都错了！经济学家高善文惹祸上身，是因为这个在国际会议上英文演讲视频！（中英文字幕）

Summary

The transcript explores China's economic challenges, focusing on the contradictions within its economic management framework. It highlights the shift in economic model post-2008, moving from an easy-to-cool-down economy to one difficult to stimulate. The discussion points to issues with China's fragmented public finance system, the overreliance on the real estate sector, and the growth of shadow fiscal and financial systems. These factors, combined with local government fiscal pressures, have led to a high debt level, creating a dilemma for policymakers between stimulating the economy and managing debt. The speaker suggests reforms are needed but warns of challenges in implementing them.

Takeaways

• 😀 China's economic management framework, established in 1994, has inherent contradictions that play a fundamental role in the current challenges facing the economy.
• 😀 Before 2008, China's economy was prone to overheating, but post-2008 it has become easier to cool down and harder to stimulate, shifting the focus to fiscal policy for economic management.
• 😀 Monetary policy has become less effective in stimulating the economy, leading to a greater reliance on fiscal policies to boost demand, especially in challenging times.
• 😀 China's public finance system is fragmented, with local governments playing a major role in economic administration, leading to misalignment of responsibilities and interests.
• 😀 The real estate sector became a key economic driver after 2008, but flaws in the business model and regulatory framework led to the rise of a shadow financial system.
• 😀 The unregulated shadow financial system, which developed around the real estate sector, contributed to the growth of local government debt and financial instability.
• 😀 Local governments, under pressure to stimulate economic growth, relied on land sales, creating a shadow fiscal system that operated outside of central government oversight.
• 😀 A significant moral hazard exists, with investors believing that the central government will eventually bail out local governments, which undermines financial market supervision.
• 😀 The rapid accumulation of debt since the global financial crisis has raised alarms, and policymakers face a dilemma between stimulating the economy and controlling debt levels.
• 😀 Structural reforms are necessary to address the shadow fiscal and financial systems, but the process is complex and time-consuming, making government efforts to stimulate the economy opportunistic and uncertain.

Q & A

What has been a fundamental reason for China's slow and indecisive economic stimulation in the past two years?

The fundamental reason lies in inherent contradictions within China's economic management framework, which was set up in 1994. These contradictions, along with data issues, have played key roles in slowing economic stimulation.

How has the structure of China's economy changed since the 2008 global financial crisis?

Before 2008, China's economic model was characterized by being easy to 'heat up' and difficult to 'cool down.' After the global financial crisis, the model shifted to being easier to 'cool down' and harder to 'heat up,' making monetary tightening less effective.

Why is fiscal policy more important than monetary policy in China’s current economic management?

Due to the economic environment being easier to cool down but difficult to stimulate, monetary policy has been less effective. As a result, fiscal policy has had to take a central role in managing China's economy.

What is the state of public finance in China, and how does it impact economic management?

China's public finance is highly fragmented, with the central government accounting for only 14% of total government expenditure. Most administrative functions are performed by local governments, leading to a misalignment of responsibilities and interests.

How did the real estate sector become an important driver of China's economy after 2008?

After 2008, sluggish external demand and rapid urbanization led the real estate sector to become a key pillar of aggregate demand. However, this also created significant risks due to structural flaws in property developers' business models and regulations.

What challenges did the real estate sector’s rapid growth create for China’s financial system?

The rapid growth of the real estate sector led to the emergence of an opaque, frictional, and largely unregulated financial system, which created significant loopholes and risks for the broader financial system.

How did local governments contribute to the formation of a shadow fiscal system in China?

Local governments, under pressure from economic downturns and the need for counter-cyclical policies, sought alternative financing channels. This led to the creation of a shadow fiscal system centered on land transactions and land mortgages.

What is the role of moral hazard in China’s economic system, especially regarding local government debt?

There is a widespread belief that the central government will ultimately bail out local governments, creating moral hazard. This belief has contributed to the unchecked growth of local government debt and made it difficult to monitor financial markets.

What dilemma does the Chinese government face when trying to stimulate the economy?

The government faces a dilemma: if it stimulates the economy, the debt level may rise unsustainably. However, if it does nothing, the economy could fall into recession and deflation.

What is required for the Chinese government to confidently stimulate the economy without risking further debt issues?

A systematic solution to reform both the shadow fiscal system and the shadow financial system is necessary. Once such reforms are in place, the government can be more confident in stimulating the economy without exacerbating debt problems.