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Author:Davis Jun

Source:Davis diary (ID:gh_25d9ef70896f)

01, the economic miracle

In 2001, O’Neill, the chief economist of Goldman Sachs, first proposed the concept of”BRIC countries”. It included the four largest developing countries in the world at that time, Brazil, Russia, China and India.

Two things happened in the same year. The first is a Chinese-American named Zhang Jiadun who wrote a best-selling book , Called”China is about to collapse”, the book is full of bestsellers in major bookstores in Hong Kong as soon as it is published.

Secondly, China joined the WTO. At that time, both Western media and even celebrities questioned this decision and China opened up Now, has our national industry really beat foreign products? Will the manufacturing industry go into depression because of this?

From 2001 to 2009, China’s manufacturing output value increased from 8 trillion to 47 trillion, with an average annual growth rate of 25%.

The output of major industrial products ranks among the top in the world. By 2009, steel, coal, automobiles, cement, cotton cloth and other products ranked first in the world, power generation ranked second in the world, and crude oil production ranked fourth.

and all-round upgrades in various industries.

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2001 At that time, the World Bank was still discussing whether the mainstream of emerging markets belonged to China or India, because these two countries have many similarities, whether in population or in the age of independence.

From the 2010 statistics released by the World Bank and other institutions, the difference between India and China is summarized as 2, 4, 6, 10, 20 And incomparable.

2 China’s grain output is twice that of India.

4 is China’s economic scale, total foreign trade, crude oil production, and power generation 4 times that of India.

6 is China’s foreign exchange reserves, steel production, and television sets approximately six times that of India, and the number of AIDS patients in India is six times that of China.

10 is that China’s foreign investment is 10 times that of India, and the average life expectancy of China is 10 years higher than that of India.

20 The number of foreign tourists attracted by China is 20 times that of India.

The incomparability is that the two countries are not comparable in terms of high-speed rail, highways, women’s status, and slum conditions. China does not know that it is better than India. How many times.

These are just differences in numbers. If you go to India for field trips, you may feel that the gap is even greater.

Driving from Beijing or Shanghai for more than 20 hours, the poverty you see all the way together will be less than what you see from India Mumbai, New Delhi, Kolkata, drive 1 hour away from the city center, you can see the poverty.

In 2010, China’s GDP surpassed Japan, ranking second in the world.

The theory of China’s collapse collapsed, and it was replaced by the theory of China’s threat.

Whether it is PricewaterhouseCoopers or Goldman Sachs, all reports regarding China’s surpassing the United States, there is only time left for discussion, not results .

Because China’s industrial net output and added value surpassed that of the United States for the first time in 2009, historically, the scale of American industry exceeded that of the United Kingdom in 1892. In 20 years, the United States has fully surpassed Britain.

But the world is still skeptical about China’s surpassing, because China is still an export-oriented economy in 2010, and high-end technology is limited.

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in 2010 After the demographic dividend disappeared, China has made three changes:

First:the improvement of all production factors.

Through large-scale infrastructure, China has greatly improved transportation efficiency, caught up with the high-speed lanes of the mobile Internet, and improved the efficiency of information transmission. Through the world’s largest group of college students, fully enjoy the engineer bonus.

China did not have the problem that the manufacturing industry was abandoned during the rapid development of high-tech in the United States.

Because Southeast Asia and Latin America, where wages per unit time are lower than ours, apart from lower wages than us, transportation costs are higher than us, information circulation costs are higher than us, and workers do not have us. Well-trained, the actual R&D cost is also higher than ours, the Chinese factory has not been moved, but upgraded.

Second:shift from an export-oriented economy to a domestic demand-oriented economy.

Thanks to China’s industrial reforms after the 2008 financial crisis;

China’s trade dependence dropped from 64%in 2006 to 33%in 2018.

The contribution rate of consumption to GDP climbed from 40%in 2007 to 70%in 2017.

Stable domestic demand allows China to be less affected by global economic fluctuations.

It also avoided the possibility of a hard landing caused by foreign disasters such as the trade war and the Asia-Pacific financial crisis after South Korea and Japan shifted their economic growth rates.

Third:The proportion of the service industry in the total economy is gradually increasing.

From 2012 to 2018, the added value of my country’s service industry increased from 20 trillion to 46 trillion.

The rapid growth of the service industry has greatly increased the average salary of residents, promoted the process of urbanization, and solved the employment diverted from the manufacturing industry; To the high end of the value chain.

And like the East Asian miracle created by Korea, Japan, Hong Kong and Taiwan, the replacement of low-end manufacturing by the service industry has completely allowed first-tier cities and coastal provinces to surpass the middle-class income Trap, becoming a high-income area.

While China’s economy is successfully transforming;

In 2011, the bulk With the downturn in commodities, Brazil’s average economic growth rate from 2013 to 2017 was only negative 0.5%. The income level of Russian residents in 2017 was even lower than in 2010.

Although India has maintained rapid growth after Modi came to power, it’s basically because India itself does not have Brazil’s or Russia’s wealth of commodities, and it has opened up It’s just the growth caused by its own cheap productivity.

Goldman Sachs economist O’Neill might not have thought of it;

he proposed it back then The concept of the four BRIC countries, only China is gold, and the others are bricks.

02. Balanced development of society

About In the discussion of China’s rise, there are two hot issues that cannot be avoided;

The first is the issue of the gap between the rich and the poor; the second is the issue of corruption.

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First of all, regarding the gap between the rich and the poor; any stage of rapid social growth is a time when the gap between the rich and the poor is rapidly expanding and various social problems breed.

For example, the industrial revolution has also caused related social problems. Take a look at the British writer Dickens‘s”Tale of Two Cities”, Balzac’s”Old Man”, Hugo’s”Les Miserables”, we know how much injustice and evil there were in the Western world at that time, even now everyone recognizes it as high welfare In Northern Europe, there are also fairy tales like”The Little Match Girl”.

Not only was the disparity between the rich and the poor in Western countries much more serious than that in advanced China, but it was also easy to”digest” various social contradictions;

Take the United Kingdom as an example. It can”export” criminals to Australia,”export” the unemployed to Africa, and export”infidels” to the Americas.

And today’s China can only”digest” all social contradictions brought about by the modernization process within its own territory.

In the course of economic growth, China has eliminated poverty to the greatest extent, and absolute poverty has basically been eliminated at this stage;

In Rio de Janeiro or Mexico City, Brazil, it’s only half an hour’s drive from the rich area to the slums of hundreds of thousands of people. The crime rate is high, and tens of thousands of people die every year. Shot.

These phenomena did not appear in China.

Our country’s government resource integration capabilities, decision-making capabilities, and overall efficiency are much higher than the average level of developing countries.

For example, abolishing agricultural taxes across the country is almost immediate.

In recent years, a series of measures to promote the development of the central and western regions and increase agricultural income have quickly led to a shortage of migrant workers throughout the coastal areas.

China has basically achieved universal medical insurance, and there are more than 60 million people in the United States without any social security.

In Chinese culture, there is a natural tradition of”not worrying about being scarce but about being uneven”.

This view of equality is bound to cause confusion in a country undergoing rapid social transformation.

In India, even if you are a canteen runner and live in a slum, as long as you can speak a few English words, you feel good enough to belong Middle class.

In China, white-collar workers who frequent Starbucks also deny that they are middle-class. It is said that there are only two apartments.

China’s centralized transfer payment function has established a benign mechanism for resource flow.

Take Shanghai Pudong as an example. Pudong’s per capita GDP has already passed the developed standard of 10,000 US dollars.

Assuming that the per capita GDP of a certain place in China is 100 U.S. dollars, if you look at it mechanically, the gap is 100 times, but if you want to take the method of robbing the rich to help the poor It is extremely unwise to shrink.

More than half of Pudong’s annual fiscal revenue has to be turned over to the central government, and perhaps part of it is to help this impoverished area with an average of $100 per capita.

If there is such a relationship between poor areas and backward areas, this is a virtuous circle, so don’t worry too much.

The second issue is corruption. Every fast-growing economy has encountered corruption, but the ultimate orientation is different.

In the medium and long term, market economy and modernization will have strong domestic demand for the legal system, which will eventually lead to a decline in corruption.

Corruption in China is most likely to be:

low corruption -> medium corruption -> low corruption This is how Hong Kong has come over.

Rather than corruption in Latin American countries -> high corruption -> higher corruption.

On the issue of anti-corruption, China is at a juncture. It depends on whether China can make it through. If it fails, China will always be a developing country.

The Industrial Revolution in Britain and France, and the Meiji Restoration in Japan, have all experienced a period of significant rise in corruption.

But in the end, institutional innovation and mechanism construction have reduced corruption.

In Asia, Hong Kong and Singapore have not adopted Western democratic systems. They have established an anti-corruption mechanism that daunts corrupt elements through legal construction and elite politics.

While fighting corruption with an iron fist, we should learn from the anti-corruption experience of Hong Kong and Singapore, and strive to make China from the current”China” in a short period of time. Corruption”turns into” low corruption’.

03. Institutional advantages

Behind the Chinese miracle, there is a term often mentioned, that is, the Chinese model.

In Deng Xiaoping’s words, China The main meaning of the model is China’s own set of practices and ideas, which are a combination of Chinese roads and Chinese experience.

Many Western countries criticize China’s existing system. Question that we do not have a formal system and a real rule of law.

The development of society is more dependent on”good emperors” or”bad emperors”.

In reality, the opposite is true. The success of a country depends mainly on whether there are”real systems and real rule of law”. It depends on these”real systems””And the rule of law” is in line with the real national conditions of a country and whether it is advancing with the times.

Take India as an example, it seems early There is”real system and real rule of law”, but India lags behind China in almost all aspects, and many of its social indicators are not up to the level of Tibet.

Japan also had a”formal system and a real rule of law”, but before Abe came to power, Japan changed governments like a revolving door. Ten years ago, the country was weak, and the economic recession lasted for more than 20 years.

The United Kingdom has long had”formal systems and real rule of law”, but everything has gradually evolved into a kind of”institutional rigidity and legalism”, which is also the most in need of reform in the British system Local.

Forty years of reform and development, China’s rapid social and economic development, the real institutional advantage that it really relies on is the balance of power.

The so-called balance of power refers to the balance of political power, social power and capital power.

China’s 100 richest people cannot influence the decisions of the Politburo, but the 50 richest people in the United States are enough to influence the White House’s decisions.

The power of capital is restricted by social and political power, and the profit-seeking nature of capital has not been spread, leading to a high degree of social polarization and an interval financial crisis. .

With the rise of the Chinese middle class and the popularization of Internet technology, China’s social forces have begun to restrict political forces and discuss many public policy and political issues It has also become open and in-depth, avoiding the possibility of a tragedy such as the”Cultural Revolution” caused by excessive political power.

At the same time, political forces have guided and corrected social forces more and avoided the development of populist trends.

China is a country with a super large population, super vast territory, super long history and tradition, super deep cultural heritage. The governance of such a large country requires many considerations Complex factors require a strong, promising and neutral government.

If the government is not strong, the country will decline or even disintegrate, such as the Song Dynasty.

If the government is not neutral and inclusive, the country will not be able to coordinate with complex interests. The entire country may fall into conflict of interests and become stagnant or paralyze civil strife, leading to Days of peace are like the warlords fighting after the founding of the Republic of China.

The relative strength and neutrality of China’s political power enables it to represent the interests of the overwhelming majority of the people, and can regulate and guide capital and social forces.

This institutional arrangement has better ensured the rapid rise of China. This arrangement reflects the traditional genes of Chinese civilization and the organic integration of western elements. Fusion.

This balance of multiple forces is China’s real institutional advantage.

04. Longer China

In 2018, China’s economic The growth rate hit a new low since 1991.

The economic downturn has both cyclical factors and potential growth rate downward factors.

Although my country still has a big gap with developed countries in the fields of technological innovation, high-end manufacturing, financial services, and university education.

But in US dollars, China’s per capita GDP in 2018 has reached US$9,800. According to World Bank standards, the threshold for per capita GDP in developed countries is US$12,500.

If China grows at a rate of about 6%for another four years, around 2022, China will cross the middle class trap and enter the clubs of developed countries.

The transition of a large economy with a population of 1.4 billion from takeoff to leapfrogging is a miracle in the history of human economic growth.

China has a population of nearly 1.4 billion and a middle class of 400 million. Its spending power is the world’s largest unified market.

The continuous improvement of residents’ income and employment will promote the continuous expansion of consumption, which will significantly enhance the upgrading of manufacturing and service industries.

After Japan crossed the middle-class trap in the 1970s, Toyota, Sony, Panasonic and other companies became the focus of the world.

After South Korea crossed the middle class trap in the 1990s, Samsung, LG, and Hyundai became the darlings of capital.

After that, the Japanese stock market went out of the bull market from 1974-1989 and the Korean stock market from 1991-2007.

If China succeeds in its growth and shift in the next few years, from rapid growth to high-quality growth, China will be the most dynamic economy in the world. The influence of its scale effect will be far greater than that of Japan and South Korea.

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China’s future investment long-term return rate and direct financing ratio will increase significantly.

The capital market is also expected to change the situation of short and long bulls and get out of the slow bull and long bull.

05, endnote

1911, Before the Guangzhou Uprising, Lin Juemin wrote”Speaking to His Wife”:

You are lucky and I am born in China today! Fortunately, I have won you, so how unfortunate is the China today!

I can’t help but feel sad.

More than 100 years have passed, and China has undergone tremendous changes.

Since the 18th century, China has once again gained a heavy voice in the world.

We have gone through the most difficult road. The next 20 years will be the best 20 years in modern China.

May China forge ahead, and the nation’s prosperity will be prosperous, and that the younger generation can feel sincerely:

He Xing was born in China today.