The Implementation Of The Central Committee Of The Global Stock Market "Massacre" Is Not Easy.

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On the afternoon of 19 May, Wu Jinglian, Zhou Xiaochuan, Lou Jiwei, Liu He, Wu Xiaoling, Qian Yingyi, Fang Gang, Yi Gang, Fang Gang and other big business economists gathered together at the Diaoyutai State Guest House. The theme was "deepen the structural reform of the supply side and improve the quality of development in an all-round way".

In 1990, economist Wu Jinglian, who was named "Wu market", expressed his concern about the reform of the supply side: "for government agencies and officials, the most effective way is to intervene with administrative means", and "relying mainly on administrative means to adjust the structure is very difficult to achieve success".

In addition, Minister Lou Jiwei of the Ministry of Finance pointed out: "the restraint of labor contract law on enterprises has greatly reduced the flexibility of China's labor market, which is not conducive to the improvement of total factor productivity, and ultimately leads to low labor productivity."

For details, please read the original speech. His vigilance is worth reading and thinking deeply.

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Wu Jinglian: my topic is about accelerating the pformation of the mode of economic development. I want to talk about 4 points.

Leverage has exceeded the warning line.

The first point is that in November this year, the Central Committee of the Communist Party of China put forward efforts to promote structural reforms on the supply side and promote sustained and healthy economic development.

This decision is a very important decision. The introduction of this decision means that we have shifted from the original Keynes - based stimulus policy to a macro - economic policy to improve the quality of supply and improve the quality of development.

This is an important change in the thinking of the leadership.

The main idea of the past is to analyze the reasons for the decline of China's economic growth and the strategies for seeking countermeasures from the perspective of demand side.

The conclusion from this analysis is that the reason for the economic slowdown is that the power of investment, consumption and export of the three wagons is insufficient, so the strategy is to expand demand and maintain growth.

But after implementing this policy for a number of years, we are now in a predicament, and there are two phenomena.

The first phenomenon is diminishing returns on investment.

Over the years, the intensity of stimulus has not diminished every year, but efficiency has been declining, and it has little effect.

The other is increasing leverage.

Last year, we should say that we have exceeded the warning line, and we are continuing to raise it now, so that there is a risk of systemic risk.

In fact, we can no longer continue to use this approach to deal with the challenges we face.

So this decision is very important. For many years, western economists have suggested that when analyzing the long-term economic development of China, we should not use the demand side analysis. Keynes's stimulus policy is ineffective for the medium and long term development, and has many disadvantages.

We should rely mainly on efficiency to achieve growth.

Second, what conclusions can be drawn from the analysis of demand side? The total amount of GDP, the total demand and the number of production factors are equal.

But when you want to analyze the total change of GDP, you can analyze it from the demand side or from the supply side.

The supply side factor is mainly from the growth of new capital investment, total factor productivity and so on.

What is the conclusion from this analysis? The first is economic shocks. Why do we have economic shocks? Because the supply side is weakening. One is the disappearance of the demographic dividend, one is the increase in investment and the other is the potential growth rate.

The prescription to solve this shock is to mobilize enthusiasm by correcting the misallocation of resources, changing the deterioration of structure and establishing compatible incentive mechanisms.

We should try our best to improve the allocation effect of resources and the operation effect of macroeconomy.

The so-called improvement of resource allocation efficiency and economic efficiency is actually changing the way of economic development.

Changing the mode of economic growth means changing the growth that depends mainly on investment and turning to the growth that is mainly achieved by efficiency improvement.

Therefore, the core and essence of the problem is to accelerate the pformation of the way of economic development.

Third, the key to speed up the pformation of the mode of economic development is whether we can eliminate the institutional obstacles to achieve pformation through comprehensive deepening reform.

It has been 20 years since the formal pformation of the mode of economic development was put forward. It was put forward when the 95 plan was formulated in 1995, but until now, the pformation has not yet been fully realized.

10 years after the proposed pformation of economic development, the 2005-2006 year plan for 11th Five-Year was discussed. Why did it progress so slowly? At that time, the conclusion was that there were institutional obstacles.

At that time, I wrote "the decision of China's growth mode", which explained in detail the institutional obstacles at that time, and concluded that the government played a leading role in the allocation of resources, so that the role of the market could not be brought into full play.

This problem has not been solved until now. How can we solve this problem? That is, we need to deepen the reform in an all-round way, eliminate the institutional and institutional barriers to these pformation with comprehensive deepening reform, give full play to the role of the market, give full play to the role of the effective allocation of resources in the market, and bring into play the role of the market in the effective administrative incentive mechanism to realize the pformation.

Fourth, from three months to the implementation of the central decision, two problems are urgently needed to be solved.

The first question is whether to improve the quality of economic development depends mainly on market forces or mainly on administrative means. This is a big problem.

In theory, most people agree that market forces can promote resources from oversupply, inefficient enterprises to higher efficiency enterprises, and make decision optimization. It also recognizes that the market can effectively stimulate the vitality of innovation and entrepreneurship, and achieve the goal of rewarding rewards and punishing the poor.

But establishing and perfecting the market mechanism is not easy to do, and it is necessary for the relevant organizations and personnel to give up all the existing powers and interests.

Therefore, for government agencies and officials, the best way is to intervene by administrative means.

On the one hand, we should target the excess capacity of the index, eliminate the inventory of real estate, demand the network to increase the speed and reduce the cost, and on the other hand, we should set up various supporting funds and high and new technology development zones in an attempt to introduce a high tide of technological innovation with high investment and high subsidies.

But experience in recent years has proved that optimizing the structure must optimize the system and mechanism, and assist the necessary administrative means.

It is difficult to achieve structural success by relying mainly on administrative means.

Speaking of this place, I think there is a need to clarify that structural reform is rarely used in the economic literature of China, but some people in the west, especially Europeans, like to use this term. After the financial crisis, some international organizations have pushed for structural reforms in European countries.

I checked some documents. At that time, the structural reform was about the reform of the political, social and economic structure, that is, the structural reform we talked about.

But when combined with our supply side, it is often understood as the structural adjustment of the supply side. Now we can see many reports. The structural adjustment of the supply side has actually returned to the old way, that is, using administrative power to adjust the structure.

I am very worried that this approach may not achieve the desired results.

Another point that needs our attention and improvement is that the decision-making departments and executive departments seem a bit slow.

The third plenary session has done a good top-level design for comprehensively deepening the reform, and many reform projects have been approved by the Central Committee for deep reform.

But there seems to be a problem with the convergence of these top-level design and guidance and specific implementation plans.

There are some guiding opinions and programmes that do not match up. The people in the power sector have made some discussions, which is obvious.

In the past month, the so-called reform is idle, leading departments are busy issuing documents, the lower level departments are busy learning documents, and a document has not been finished yet, and the second documents have come again, called reform or idling, or reform has become rhetoric.

This criticism may be false, but it should arouse our vigilance.

We must put these good reforms in the top-level design and guidance to take root and move to the general secretary Xi Jinping's January 12th central reform and reform committee. This year, we strive to build up the new framework of the main body, which will help deepen the reform of the objectives, implement the links, and make every reform possible.

I hope, or I suggest, that the leading departments and the executive departments should cooperate fully and reform one by one, discuss its progress, whether its original design is deficient or not, and what supplements we have in the process of implementation.

On the theme of "supply side reform", Wu Jinglian talked about the way of supply side reform, and put forward "to change the growth that mainly depends on investment, and turn to the growth that mainly depends on efficiency increase".

While Lou Jiwei is directly concerned about the cost of employment of enterprises, criticizing the restriction of labor contract law on enterprises, resulting in low labor productivity.

In view of this problem, it is closely related to the development of enterprises. I believe it is also a topic of close concern for entrepreneurs and friends.

My topic is about improving labour market flexibility and total factor productivity. The topic is not compatible with me. I will talk about the preceding ones.

In 1981-2012 years, China, the United States and Japan put forward the contribution rate of total factor productivity to economic growth by 40%, 43% and 35% respectively. We are higher than Japan.

We see that there are some countries with stagnation of labor productivity in the world. We think it is not very good. In fact, the improvement is quite fast. For example, Japan, Japan, 1995-2000 years, 2001-2005 years, from 2006-2010 years, total factor productivity growth to economic growth is 30%, 66%, 70%, and Japan's total factor productivity is constantly improving.

Under the new normal, TFP has increased.

We say that the labor contract law may be problematic. The labor contract law reflects the constraints of enterprises, legislations and judicature. In the end, it greatly reduces the flexibility of China's labor market, is not conducive to the improvement of total factor productivity, and ultimately leads to low labor productivity.

First of all, the current employment system is divorced from labor productivity and wages are rising rigidly.

In the past ten years, especially in the last eight years, wages have exceeded two or three percentage points of labour productivity, making our competitiveness less and less.

The distortion caused by law makes the employment system in this area withdraw from productivity.

We always talked about the rise in wages, but it was too early.

Now, enterprises must sign long-term contracts, but from the perspective of enterprises, if I do not have an order, I will have a holiday, and I will get back if I have an order.

Another decline in the number of new labour force has resulted in a decline in the labour market and a great damage to the low skilled labor force.

Thirdly, to reduce the willingness to invest in human capital, enterprises need to pay a lot of training costs, so that non skilled workers become skilled workers.

At present, the most important thing for a company is its technical staff, and the fact is that when the employees are trained, they leave.

If the enterprise says that if the employee has to pay a lot of money to go, skilled workers are hard to recruit.

Wage growth lowers the willingness to invest in the labour market.

The rate of student dropout is increasing, and workers are unwilling to give up their current income training.

Wage collective bargaining should be carried out within enterprises.

What do I do? I think the next step should be to ensure the flexibility of the labor market. On the one hand, it can not be said that the labor contract law has caused the possibility that people have not settled down, and the enterprises are unwilling to train.

If there is motivation, we should combine vocational training with enterprises so as to increase labour productivity.