedby
them,iscausedbythe front.Secondly,inthe foamdancingwithdowntoearthfeeling
is not the same,afterthebubble brokeuphecoulddowntoearth.Furthermore,the
new achievementseasiertocomeup, becauseitreducesthestartingpoint,afterthe
bubble burstperformanceisrelativelyeasytodotogether,oratthe startingpointis
hightimetogoupwardisverydifficult.Ingeneral,thenew leadership tookoffice,in
frontofthreemonths,outofpoliticalconsiderations, shouldinheritand carryforward
is certainlyprudent,and inthreemonths,Ibegantograduallyexposedsomeofthe
problemsthe formerterm,showinghis new the ideaofnew initiatives.Anenterpriseto
adoptanew chairman,are alsotrue.Sowhy say thatthe economiccrisiscouldbein
2013,mostlikelyinJulyand August2013(thesecondhalf).
Thefourthreason,shortand longbottomthreecyclesmay besuperimposed.Short
periodis35years,the currentcycleofthe economyisdown,thenexttwo yearsmaybe
tothe bottom.Thecycleisaperiodofaboutninetoten years,wethink1949,1957,
1966,1976,1989,1998,everydecadeorsoisgenerallygoingtotoss,thenfrom1998to
now has beenThereare morethanadecade,and itshouldcome.Originally08,09should
betohappen,but itwas laterpushedbackbecauseofpolicy,butitcannot bepushed
too far.Thereisalongperiodof60years,aperiodofsix decades,theyhavetocount
the periodofthe IChing.So, after2013,Chinamaywantaneconomiccrisisbrokeout,
the performanceoftheeconomiccrisis:someSMEsbankruptcy,somebanksgo
bankrupt, somelocalgovernmentsgobankrupt, thisisour nextsteptofacesucha
situation.
Bothbeforeand afterthe fivesecondperiod,theremay beasocialcrisisbroke
out.Because
of
the
economic
crisis,
it
may
also
lead
to
social
problems,
at
present,
downthe accumulationofavarietyofsocialconflictsoroutbreaksalsostormin.
Thefirstbig problemonthe secondpoint the socialcrisis
Iexplainedfromtwoangles:firstaperspectiveofour societyissick,sick
performancewas hot.
Thefirstheat,the Civilheat.Chinaisthe worldshardesttestcivilservants,
universityentranceexam,two orthreepeopleinthetestone,testPh.D.,atwenty
individuals can alsotesta.But the Chinesecivilserviceexam,thousandsofpeoplein
the lastone before the exam.Why doweXiaojiannaodaicivilserviceexam?Becausethe
richand powerfulcivilservantsand security,becauseweChinesegovernmenthas
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masteredmoreand morewealth,moreand morepower,moreand morecontrolofthe
assetsofthatlandistheChinesegovernment,avarietyofmineralisagovernment,is
the governmentsrighttotax,the poweroflifeordeathisalsothe government,many
importanttrademonopolyalsointhe handsofthegovernment,the Chinese
governmentwas amazing,everyonewantedtobecivilservants.Civilservicereformin
the backwardreaction.
Thesecondheat,SOEheat,heatthecentralenterprises, the countryback.Current
centralrateofthe incomeyear,smalland mediumprivateenterprises isthesum offive
hundred,Chinasstateownedenterprisesbyvirtueofcentralenterprisesmonopoly
privileges, suchasthe monopolyoflandresources,the monopolyofcreditresources,
monopolypricing,accesstoexcessprofits,whichreflectsour reforminbackwards.
Thethirdrealestatefever.Nationofrealestate,alittlebit ofpowerfulenterprises
are nowengagedinrealestate,Haier,Hisense,TCL,Youngor,Romon,Erdosall these
outstandingprivatesectorcompaniesare engagedinrealestatedevelopment,corporate
realestateinits interiorsomeproportionis70 80% ormore,Iaskedsomedomestic
chairmanand generalmanager,Isaid,why doyou engageinrealestatedevelopment
it, youare not doingverygoodfor you Industry?Prettybig do? Thenheasked,hesaid,
why Idonotengageinrealestatedevelopment?Idoengageinrealestatedevelopment
is areturnofmorethanseveraltimesIndustries, Iengagemyfoolish,thisissomeof
the largercompanies.ThenthoseSMEsdo? Thenherealestate,hedid not directly
engageinthe developmentstrength,thenheindustrialhollowing,industrydonotdo,
realestatespeculatorsfromWenzhou,Hangzhou,Scoop,ScoopfromHangzhouto
Shanghai,fromShanghaiScoopBeijing,fromBeijingScoopSanya.Thenthereisthe
strengthofsomeindividuals do, buyahouse,apersonbuydozensofsets.And then
peoplecannot affordhousing?Theytalkaboutthehouse,justameetingtotalkabout
the house,aslongaspeoplesee me, theyask,theteacher,you saythatthe priceisupor
tofall?Whenup, whendown?All thepeopleall therealestate.Thisshowswhatthe
problemis? Descriptionsick.
Thefourthheat,speculativefever,isnotarealestatestocks,stocksthatare not real
estatespeculators,not realestateonspeculationofagriculturalproducts,garlic,ginger
yourarmy,beansyou play,and nowspeculationfunds,loansharking,friedinvogue,
prevalenceofspeculation,doesthatindicate?Descriptionsick.
Thefifthheat,immigrantfever.Whenanofficertothe nakedofficials,
entrepreneurs havelittlestrengthtoimmigrants.ThisisChinascurrentsocialproblemsauthenticity.
Onsocialissuessecondperspective
Thegap iscausedbytoo largeanimportantcauseofsocialinstability,butalsoalot
ofpeopleonanimportantaspectofsocialdiscontent.
Wideningwealthgap ishowthe?
Thefirstchannel,taxation,sincethemid1990s,wehavestrengthenedthe
governmentregulationoftheeconomystrengthenedtaxedpriorityistoprotectthe
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nationaltax,our governmenttaxeseveryyeartomaintain20% 30% ofthe highspeed
growth,twicethreetimesthe GDP growthinthe incomeofurbanand ruralresidents,
manyofusrelishthegovernmenttookthisasanachievementofour GDP may beabit
ofwater,but the revenues, but realmoney.Thisshowswhattheproblemis? Helpus
fightthe governmentand ChinaLeadertobeaddedtothe extentoftheseearlytax cuts,
the tax revenuegap isnotonlyagap atall levels,aswellasgovernmentand business, the publicincomegap.Wealthisnow controlledbythegovernmenttoomuch.
Asecondchannel,investmentand financinginclined,inthisanticrisisprocess,
fourtrillioninvestmentoverthe amountofdaysofcredit,investedwhereto
go? Mainlyfor localinvestmentand financingplatformand largeenterprises, the
majorityofsmalland mediumenterprisesand privateenterprises, the majorityof
entrepreneurs get proportionisrelativelylow,itcausesafortune,especiallyin
propertyand incomewidening.
Thethirdchannel,monopolies,monopolycausedbythe wideningincomegap,
telecommunications, electricity,petroleum,petrochemical,finance,monopolies
monopolyprivilegebyvirtueofexcessprofits,the incomeofsomemonopolyindustries
is our generalcompetitiveindustryrevenueoften times.
Thefourthchannel,irrationaldistributionoflandrevenue.Wehavetwokindsof
landownership.One isthe citystate,aruralcollectives.Ruralcollectives,thiswas
constitutional,heisactuallyafake,sowhenthe landusedfor agriculturalproduction
purposes,heisthe collective,aslongasthislandtoberealized,the establishmentof
the development,inthe processpreciselyproducelargeamountsofLAT,but the
majorityofruralcollectivefarmersreceiveonly1020% ,7080% byall levelsof
government,
developers
away,
so
why
such
a
big
gap
between
urban
and
rural
areas
weare,why weChinesefarmersitisalwayspoorer,farmersinWesterncountriesas
longasthereisland,thenhemustbemiddleclass.
Testwhetherwesincerelysolveruralissues,the key isthatwecannot solvetwo
things:first,tonotgivefarmerslandownership;second,allowingfarmersnot
establishedFarmers.The formeristhelargesteconomicinterestsoffarmers,whichis
the largestpoliticalinterestsoffarmers.But thesetwo,weare afraidof. Ifwetake
ownershipoflandtothe farmers,orfarmers collective,our governmentfinanceson
landcollapsed,morethanhalfoflocalgovernmentrevenuesourcesgone.Therefore,it
causestheurbanruraldisparity.
Thefifthchannel,highpricescausedbythe wideningincomegap betweenrichand
poor.Highpricesare amechanismofredistributionofincomeand platforms.Someof
our peoplealifetimeaccumulatingalot ofmoneyand wanttoimprovetheirhousing
conditions,highpricesofthe threegenerationsofancestorsaccumulatedmoneyswept
away,all ofasuddentheircolorstothemiddleclass,thatmoneygonetoo?Toall levels
ofgovernment,banks, developerswheretogo.
Thesixthchannel,Chinasstockmarket,accordingtoWuJingliansaidthatevenif
the casinoisnotthe place.Sointhestockmarket,Chinastockmarketwho make
money?Asymmetricinformationtoinformationofthatpartyistomakemoney.Who
holdstheinformation?Listedcompanies,the Commission,the fundcompany
executives. For thosewho donot havethe information,themajorityofretailinvestors
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tomakemoneyisnotnormal,donot makemoneyisnormal,8090% are losing
money.Sothe stockmarketisaredistributionofwealthasaplatform.
Inadditiontothe abovesix oclock,the handsofthe peoplewehavemoney,they
put themoneyinthe bank,but inflationsothatthemoneyactuallydepreciate.Excess
ofinflationisthatinflation,thenissuingthe righthandsoftheGovernment,toprintmoremoneyinthe processistoletyourhairticketschangeprocess,whichisare
redistributionofwealth.How the wideningwealthgap,throughthesechannelstopull
him big!Onceayoungmantoldmethataftertheyear2000,Imonthtwo thousand
dollars,3800dollarsamonthnow,and nowthe 3800purchasingpowerofmoneynot as
goodasthe originaltwo thousanddollars,becauseofinflation.
Moreover,inthe year2000,nonew threemountains:Buy and medicaltreatment,
schooling.Now threenew mountainspressureup, and mademe3800dollars
disposabledeclinedsharply,soIask Li, mystandardoflivingisupordown?Hewas
tellingthe truth.
But thisdecade,Chinaseconomyhas maintainedrapidand steadydevelopment
indeed,whichiswhy alot ofpeoplerightnow are socialdiscontent,somepeoplean
Internetcontentnot look,onlytosee the titleofthe BSing,why hewas BSing?Hehas
emotions,feelingofsocialinjustice,sowhy shouldthe outbreakofasocial
crisis.Economiccrisiswillleadtoasocialcrisis,thenthiscrisismay alsobe
accompaniedwiththe outbreakoftheeconomiccrisis.
Economiccrisisand socialcrisisdoesnotmeanlet an, weuse historicalperspective
tosee.Peoplehavealwayshappens,monthalsowanes,cyclicalfluctuationsin
economicdevelopment,
this
is
normal,
we
have
gone
through
so
many
years
of
rapid
development,istherestofthe time.Isarainbowafterthe storm,sotothe 2013
outbreakoftheeconomiccrisisisagoodthingfor ustowin the longtermgrowth
opportunities.Meanwhile Forcedusthroughthiscrisiscantransitionand reform,so
eveniftheeconomiccrisishavenothingtofear.
Thefirstbig problemofthe thirdpoint,the internationaleconomiccrisisstill
ongoing.
Fromthemomenttheperformanceoftheworldeconomywillbeabletoseeit, just
the beautyoftheoutbreakofthedebtcrisisand the outbreakofthe debtcrisisisjust
one ofthe worldeconomiccrisiscontinuesepisode.U.S.economicpresenceinthreemajorissues:
Thefirstisadebtthathedid not wanttofallintotoodeepinLibya,becauseno
money,leavingBushtoObamaisafiscalmess,war isthe money.Not longago,the two
partiesadoptedadecisiononraisingthe debtceilingto14.3trillionbill,but the U.S.a
yearto$14.6trillionGDP,ifthe valueofGDP,morethanonce,itmeansthatayear
aftertheincomeofhardenoughtorepaythe interest,thisisjustdebt,theUnitedStates
therearemanyotherbonds, suchascorporatebonds, financialbonds, etc.,atotalof60
70trillion,isthe sum oftheglobalGDP ayear,ifthe UnitedStatesisanormalcountry,
whichhas longbeenbankrupt,and the reasonisnot bankrupt,becauseheisthe
overlordoftheworld,you canuse his dollarhegemonyexploitedpeoplesofthe world.
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Americassecondproblemisthatthe entityseconomicrecoverythanexpected.
Thethirdproblemisthe highunemploymentrate,currently9.1%,stillmore,the
U.S.governmentcaresaboutemploymentand unemploymentinparticular,because
theyare reallyservingthe government.WeChinesegovernmentcaresaboutmostis
GDP and fiscalrevenueand land,whichistheirownachievementsand theirown income.
EUeconomies,thereare alsothreemajorissues:
Thefirstproblemisthatweare alwaystalkingaboutthe Europeandebtcrisis.
Thesecondproblemisthe Eurobasecurrencytoo,becausehemonetary
unification,but nounifiedfiscal,the unevendevelopmentofvariouscountries,leading
toaseriesofquestions.
Thethirdproblemisthe agingpopulationinthewholeofEuropethereisthe
wholewelfaresociety,makingthe wholesocietyforwardvitalityand
underpowered. And the Japaneseeconomysincetheslumpinthe nineties,earthquakes,
tsunamisplustriplenuclearradiationcrisisitworse,negativeeconomicgrowth,sothe
Japaneseeconomyisnot optimisticaboutthe future.
Involvementofdevelopingcountriesinthe emerginginflation,Indiasinflation
was over10%,Russiahas morethan10%,morethan6%inBrazil,Chinathan6.5%.This
is the momentthe worldsmajoreconomies,the maincondition,fromthe situationof
theseeconomies,wecanseethatafterthe economiccrisisisnot over.Why isnot over
yet?First,emergingeconomiesoverthe past2012arapidrecoveryofbottombounce,but stimulusstimulusout ofthe stylusoutofthe heartbeatstronger.Aslongasbooster
awithdrawal,the economywillgodown.
Followedfromthehistoricalexperience,amajorcrisistakestimetocomeout.U.S.
GreatDepressionof1929,thereare two versions,onein1929to1934,atotaloffive
years,the secondis1929to1941,atotalof12years;1970soil crisislastedsevenyears;
80yearsofU.S.savingsand loancrisislastedsix years;1990sdebtcrisiscontinuesin
Japanfor eightyears;late1990sAsianfinancialcrisislastedfor fouryears,thenthe
crisiscomparedwiththe GreatDepression,not soserious,comparedwithother,atleast
asmuch,soexpect23yearsinthe past,isnot sosimple.Therefore,the international
economiccrisiswillcontinuefor theinternationaleconomiccrisiscontinuedtogiveus
what?Exportsbroughtgreatpressure,lackofexternaldemand.
Thefirstbig problemofthe fourthpoint,internationalresourcesand environment
crisis.
Nowinternationalcommoditypricesingeneralare high,globalwarming,natural
disasters, the mostimportantare relatedtoChina,1.4 billionpeopleinmass
consumption,and consumptionaffectthe environment,our countrycomparedwith
otherindustrializedcountries,Chinaaccountedfor led theworldsfirstcarbondioxide
emissions,
resource
and
environmental
pressures
affecting
their
own
development.
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Thefirstbig problemofthe fifthpoint,Americanhegemonybroughtaboutthe
crisisintheinternationalclashofcivilizations.
Americanhegemonybegan10yearsago,whenChinasinternationalstatuscamein
fifth,six,whilethe UnitedStatestosuppressChina,begantocreatetrouble,suchasthe
SouthChinaSea collisionincident,thebombingincidentEmbassyinYugoslavia,but bin LadensappearanceattractedAmericasattention,sothatthe UnitedStates
concentrateondealingwithOsamabinLaden,Osamabin Ladenisnowgone,the
UnitedStatesbegantofocusagainturnedtoChina,soinrecentyearsaroundusbegan
toengageinmilitaryexercises, war,suchasIraq,Afghanistan,NorthKorea,Taiwan
problem,the SouthChinaSea,the DiaoyuIslandsissue,Vietnamand other
issues.UnitedStatesbegantotakeadvantageoftradecompetition,supportavarietyof
antiChinaforces,antidumpingChineseproductssocomprehensivemeanstocontain
Chinasdevelopment.
Americascorenationalinterestsistomaintainits hegemony,againstall
opponents. Tocombatthe SovietUnion,the SovietUniondisintegrate, asagainstthe
euro,the U.S.manufacturingeventsinKosovo,inordertofightagainstthe Japanese,
thesigningofthe PlazaAccordforcedthe appreciationofthe yen bubble,sothat
longtermsluggishJapaneseeconomy,inordertocombatthe Asiantigers,Soros
makingafinancialcrisis.
NowturntoChina,Chinahas 1.4 bil lionpopulationisabig country,alonghistory
ofcivilizationfor thousandsofyears,nearly30yearstomaintain10% ofthehigh
growth,economic
output
has
been
routed
to
the
second,
in
accordance
with
this
trend
continues,10years15yearsthanthe UnitedStates,thisisdefinitelythe UnitedStates
can nottolerate.Now toseewhetherChinawillhavemorethanthe previous
compressivecapacityofthosecountries,and ifnot,thentheoutcomeisthe same.So
now Chinaisfacingamoresinisterinternationaldevelopmentenvironment,
surroundedbyfriendslessand less,who toldyou all day topursueGDP,big hat and
nocattle?Busyall daytoachievecatchupdevelopment,turntoovertake,super
regulatorydevelopmentsand othertargetsunderthreeyears,infact,weourselvesget
nothing,othersyou havetobearwithsuitableinternationalresponsibilities and
pressures.
Thesecondmajorproblem the internationaleconomicoutlook.
Internationaleconomicoutlookmainemphasisheresix points.
Thissix pointtwo yearsago,severalseminarsIhaverepeatedlyemphasized, and
now lookbackatmypredictionsare basically correct,includingthe September11
attacksonthe UnitedStatesafterthe outbreakofthe economictrendprediction,I
wouldsay lookatthe UnitedStateshowtodealwiththe September11incident,when
the UnitedStatesthereare two methodsavailable,the firstmethodismagnanimous
U.S.authorities,suchastheuse ofthismethodtodealwith,the U.S.economywill
continuetoprosper.Thesecondmethodisthe use ofmassiveretaliation,ifthisisthe
casesincetheU.S.economywilldecline.Infactthe U.S.usesmassiveretaliationto
handlethe incident,sureenough,the nexttimethe U.S.economybruised,battered,
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10
indicatingthatIwas forecastiscorrect.Anotheroneisafourtrillioninvestmentpolicy
aftertheintroductionofthe forecast,Ihad saidfourtrillioninvestmenttoeconomic
stimuluseffectcan lastuptoayear,inearly2009,whenIpredictedsecondhalfof2010
Chinaseconomywillgodown,whenChinaseconomyisVplusUshaped,but the
secondhalfof2010justinaneconomicturningpoint,the factthatinthethirdquarter
of2010Chinaseconomydoesgodown.Isay now is2013totheoutbreakofthe economicand socialcrisis,wecanverifywhatIsaidright.For the pasttwo years,the
economicsituationinthe judgmentofthesix sentencecanalsobesaidtobesix point
whereIinsist.
Thefirstpointisthe internationaleconomiccrisiswillcontinue.International
economywillcontinueatlow levelsfor atleast2to3years,whichwas two yearsago
thatthe firstsentence,itseemstrue,for reasonsalreadyexplainedearlierinthishere.
Thesecondpointistheinternationaltrade,investmentand employmentsituation
has improvedbut isstillnot optimistic.Internationaltradein2009droppedby13%,
thenreboundedin2010,althoughareboundin2011,but did not bounce backtothe
levelbeforethe internationaltradeisnow the mainproblemfacingtheinternational
tradeprotectionismresurgence,and thisisthe UnitedStatesand Europedeveloped
capitalistcountriesengagedintradeprotection,toengagewiththe past,mainlyin
developingcountries,dependingonthe characteristicsoftradeprotection,previously
developedemphasisonfreetrade,nowistheChineseemphasisonfreetrade,which
currentlykindoftradeprotectionismsignsofthe worldeconomyonChinaseconomic
development,especiallythe developmentofextremelyunfavorable.
ThethirdpointistheU.S.dollaralsodepreciatedfromthemediumand long
term.
Why
dollar
devaluation?
We
can
do
a
simple
analysis,
the
U.S.
national
debt
is
currentlyhigh,fromnow the UnitedStatesfollowingfourmethodscanbeusedto
repaydebt:first,the saleofstateownedassetstodebt;Second,the gradual
developmentofthe economy,the developmentofindustrytodebt;the third,bythe
refinanceolddebt;fourth,printingmoneytorepay.Thenthe UnitedStateswilltaketo
repaythe debtitthatway?U.S.willuse the firstmethodthatis becomingtobuy assets
torepayyou?CurrentlythelargestU.S.creditorisChina,the UnitedStatesisunlikely
toapplythismethodtosolvethe debtproblem.Theuse ofsecondand thirdmethodsto
repaydebtand itlookstooslowtootired.Weighmostlikelyafterthe U.S.approachis
toprintmoney,becausethismethodislowcost,higheffect.Theprintingofdollars
directbenefitsare:First,the directformationofpurchasingpower,asthe worlds
currencycan
be
consumed
directly.
The
second
is
adirect
reduction
of
debt
burden,
the
dollarstartedtodepreciatemorenaturalcreditorsinjured.Threeistoincreasethe
competitiveness ofU.S.exports.Fourisadirectreductionofthe fiscaldeficit.Fiveis
beneficialtothe WallStreetfinancialmarketactivities,asfinancialinnovation,financial
derivatives are inU.S.dollarsasameanstoreleasemoremoneyonWallStreetto
promotegreaterprosperity.U.S.dollarnow emboldenedgreatestcloutliesinits
possessionalargegoldreserves,the worstsituationistoabandonthe dollar,recreatea
new worldcurrency,and its virtue,but you caneasilyget rid oftheirhugedebt,sothat
the dollarwillcontinuetodepreciatenexttime.
Thefourthpointisthatanew roundofglobalinflationisinevitable.Infact,
inflationhas comeinemergingcountries,the developedcountriesare alsocoming,the EUhas reached3%, the UnitedStateshas morethan2%, thefuturewillevolvefurther,
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the firstreasonisthatcountriesinordertostimulatetheireconomieshavetakenlow
interestratepolicy,the policyofloweringinterestratesisdoubleedgedsword.Onthe
one handthe low interestratescanspurinvestmentand boostthe economy;whilethe
otherhand,itwillleadtoassetbubblesand inflation.The secondreasonisthat
governmentstakeinordertomaintainahighgrowthpolicyofprintingmoney,and
now inmanycountriesthroughtheissuanceofmoneytomaintainthe highinflationtostimulatetheeconomy,leadingtohighprices,creatingabubble economy.
Thefifthpointisthe globalindustrialstructureisacceleratingmolding.Mainlyin
threeaspects:First,increasedthe proportionofthe realeconomy,virtualeconomy
declined.Becausethe virtualeconomyhas triggeredthe financialcrisis,risk,sonowall
countriesinthe importanceoftherealeconomy;Second,the emergingindustryinthe
globaleconomicstructure,the proportionwillrise.Thesocalledemergingindustry
referstonew energy,energysavingand environmentalprotectionindustries,the
currentcrisisfacingthe worldsthree the energycrisis,environmentalcrisis,are
inseparablefromthe economiccrisistoresolvedevelopmentofemergingindustries;
threeemergingeconomicpowersintheinternationalcommunitystatusincreasethe
statusofWesterndevelopedcountrieswillbesomewhatweakened.
Thesixthpointisthe worldsmajoreconomies,the fiscaldeficitand thedebt
burden willhauntthe futuredevelopmentofthe worldeconomyfor sometime.With
the governmentspendingmore,lessincome,whichled tonationaldevelopmentbonds,
ifthe controllablerange,therewillbeconducivetonationaldevelopment,ifitexceeds
the scopeofittriggeredthedebtcrisis.
Itisobviousfromthesesix internationaljudgein2023thatinthenext five inthe
first
medium
term
economic
situation
is
still
not
optimistic.
The
six
big
trend
will
continuetoevolve.
BINGTRANSLATION
LiZuojun:August2013,Chinawillbreakouttheeconomiccrisis
ThisarticlecomesfromthefinancialnetworkonJune25,2013
Sept. 17, 2011 titled, Economic Crisis Will Befall China in 2013. The speech was presented at an internal meetingof the Changsha Alumni Organization of Huazhong University of Science and Technology,
Forresourceandenvironmentalpolicy,developmentresearchcenteroftheStateCouncilLi
Zuojun,DeputyDirectoroftheInstitute,washiredasconsultantsorbymultiplelocal
GovernmentChiefEconomist.FromtheEconomistWuJinglian.FollowinghisSeptember27,
2011,uponinvitationbytheAlumniAssociationoftheUniversityofscienceandtechnology,
inaninternalreportmadeby2013,Chinawillreportoftheoutbreakoftheeconomiccrisis.
1thfirstbigproblemsituation;
2ndlargestissuessocialcrisis;
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Governmentexpenditures,strengtheningwaterfacilitiesconstructionneedsGovernment
expenditures,stronglydevelopmentstrategyemergingindustriesneedsGovernment
expenditures,Tomaintainsocialstabilityatallcostsneededgovernmentspending,spending
agreatdealofpressure.Anotherpiece,notbefore,now,thatwasitsfocusonarrivalofthe
repaymentperiod,debtservicepressures.Afewyearsago,4trillioninvestmentvolumeof
credit,was
avery
handsome,
but
it
snot
pie
in
the
sky,
are,
starting
from
the
second
half
of
theyear,repaymentperiodstartedcoming,thenexttwoyearsto4.6trillion.Whyrecently
YunnanHighway,andShanghaiofcityvotedandweChangshaofHighwaywait,began
displayedoutsomeproblem,actuallythisjusticebergacorner,isbecausemassof
concentratedrepaymentperiodcomesandincomeflownotsymmetriccausedofhuge
pressure,soastimeofover,to2013beforeandafter,haspartlocalgovernmentmayto
bankruptcy,certainly,hasarmy,putbarreltohereaput,whosaidGovernmentbankruptcy?
Governmentwillnotgobankrupt.Whobrokeit?BreakingtheBank,moneyfromtheBank,
banksarewherethemoneycomesfrom?Fromthemajorityoftheenterprisesandpeople,is
theirproduction.Thisisthesystemicfinancialrisk,thisisthefirsteconomicreasons,causeof
thecrisis.Apropertybubbleburstbeforepossiblecrisisduetothetimeconstraintsdonot
expand.
Secondduetoexternalreasonswhyinternational,afewyearsagoourrapideconomic
developmentinChina,whichhasamajorpower,wasthatalargenumberofinternationalhot
moneyinflowsintoChina,supportingoureconomicbubblehasgeneratedhotmoneyis
increasinglylimited,andspeculative,willcome,andsaycango,hemainlydependsonthe
returnoninvestmentsinvariousparts.ArenowstayinginChina,becauseChinahas
maintainedrapideconomicgrowthinrecentyears,thesespeculativereturnisrelativelyhigh,
butdownChinaseconomy,Chinarisksemerging,someinternationalorganizationsbegan
aggressiveshortingChinaconceptstocks.UnitedStateseconomyslowlyrecovers,United
Statesdollarlikelyappreciation,UnitedStateswouldalsolikelyraiserates,sothese
internationalhot
money
is
likely
at
some
point
alarge
withdrawal.
This
results
in
US
China
economicbubbleburst,thisisbadgovernment.
Thirdreasonispoliticalreasons,mustalsohaveavisionofthepoliticaleconomyofChina.
Whyis2013,2013theGovernmentGeneral.IntheGovernmentbeforethegeneralelection,
withinthetermofthisadministrationinthelastyear,thehighestguidingprinciplejustdont
happen,stabilityatallcosts,maintainingthestabledevelopmentoftheeconomy,thatsthe
mainthing.
OntheleadershipofthenextGovernment,facedwithachoice,either.Oneoption,followed
bythelastbubble,meticulouslymaintained,thenhewilldefendwhatwhen?Maintainedby
2015at
the
latest,
or
2016,
so
that
time
is
abigger
crisis.
Who
has
the
responsibility
of
that
timeofcrisis,andwhodontknow,thisisanoption.Thesecondoption,notthebubbles,let
thefoambrokeawaysoonafterhetookoffice.Afterthebreak,firstbroughtaperiodof
painful,butfornewleadersisagoodthing,becausetheresponsibilityisclear,notcause
them,aretheresultofearlier.Secondly,thedanceonthebubblewithdowntoearthitisnot
thesame,afterthebubblebrokehimdowntoEarth.Furthermore,thenewrecordeasier,
sincebeginningofthereduced,afterthebubbleburstperformanceisrelativelyeasytodo,
otherwiseahighatthebeginningtosetthemupisverydifficult.InGeneral,thenew
leadershiptookoffice,infrontof35months,outofpoliticalconsiderations,toinheritthe
spiritmustbecarefully,andafter35months,itbegantoopenupsomeoftheprevious
questions,showingitsnewthinking,newinitiatives.AnenterpriseforanewChairman,also.
Sowhy
is
that
the
economic
crisis
may
be
in
2013,
most
likely
in
August
2013
(the
second
half).
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14
Thefourthreason,shortlonginthreecyclesofthetroughmaybesuperimposed.Short
period35yearcycle,thiscycletheeconomyisdown,tospecifytheyearaftermayhit
bottom.Cycleisaround910cycle,wethinkof1949,1957,1966,1976,1989,1998,every
decadeorsototossdown,thenfrom1998tothepresentaremorethan10years,shouldhave
arrived.08
09
is
to
have
happened,
but
later
postponed
it
because
policy,
but
cannot
push
too
far.Alsohavingalongcycle,a60yearcycleofthecycle,theycountthebookscycle.So,
around2013,thepossibleoutbreakofaneconomiccrisisinChina,theeconomiccrisis:some
SMEsbankruptcy,partBank,partofalocalgovernmentbankruptcies,thisisthenextstepwe
havetofacesuchasituation.
While35issues,couldalsobeasocialcrisis.Sincetheoutbreakoftheeconomiccrisis,may
alsoleadtosocialproblems,atpresent,thebuildupistheoutbreakofvarioussocial
contradictionsfromintensifyingorLurker.
Onthe2ndlargestissuessocialcrisis
Isetoutfromtwoperspectives:thefirstpointisthatoursocietyissick,sickishot.
Thefirstheat,heatforcivilservants.FreedoisChinascivilserviceintheworld,the
Universityentranceexam,entranceexaminationtoatwoorthreepeople,Drexam,oneoutof
tenortwentypeoplecanalsogetintoa.ButcivilserviceexamChina,thousandsofpeople
cantpasstheprevious.Whysharpenheadthecivilserviceexam?Becausecivilservantsrich
righthaspotentialhasguarantees,becauseweChinaGovernmenthasmasterhas
increasinglymoreofwealth,andincreasinglymoreofpower,controlhasincreasinglymore
ofassets,landisChinaGovernmentof,variousmineralisGovernmentof,taxofrightis
Governmentof,wieldabsolutepowerofpowerisGovernmentof,manyimportantof
industrymonopoly
is
in
Government
hand
in,
Chinese
Government
too
cattle
has,
everyone
arewantedtoDangcivilservants.Thermalresponseofthecivilservicereformastep
backwards.
Thesecondheat,heat,heatenterprises,StateownedenterprisesGuoJinminback.Currently
Centralenterprisesayearincomeisthesumofsmallandmediumenterprisestop500private
enterprises,StateownedenterprisesinChinabyvirtueofmonopolyprivileges,land
resourcessuchasmonopoly,monopolisticcreditresources,monopolypricing,accessto
excessprofits,whichreflectsourreformsastepbackwards.
Thethirdheat,hotrealestate.Universalisrealestate,slightlykindofstrengthofenterprise
noware
got
real
estate,
Haier,
and
Hisense,
and
TCL,
and
ya
Al
Gore,,
and
Luo
Mongolian,
andOrdosalltheseexcellentofprivateeconomicenterpriseareingotrealestate
development,someenterpriserealestateinitsinternalofaccountedforthanis7080%above,
IaskedhaddomesticofsomeChairmanandGeneralManager,Isaid,youwhytogotreal
estatedevelopmentdoes,youindustrialnotdohavequitegoodofdid?Prettybigone?Then
heasked,hesaidwhyIdontdorealestatedevelopment?Realestateismybrickandmortar
returnseveraltimesover,Idonotfuckmesilly,thisissomeofthelargercompanies.What
aboutthesmallandmediumenterprises?Hesreal,hedevelopsnopowerdirectly,sohes
industrialhollowing,industrydoesnotdo,friedfriedtoHangzhoufromWenzhou,fried
fromHangzhoutoShanghai,FRYfromShanghaitoBeijing,firedfromBeijingtoSanya.And
astrongindividual,buyingaHouse,onepersonboughtdozensofcopies.Thepeoplecannot
affordto
buy
it?
They
talked
about
the
House,
as
soon
as
you
meet
to
talk
about
the
House,
as
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15
longaspeopleseeme,heasked,teacher,yousaythatthepriceistogoupordown?When
up,whenfallen?Everyoneinrealestate.Thatmeanswhatstheproblem?Noteill.
Thefourthheat,speculativefever,eitherrealortradingstocks,eitherstockorreal,notreal
friedproducts,yougarlic,gingeryou,beansyoulikefirefunds,loanshark,popular
speculation,speculation
prevalent,
what
does
that
mean?
Note
ill.
Fifthheatofimmigration.Politicianswanttobenaked,entrepreneurshavealittlemore
strengthtoimmigrants.ThisistheauthenticityofChinesecontemporarysocialissues.
Secondperspectiveonsocialissues
Gapistoolargetobeanimportantreasonforcausingsocialinstability,isalsoanimportant
aspectofmanypeoplethesociety.
Howtowidenthewealthgap?
Firstachannel,tax,90generationmediumtermyilai,westrengtheninghasGovernmenton
economicofregulationstrengtheninghastax,priorityisguaranteesIRS,weGovernmentof
taxannuallykeep20%30%aboveofsuperhighspeedgrowth,twicetimesthreetimestimes
YuGDPandurbanandruralresidentsofincomegrowth,wemanyGovernmentonputthis
asachievementsrelish,weofGDPmaykindofwater,butrevenuebutreallygoldsilver.That
meanswhatstheproblem?OurGovernmentandcompetingreachedbottomlevels,earlyon
thetaxcuts,fiscalincomedisparityisnotonlythesectionsofthegapalsowidenedincome
gapbetweenGovernmentandbusiness,thepublic.Toomuchgovernmentcontrolofwealth
now.
Thesecond
channel,
slope
of
the
investment
and
financing,
in
the
middle
of
the
anti
crisis,
4
trillionofinvestments,hypervolumeofcredit,investmentandwhere?Mainlytolocal
financingplatformsandlargeenterprises,themajorityofsmallandmediumenterprisesand
privateenterprises,andlowertheproportionofentrepreneursget,resultinginfurther
wideningofthewealth,particularlyinpropertyandincome.
Thethirdchannel,monopoly,monopolyofincomedisparity,telecommunications,electric
power,petroleum,petrochemical,finance,monopolyprivilegesbyvirtueofmonopoly
receivedexcessprofits,monopolyincomeisincomeadozentimesinourcompetitive
industry.
Afourth
channel,
land
income
distribution
is
not
rational.
We
have
two
types
of
land
ownership.AcityState,aruralcollective.Ruralcollectivealldoes,thisisConstitution
providesof,heactuallyisafakeof,sodanglandasagriculturalproductionusesofwhen,he
iscollectivelyowned,aslongasthislandtovariableare,togotdevelopment,inthisprocess
inthepreciselyproducedlargeoflandVAT,butgeneralruralfarmerscollectiveonlygot10
20%,7080%islevelsGovernment,anddeveloperstookhas,sowhyweurbanandrural
wealthgapsolarge,whyweChinafarmersalwayscomparisonpoordoes,Farmersin
Westerncountriesaslongastheland,thathemustbemiddleclass.
Testofwhetherwereallysolvetheproblemsofagriculture,thekeyiswecanaddresstwo
things:first,togivefarmerslandownershipand,secondly,Yundoesnotallowfarmerstoset
upfarmers
Association.
Former
farmers
maximum
economic
benefits,
which
is
the
largest
politicalinterestsoffarmers.Butthesetwo,wecant.Ifwegavethelandtothefarmersor
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farmers group,ourGovernmentlandfinancecollapsed,morethanhalfoflocalgovernment
revenueisgone.Therefore,resultsinurbanruralwealthgap.
Thefifthchannel,highpricescausedbythewideningincomegapbetweenrichandpoor.
HighHousepricesisoneoftheincomeredistributionmechanismsandplatforms.Wehad
somepeople
alifetime
to
accumulate
alot
of
money,
to
improve
housing
conditions,
high
accumulationofthreegenerationsofancestorsinthepriceofmoneysweptawaybackin
shapetogotomiddleclass,wheredoesthemoney?GototheGovernments,banks,
developers.
Thesixthchannel,Chinasstockmarket,accordingtoWuJingliansaidis,whereeventhe
casinosarenotasgoodas.Onthestockmarket,whotheChinesestockmarkettomake
money?Informationasymmetriesofinformation,thatpartyismakingmoneyWhocontrols
information?Listedcompanies,securities,fundcompanyexecutives.Asforthosewhodonot
masterthemajorityofindividualinvestorstomakemoneyisnotnormal,notmakingmoney
isgood,8090%islosingmoney.Sothestockmarketisalsoaplatformofwealth
redistribution.
Inadditiontothesesixpoints,weareinthehandsofthepeopleandthemoneythey
depositedthemoneyintheBank,butactualinflationsothatthesemoneydevaluation.
Inflationisexcesscurrencyinrealterms,thenoteissuingrightsinthehandsofthe
Government,howisyourtickettogettheprocessofprintingmoney,itisalsoarealignment
ofwealthredistribution.Howtowidenthewealthgap,pullinghimthroughthesechannels!
Onetime,ayoungmantoldme,beforeandafter2000,Im$2000amonth,now$3,800a
month,nowthepurchasingpowerof$3,800isworsethan2000dollarsbecauseofinflation.
Notonlythat,butnonewthreemountainataround2000:buyhard,difficult,gotoschool.
Newthree
mountains
press
right
now
makes
me
$3,800
disposable
fallen
sharply
as
a
proportionofthemoney,soasktheteacher,mystandardoflivingisrisingordecreasing?He
wastellingthetruth.
ButthistenyearsChinaseconomyhasmaintainedfastandstabledevelopment,whichis
whyalotofpeoplenowonsocialdiscontentnow,someInternetaccess,withoutreadingthe
contents,onlytoseethetitleManiangwhyheManiang?Hewasinamood,socialinjustice,
sowhywouldasocialcrisis.Theoutbreakoftheeconomiccrisiswilltriggerasocialcrisis,
thecrisisisalsopossiblewiththeoutbreakoftheeconomiccrisiswereaccompaniedby.
Economiccrisisandsocialcrisisdoesnotmeanthedayouttogounnoticed,welookto
history.One
unexpected
good
or
bad
fortune,
Moon
Moon
has
shine,
periodic
fluctuation
of
economicdevelopment,thatsnormal,weareaftersomanyyearsofrapiddevelopment,is
therestofthetime.Isarainbowafterthestorm,sountil2013,outbreakofaneconomiccrisis
isagoodthing,winningopportunitiesforourlongtermdevelopment.Throughthe
restructuringandreformofthecrisishasforcedus,soevenifthecrisisitsnotsobad.
3rdofthefirstissue,theinternationaleconomiccrisiswilllast.
Fromthepresentperformanceoftheeconomiesoftheworldwillbeabletosee,justusdebt
crisisandEuropeandebtcrisisisjustaninterludeoftheworldeconomiccrisiscontinued.
UnitedStateseconomytherearethreemajorissues:
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Firstisheavilyindebted,hewasnotinLibyaintoodeep,becauseofnomoney,Bushleft
Obamaafiscalmess,warisformoney.Notlongago,Twopartythroughhasonimprove
bondsceilingto14.3trillionofBill,butUnitedStatesayearsofGDPon14.6trilliondollars,if
onceoverGDPofvalue,onmeanswithyihouayearshardproceedsofincomealsoenough
reimbursementinterest,thisjustbonds,UnitedStatesalsohasothermanydebt,like
Enterprisedebt,
financial
debt
wait,
Trojan
has
6070
trillion,
is
global
ayears
GDP
of
sum,
UnitedStatesifisgeneralnational,itsearlybankruptcyhas,isnotbankruptcy,becauseheis
worldShangofOverlord,canusingheofdollarshegemonyexploitationworldpeople.
UnitedStatesofthesecondissue,istherecoveryoftherealeconomythanexpected.
Thethirdproblemisthehighrateofunemployment,stillisabove9.1%,UnitedStates
Governmentcaresaboutemploymentandunemployment,becausetheyreallyservethe
Government.WeChinesecareaboutGDPandlandandrevenue,thatis,hispolitical
achievementsandhisincome.
EUeconomy
there
are
three
major
issues:
ThefirstquestionthatwealwaystalkabouttheEuropeandebtcrisisnow.
Secondissueisthebasecurrencyoftheeuro,becausehehadMonetaryUnion,butno
unified,unbalanceddevelopmentinindividualcountries,ledtoaseriesofquestions.
ThethirdissueistheentireEuropeanpopulationageingalsobenefitssocietyasawhole,
makesthewholelackofvitalityandimpetustosocialprogress.Japaneconomy90justfell
apart,earthquakes,tsunamisandthetriplecrisisofnuclearradiationmakesitworse,and
economicgrowth,Japanseconomicfutureisnotoptimistic.
Emergingdevelopingcountriessufferfrominflation,Indiasinflationhadexceeded10%,
Russiamorethan10%,Brazilmorethan6%,morethan6.5%China.Thatisnowtheworlds
majoreconomiesmainlyfromtheirsituation,wecanseethat,aftertheeconomiccrisisisnot
over.Whynotoveryet?Firstofall,thepasttwoyearsseenrapidreboundattheendofthe
recoveryinemergingeconomies,butpolicystimuli,shotout.Assoonasshotout,the
economyisdown.
Followedbyhistoricalexperience,agreatcomingoutofthecrisisistotime.UnitedStates
1929yearsoflargedepressionhastwospeciessaying,ais,1929to1934,totalfiveyears,IIis
1929to1941,total12years;70generationofoilcrisiscontinuedhas7years;80generationof
UnitedStates
storage
credit
crisis
continued
has
6years;
90
generation
Japan
of
bad
crisis
continuedhas8years;90generationlateofAsiafinancialcrisiscontinuedhas4years,sothis
fieldcrisiswithlargedepressioncomparedtodidntsoserious,withotherofcomparedto,at
leastquite,soexpect23yearspast,Notthatsimple.Sotheinternationaleconomiccrisiswill
last,theinternationaleconomiccrisiswillbringuswhat?Exportsbroughtabouttremendous
pressure,insufficientforeigndemand.
4thsalesfirst,internationalresourcesandenvironmentalcrises.
Internationalcommoditypricesoverallarehighernow,globalwarming,naturaldisaster
prone,themostimportantarerelevanttoChina,1.4billionpeopleofmassconsumption,
consumerimpact
on
the
environment,
compared
to
other
industrialized
countries,
China
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dominated,carbondioxideemissionsintheworldsfirst,pressureonresourcesand
environmentaffecttheirowndevelopment.
5thforthefirstissue,ofdancebringsinChinaandtheinternationalcrisisoftheclashof
civilizations.
SinoUSdance10yearsQianonbegan,thenChinainternationalstatusrowin
diwuliuming,andUnitedStatestosuppressedChina,onbeganmanufacturingincidents,
asseahitmachineevent,bombingresidentSouthEmbassyevent,butbinLadenofappeared
attracthasUnitedStatesofattention,letUnitedStatesconcentratedpoweronfuladeng,now
binLadengohas,UnitedStatesbeganputattentionagainsteeringChina,soinrecentyears
beganinwearoundgotmilitaryexercises,andlaunchedwar,asIraq,andAfghanistanwar,
NorthKoreaproblem,Taiwanproblem,seaproblem,TheDiaoyuIslandissue,VietNam,and
soon.UnitedStatesbegantousetrade,supportingantiChinaforces,antidumpingof
Chineseproducts,andmorecomprehensivemeanstocontainChinasdevelopment.United
Statesnationalcoreinterestsistomaintaintheirhegemony,againstallopponents.Tocombat
theSovietUnion,divideanddemoralizetheSovietUnion,againsttheeuro,UnitedStatesmanufacturingeventsinKosovoforthefightagainstJapan,signedthePlazaaccordforcing
theyenbubble,Japanlongtermeconomicdoldrums,tocombatAsiasfourlittledragons,
Sorosmadethefinancialcrisis.
NowitsuptoChina,andChinaisagreatpower,with1.4billionpeople,hasalonghistoryof
thousandsofyearsofcivilization,nearly10%percentformorethan30yearsofhighgrowth,
economicoutputhasrankedthesecond,basedonthistrend,10,and15,overUnitedStates,
thismustbetheUnitedStatescannottolerate.CanChinanowthanbeforethecountry
strongerunderpressure,ifnot,thentheoutcomeisthesame.Chinanowfacesahostile
internationalenvironmentfordevelopment,lessandlesspeoplearound,whotoldyouto
pursueGDP,animpudentattempttorepresentthedefeatasavictory?Busyalldaytodocatchupwithdevelopmentandcurvepasses,Superregulationobjectivesofdevelopment,a
differenceofthreeyears,infact,wedidnthaveanything,someoneisaskingyoutoassume
withcorrespondinginternationalresponsibilityandstress.
SecondbigproblemInternationalEconomicOutlook.
InternationalEconomicOutlookhere,mainemphasisonsixpoints.
ThissixapointsintwoyearsQianofnumbertimesseminarintheIrepeatedlytostressed
had,nowbackheadseeseeIthenofforecastbasicallyareiscorrectlyof,whichincludingon
911eventoutbreakHouUnitedStateseconomictrendofforecast,IthenonsaidseeUnited
Stateshowtoshould911event,thenUnitedStateshastwospeciesmethodcanselected,firstspeciesmethodisUnitedStatesauthoritiesmagnanimity,asusedthismethodtoshould,
UnitedStateseconomicwillwillcontinuestoprosperity.Thesecondmethodistheuseof
massiveretaliation,ifthatisthecaseUnitedStateseconomywilldecline.InfactUnitedStates
workthroughthemassiveretaliationtothisincident,andsureenough,UnitedStates
economyovertherestofscarred,sapped,indicatingthatmypredictionwascorrect.Alsoais
on4trillionofinvestmentpolicyintroducedHouofforecast,Ithenonsaid4trillion
investmentoneconomicstimulusofeffectupcancontinuedayears,in2009earlyofwhenI
forecast2010secondhalfofChinaeconomicwillwilldowngo,thenChinaeconomicisvplus
ushaped,but2010secondhalfofjustiseconomicofinflectionpoint,factsprovedin2010
thirdquarterChinaeconomicdoesdowngo.Ishouldsayrightnowiseconomicandsocial
crisisin2013,wecanexaminemyright.Forjudgingtheeconomicsituationmorethantwoyearsofsixwordcanbesaidtobesixmainpointshere,andIinsiston.
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1thinternationaleconomiccrisiswillcontinue.Internationaleconomyremainslow,atleastin
23,itwastwoyearsagothatthefirstsentencenowseemstrue,forreasonsexplainedearlier,
Iamnotgoingtosayanymore.
2ndinternational
trade
investment
and
the
employment
situation
is
eased,
there
is
still
optimism.Internationaltradein2009declinedhas13%,thenin2010appearedhasrebound,
whilein2011alsohasrebound,butalsodidntreplytoreboundQianoflevel,international
tradenowfacedofmostmainofproblemisinternationalprotectionismagainrise,andthisis
beautyEuropedevelopedcapitalismnationalingottradeprotection,withpasttodeveloping
mainlygottradeprotectionoffeaturesdifferent,yiqianisdevelopedstressedfreetrade,now
isChinastressedfreetrade,Currentsignsoftradeprotectionismonthedevelopmentofthe
worldeconomywerenegativeonChinaseconomicdevelopment.
3rdisthemediumandlongtermfallinthedollar.Whythefallinthedollar?Wecanmakea
simpleanalysis,UnitedStatescurrenttreasurieshigh,nowUnitedStatesfollowingfour
methodsmay
be
used
to
pay
off
debt:
first,
the
sale
of
State
owned
assets
in
debt;
second,
the
progressivedevelopmentofeconomicdevelopmentindustrydebt;thethird,takenewdebts
andolddebts;IV,printingmoneytopay.Onewaythenutaketopayoffthedebt?United
Stateswilladoptthefirstapproachistobuyassetstopayhisdebts?CurrentUnitedStates
biggestcreditorsareChina,UnitedStatesisunlikelytoadoptsuchasolutiontothedebt
problem.Secondandthirdwaytopayoffdebtandlookedslowandtired.BalanceUnited
Statesthemostpossiblewayistoprintmoney,becausetheeffectsofthislowcost,high.Print
directlybenefits:oneisdirectlypurchasingpower,asaworldcurrencycandirect
consumption.Secondistodirectlyreducethedebtburden,startingfallinthedollar,natural
creditorswereinjured.ThreeistheUnitedStatesrisingexportcompetitiveness.Fourisa
directreductionofthefiscaldeficit.FiveactiveisbeneficialtoWallStreetfinancialmarkets,
financialinnovation,
financial
derivatives
are
in
United
States
dollars
as
ameans
of
issuing
morecurrencypromptedtheWallStreetmarketmoreprosperous.UnitedStatesagainstthe
dollarnowhavenofearofgreatestenergyislargegoldreservesattheirdisposal,theworst
situationistofinallygiveupthedollar,againcreatinganewworldcurrency,butitcaneasily
shakeoffitshugedebts,sonexttimewillcontinuetofallinthedollar.
4thisanewroundofglobalinflationisinevitable.Infact,inflationinemergingcountrieshas
arrived,comingindevelopedcountries,theEUhasreached3%,UnitedStatesmorethanthe
2%,willfurtherevolveinthefuture,thefirstreasonisthatStatesadoptapolicyoflow
interestratestostimulatethedomesticeconomy,policyofloweringinterestratesisadouble
edgedsword.Lowinterestratescanspurinvestmentandboosttheeconomyontheone
hand,on
the
other
hand
but
could
lead
to
asset
bubbles
and
inflation.
A
second
reason
for
Governmentstoadoptapolicyofprintingmoneyinordertomaintainhighgrowth,butin
manycountriesisthroughtheissuingofbanknotestomaintainhighinflationtostimulating
theeconomy,leadingtohigherprices,creatingabubble.
5thistheglobalindustrialstructureisbeingaccelerated.Mainlyinthreeaspects:first,real
economicweightrise,sharevirtualeconomydeclined.Becausevirtualeconomyraisesriskof
financialcrisis,sonowallattentiontothedevelopmentoftherealeconomy;second,theshare
ofemergingindustriesintheglobaleconomicstructurewillrise.Thesocallednewindustries
meannewenergy,energysavingandenvironmentalprotectionindustries,thethreecurrent
globalcrisesresolvetheenergycrisis,theenvironmentalcrisis,theeconomiccrisisis
inseparablefrom
the
development
of
emerging
industries;
third,
the
emerging
economic
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powerrisingstatusintheinternationalcommunity,willdiminishthestatusoftheWestern
developedcountries.
6thisfiscaldeficitsanddebtburdensoftheworldsmajoreconomieswillbetroubledfor
sometimeinthefuturedevelopmentoftheworldeconomy.Asgovernmentspending,less
income,this
leads
to
national
bonds,
if
within
the
controllable
range
will
also
be
conducive
to
thecountrysdevelopment,ifitisthrownoutofthedebtcrisis.
Judgingfromthesixitiseasytoseetheinternationalinthenexttwoorthreeyearsthatis
TwelveFive thefirstmediumtermeconomicsituationremainsbleak.Sixlargetrendthat
willcontinuetoevolve.
Author:LiZuojun (Editor:ChenJun)
Keywords:LiZuojun
EPOCHTIMESSYNOPSIS
AneconomicsresearcherinChinasStateCouncil,theequivalentoftheChineseregimes
cabinet,predictsaneconomicmeltdowninthecountrynextyear.Hisremarks,whichwere
madealmostayearago,weregivenrenewedattentionrecentlyasChinaseconomyactually
beginstoslowdownandhispredictionsstarttolooknotfaroffthemark.
LiZuojun,aresearcherwiththeNationalDevelopmentandResearchCenteroftheState
Council,deliveredaspeechonSept.17,2011titled,EconomicCrisisWillBefallChinain
2013.ThespeechwaspresentedataninternalmeetingoftheChangshaAlumni
Organizationof
Huazhong
University
of
Science
and
Technology,
according
to
Deutsche
Welle.
RecentlythespeechhasspreadwidelyonChinasInternet.
AnAug.23postonWeibo,Chinaslargestsocialmediasite,wasforwardedmorethan9,000
times.Theinformationwasalsowidelyreportedbymainlandmediaportals,includingSohu
andSina.
Insummary,Linotedthatthebankruptciesofsmallandmediumsizedcompanies,banks,
andlocalgovernmentsareallsignsofanationwideeconomiccrisis.
Ligavefourreasonsforhisprediction:
Economic
AburstingrealestatebubbleandtheworseninglocaldebtcrisesaretwocausesLiattributes
toapotentialeconomicmeltdown.
Hereasonsthattheoveralleconomicdownturnledtofinancialhardshipforsmalland
mediumsizedcompanies,whichsubsequentlyresultedinreducedindustrialandcommercial
taxrevenues.
Local
governments
suffered
from
reduced
revenues
due
to
the
depressed
real
estateindustry.
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21
Nevertheless,localgovernmentsareunderalotofpressuretokeepspendingmoremoneyon
itemssuchasnationaldefense,localinfrastructure,housingconstructionandsocialinsurance
policies,improvementofhydraulicstructures,and,mostimportantofall,maintainingsocial
stability.
Atthesametime,maturityoflocaldebtsisaddingfurtherpressureandforcingsomelocal
governmentsintobankruptcy.Thiswillinevitablyleadtobanksalsodeclaringbankruptcy,
anddebtsbeingpassedontoChinesecitizens.Asaresult,Lipredictsafullblowneconomic
crisisisimminent.
HotMoney
ChinaseconomyisslowingdownwhiletheUnitedStatesisexperiencinganeconomic
recovery,thereforelargesumsofinternationalhotmoneywillflowoutofChina.Thisdrain
willalsocontributetoaneconomicimplosion,hesays.
Political
Chinas2013leadershiptransitionbringsnewleaderstothehelmthatmightnotbeso
anxioustoaddressChinaseconomicwoes.Lithinkstheywontexposeanyofthepast
problemsuntilthreetofivemonthsaftertheytaketheirpositions.So,themostlikely
recognitionofaneconomiccollapse,accordingtoLisestimation,isJulyorAugustof2013.
Followingtheeconomicbubblebursting,therewillbeasubsequentperiodofsuffering.But
forthenewleaders,thisisnothingbad,sincetheyarenottoblameforthesuffering,Lisaid.
Furthermore,Withtheeconomicbubblebursting,thenewleadershipcanadoptpractical
approaches.
New
political
achievements
will
be
gained
more
easily,
since
the
starting
pointiscomparativelylow.
Cycles
Thevalleysofshortterm,midterm,andlongtermcyclesconvergein2013,Lisaid.
Ashorttermcyclespansthreeorfiveyears.Currently,thiscycleismovingdownwardsand
willreachbottomwithinthenexttwoyears,Lisaid.
Amidtermcyclespansaboutnineortenyears.AccordingtoLi,midtermcyclesinChina
occurredalmosteverytenyears,in1949,1957,1966,1976,1989,and1998.Lisaidithasbeen
overadecade
since
1998,
and
the
cycle
should
be
around
the
corner.
Initially,
this
cycle
shouldhavearrivedin2008or2009.Economicpoliciesatthattimedelayedthecyclesvalley,
butitshouldntbedelayedfortoomuchlonger,hesaid.
Thereisalsoalongtermcycle,whichspans60years,Lisaid,givinghisspeechatraditional
ChineseinflectionwithareferencetotheIChing,alsoknownastheBookofChanges,a
classicChinesetextondivination.FromLisestimationthiscycleisalsoapproaching.
Withtheeconomiccrisis,socialproblemswillalsoresult.Thecurrentintensificationofmass
incidents,orlarge,oftenviolentprotests,canbeseenasaforewarningoffutureturbulence,
hesaid.
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CHINASCOPEVERSION
ChinasEconomyFacesNineMajorChallenges
WrittenbyTS,AEF,AT
[EditorsNote: LiZuojun,DeputyDirectoroftheInstituteofResourcesandEnvironmental
PolicyResearchattheDevelopmentResearchCenteroftheStateCouncil,publishedanarticle
discussingthemajorproblemsthattheChineseeconomyfaces.TheDevelopmentResearch
CenteroftheStateCouncil(DRC)isaleadingpolicyresearchandconsultinginstitution
directlyundertheStateCouncil.AccordingtoLi,thenineproblemsare:decliningeconomic
growth,inflation,economicbubbles,thechangingeconomicgrowthengines,adjustmentsin
ourindustriesandregionalbusinessstructures,environmentalconstraints,thesocialcostsof
development,thedeterioratinginternationalenvironment,andresistancetoreform.The
followingareexcerptsfromLisarticle.][1]
Nowthat
the
stage
of
China
s30
years
of
rapid
growth
has
ended
and
the
restructuring
and
developmentstagehasbegun,theChineseeconomyfacesthefollowingproblemsand
challenges.
TheChallengefromtheSlowdowninChinasEconomicGrowth
First,Chinaseconomicgrowthisslowingdown.Itisafactandatrend.The2012second
quarterGDPgrowthratedroppedto7.6percent.Thisisnottemporary,but,rather,itreflects
themarketsdirection.
Theslowdownineconomicgrowthmeansthatthedemandforproductshassubsided,orders
havedeclined,
and
markets
have
shrunk.
It
means
that
many
companies
may
incur
losses
to
thepointofbankruptcy,leadingtoareductioninjobs.Animportantreasonwhywepursued
rapideconomicgrowthinthepastwastosolvetheunemploymentproblem.AsChinas
economicgrowthhassloweddown,thepressureofunemploymenthasincreased.Wemust
constantlyadapttotheeconomysslowingdownandactivelyrespondtothechallenge.
TheChallengeofLongtermInflation
In2011ChinasCPIwasashighas6.5percent.InJune2012itdroppedto2.2%,butmay
reboundanytime.Thepasttwoyearssawnegativeinterestrates(ratesthatwerelowerthan
inflation).Nowwefinallyhavepositiveinterestrates.Whatweneedtobeconcernedaboutis
whetherinflationary
pressure
is
ashort
term
problem,
an
intermediate
term
problem,
or
a
longtermone.Itismostlikelyanintermediatetolongtermproblem.Sowemustincrease
ourtoleranceforinflationandourresilience.
Whathaslongterminflationbroughtus?Inflationmeansthatthewealthofthepeoplehas
shrunk,thattheirstandardoflivinghasdeclined,thatthewealthhastransferredfromone
socialclasstoanother,thatthegapbetweenrichandpoorhaswidened,thatthecostsforthe
developmentofsomeindustrieshaverisen,andthattheenvironmentforeconomic
developmenthasdeteriorated.
TheChallengeofAccumulatingEconomicBubbles
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Alongwiththerapideconomicgrowth,economicbubbleshavealsoaccumulated.High
housingpricesareonegoodexampleofaneconomicbubble.Highpricedassetsrepresent
anotherbubble.Wenolongerengageinmanufacturing.Rather,wehavealldivedintothe
financialmarket,whichinandofitselfhascreatedabubble.Manyindustriessufferfrom
seriousovercapacity,anotherbubble.Manylocalgovernmentshaveinvestedagreatdealin
developmentand
spent
heavily
on
financing,
directly
engaging
in
the
business
of
land
and
citymanagement,withlowefficiencyandwithmany repercussions,whichislikewisea
bubble.
Manypeopleareconcernedthatthesebubbleswillburst.Ifthegovernmentusesasuperb
macrocontroltechnique,letstheairoutofthebubbleslittlebylittlewithouttriggeringan
economiccrisisorsocialunrest,andtimelycultivatesneweconomicgrowthandnew
competitiveadvantagessothatbusinessesarerestructuredandupgraded,thiswouldbe
considereda softlanding, andthebubbleswouldnotburst.However,in2013therewillbe
unprecedentedpressure,whichwillwarrantahighdegreeofvigilanceandattention.
TheChallenge
of
the
Changing
Economic
Growth
Engines
After30yearsofsustainedrapidgrowth,Chinaseconomyisfacingchanges,mainlyinfour
areas.First,thetransitionfromrelyingprimarilyonexternaldemandtorelyingondomestic
demand;second,thetransitionfrom aneconomydrivenbyinvestmenttoonerelyingon
consumers;third,thetransitionfromrelyingongovernmentinvestmenttorelyingonprivate
investment;andfourth,thetransitionfromrelyingmainlyontraditionalelementsof
productiontoadvancedelementsofproduction.
Chinamustpromotetherestructuringofitseconomicgrowthenginesinordertomaintainits
growthmomentum.Otherwise,Chinasrateofgrowthmaybedifficulttomaintain.The
problemis
whether
this
transformation
will
be
easy
to
achieve.
It
is
probably
not
so
easy.
JapanandLatinAmericahavegonethroughthistransformation,buttheydidnotdowell
andfellintothe middleincometrap orthe highincometrap.Wealsofacethischallenge.
TheChallengeofAdjustmentstoOurIndustriesandRegionalBusinessesStructures
Changingthestructureoftheeconomyisthemaindirectionintransformingeconomic
development.Itinvolvesanumberoffactors.Themostimportantistochangehowour
industriesandregionalbusinessesarestructured.
Tochangeourindustries,wemustsolvetwoproblems.Wemusteliminateoverproduction
andupgrade
our
industries.
To
shut
down
businesses
that
are
over
productive
involves
changingtheviewsofmanyinterestgroups,noneofwhichwantthesebusinessestobedone
awaywith.Eveniftheymustbeforcedtoclose,[we]mustpreparewellinorderto
compensatethem.Industrialtransformationandupgraderequiretechnology,highly
qualifiedpersonnel,andmodernmanagement.Wecanmaketheleapforwardonlywhenall
theconditionstodosoarepresent.Thisisathrillingjump,andmanycompaniesmaynot
makeit.Sofar,fewregionsandcompanieshavesuccessfullytransformedorupgraded.
Thecentralandwesternregionsaredevelopingrapidly.Theseregionsdependmainlyonthe
advantageofhavingmanyresourcesandonindustriesthatconsumesubstantialenergy.
However,wemustnowincreaseoureffortstoconserveenergy.Thispresentsaproblemfor
thecentral
and
western
regions.
The
central
and
western
regions
hope
the
government
and
theeasternregionswillcompensatethembecausetheymustnowfocusonprotectingthe
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environment.Unfortunately,thenationsfiscalrevenueshavedecreasedsubstantiallyand
economicgrowthintheeasternregionshassloweddown,resultinginacorresponding
declineintheabilitytoprovidecompensation.
TheChallengeoftheIncreasingConstraintsofResourcesandtheEnvironment
Greaterpressurehasresultedfromthefactthatthepricesofenergyandrawmaterialshave
increased.Chinaaccountsforbetween70and80%oftheincreasedglobaldemandforcrude
oil.Thisdemandinfluencesthepriceoftheworldsavailableenergyandrawmaterials.
Atthesametime,pressureisgrowingtoprotecttheenvironment.Duetoglobalwarming,
Chinafacesincreasingpressureintheinternationalarenatoreducecarbonemissions.Chinas
2008carbondioxideemissionswerethehighestintheworld.Ifthispatterncontinues,by
2020,Chinawillproducemorethan30percentoftheworldscarbonemissions.Atthattime,
Chinawillfaceunprecedentedinternationalpressure.
TheChallenge
of
the
Increasing
Social
Costs
of
Economic
Development
Inrecentyearswehaveemphasizedeconomicandsocialdevelopmentbecauseeconomic
developmentisnotanendinitself.Rather,meetinghumanneedsisthegoal.However,from
theeconomicpointofview,socialdevelopmentincreasesexpenses.Governmentsandpeople
mustpayfortheseexpensesinordertomakesurethatpensions,healthcare,housing,
education,andothersocialundertakingsarewellcovered.
Formanylocalgovernments,thepressureonspendingcontinuestoincrease.Administrative
expenditures,infrastructurespending,theconstructionofaffordablehousing,socialwelfare
spending,andstabilitymaintenanceexpendituresaremandatoryormustincrease.
Governmentrevenue,
however,
is
declining,
industrial
and
commercial
taxes
are
declining
becausesmallandmediumenterpriseshavelessincome,andgovernmentincomefromland
useisalsodecreasingbecauseoffallinghousingprices.
TheChallengeofaDeterioratingInternationalEnvironmentforEconomicDevelopment
First,theinternationalenvironmentislessinterestedinChinasexports.Themainreasonis
theongoinginternationaleconomiccrisis.
Astheinternationaleconomiccrisiscontinues,theinternationaleconomywillremain
depressedfortwoorthreeyears,havingagreateradverseimpactonourexports.
Second,theinternationalenvironmentforChinasoverseasinvestmentsisdeteriorating....
Othercountriesdonotwelcomeourinvestments,unlikethewaywewelcometheir
investments.Whenwewanttoinvestintheirhightechcompaniesandprojects,theyare
worriedthatwewillstealtheirtechnology.Whenwewanttoinvestintheirresources,they
saywewillcontroltheirresources.Whenwewanttoapplyourexperiencefromthe
constructionofourdomesticdevelopmentzones,theysaywewillcontroltheirland.Inshort,
theyrestrictChinasinvestmentsunderthepretextofnationalsecurityorotherreasons.
Third,theinternationalenvironmentregardingadjustingtheRMBexchangeratehasnotbeen
goodforsometime....So,[Westerncountries]havebeenpushingtoweakenthe
competitivenessof
Chinese
exports
through
RMB
appreciation.
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Meanwhile,theRMBexchangerateisalsodirectlysubjecttochangesintheU.S.dollar:Ifthe
U.S.dollardepreciates,theRMBautomaticallyappreciates.Atthesametime,Chinasoverall
externalenvironmenthasdeteriorated.BecauseChinaistheworldssecondlargesteconomy,
theUnitedStatesplacesmoreemphasisonChinaasitsmaincompetitorandhasshiftedits
strategicfocustotheAsiaPacificregion.
TheChallengeofIncreasedResistancetoReform
First,vestedinterestsresistreform.Inthepastthreedecades,thereformstrategyhasbeen
uneven,leadingtoaseriousimbalanceandalackofcoordinationinpoliticalreform,cultural
reform,socialreform,andeconomicreform.Alongwithrapideconomicdevelopment;the
reformhasalsobroughtawideninggapbetweentherichandthepoor.Thisprocesshasbred
vestedinterests.Vestedinterestgroupshavebenefittedfromthisimbalanceandthelackof
coordinationinthetransition.Thesevestedinterestshavethusbecomeanobstacletothenext
roundofreform.
Second,there
is
resistance
to
reform
due
to
notions.
....
For
example,
many
people
attribute
thewideninggapbetweentherichandpoorandtheincreaseincorruptiontomarket
orientedreform.Aseveryoneknows,marketorientedreformdidnotbringaboutthese
problems.Rather,theywerebroughtaboutbyincompletereformandtheimbalancebetween
politicalreformandeconomicreform.
Endnote:
[1]ShanghaiSecurityNewsOnline, NineChallengesthatChinasEconomyFaces, August8,
2012.
http://news.cnstock.com/hgjj/201208/2192857.htm.