Abstract What really needs to be changed in structural reform is the structure of institutional mechanisms. The adjustment of the structure of the industry through administrative means often leads to more prominent distortions in the economic structure, and the role of the market in the allocation of resources can be used to solve the problem. The crux of the problem lies in making the city...
What really needs to be changed in structural reform is the structure of institutional mechanisms. The adjustment of the structure of the industry through administrative means often leads to more prominent distortions in the economic structure, and the role of the market in the allocation of resources can be used to solve the problem. The crux of the problem is that the institutional basis for making the market decisive in resource allocation has not yet been fully established. Under this circumstance, the only way out is to establish and improve a unified, open and competitive market system as soon as possible.
The role of the government is to provide a stable macroeconomic environment and a rule of law environment for businesses and entrepreneurs. In order to achieve this goal, we need to step up the promotion and implementation of the negative list of market entry and comprehensive promotion of financial reform.
The Changan Forum, hosted by the China Economic 50 Forum, co-organized by Sina Finance and Tsinghua SEM, held 300 keynote speeches and small commemorative events at the School of Economics and Management of Tsinghua University. Wu Jinglian, an honorary member of the Academic Committee of the Forum and a researcher at the Development Research Center of the State Council, delivered a keynote speech entitled "What is structural reform, why is it so important?"
Wu Jinglian said that the structural reforms really need to be changed by the structure of the institutional mechanism. The adjustment of the industrial structure through administrative means often leads to more prominent distortions in the economic structure. Therefore, the role of the market in the allocation of resources can be used to solve the problem. The role of the government is to provide a stable macroeconomic environment and a rule of law environment for businesses and entrepreneurs. In order to achieve this goal, we need to step up the promotion and implementation of the negative list of market entry and comprehensive promotion of financial reform.
Structural reform is the reform of institutional mechanism
Wu Jinglian proposed that the formulation of "supply-side structural reform" actually contains two "structures" with different meanings.
The “structure†of the first meaning refers to the economic structure, that is, the structure of resource allocation. From the supply side, economic growth is driven by three fundamental drivers: labor, capital, and efficiency. Since the beginning of this century, the driving force behind China's economic growth has begun to recede. The economic structural distortions and resource mismatches caused by investment-driven growth have intensified. As a result, China has experienced a trend of economic downturn. Wu Jinglian believes that the fundamental solution is to optimize the economic structure and improve the quality of the supply side through the re-allocation of resources.
The "structure" in the second sense is the structure of the institutional mechanism, which is also the "structure" that is really reformed in the "structural reform." These two kinds of "structures" cannot be confused. Otherwise, the reform of the economic structure will replace the reform of the institutional structure, which will have very negative consequences.
Wu Jinglian said that the key to improving the economic structure is to achieve "three to one, one reduction and one supplement", that is, to go to production capacity, destocking, deleveraging, cost reduction, and short-boarding. There are two ways to adjust the economic structure: one is to adjust the corporate structure, industrial structure, regional structure, etc. of the national economy through administrative orders in accordance with national plans and plans, government policy requirements, and the like; Under the guidance of the price signal of relative scarcity, the optimization and re-allocation of resources can be realized through the market's reward and punishment and the survival of the fittest.
For a long period of time, China has been accustomed to following the tradition of the government's decisive role in resource allocation, and the first way to "adjust the structure." Wu Jinglian believes that the direct "regulation of the structure" by the government is not only ineffective, but even counterproductive. As early as the beginning of reform and opening up, many people have realized that China's industrial structure is seriously distorted, its benefits are damaged, and adjustments are needed. However, under the conditions of the government's dominant resource allocation at the time, this adjustment was carried out through administrative means.
Wu Jinglian said that the fundamental problem of this method is that the government has no way to determine what kind of structure is a good structure, and structural distortions are often caused by institutional defects and policy deviations. Even if the adjustment is in place, it will not allow the market to get a good structure. In addition, various institutional and policy factors that have caused distortions in the economic structure have not changed. Many adjustments are useless efforts to “treat the symptoms and not cure the rootsâ€.
Wu Jinglian said that after 20 years of reform, the market gradually grew and developed, but the government's habit of leading and allocating resources remained, and the problem of structural distortion was difficult to solve. After the economic "overheating" occurred in 2004, whether the macro economy was "overheated" or "local overheating" was debated. There were three opinions at the time: the first one believed that there was no overheating and did not agree to a total austerity policy. The second is that the economy has experienced a total overheating and advocates austerity measures to prevent the stock and real estate market bubbles from expanding and causing a collapse. However, it is the third opinion that the decision-making level is affirmed. That is to say, there is no “overheating†in the Chinese economy. It is only necessary to take measures to control and curb the expansion of the “overheated sector†to ensure the stable and coordinated development of the national economy.
As a result, the State Council and relevant departments have repeatedly formulated and promulgated relevant documents and regulations, hoping to use administrative means to adjust the structure of the industry. However, such adjustments have led to more pronounced distortions in the economic structure, and more and more industries with overcapacity. Because of price distortions and cost distortions, designated industries that were subsidized with various subsidies and policy preferences soon became industries with overcapacity. Until now, the first major task of structural adjustment was to go to capacity, which also reflected the Achilles heel of using administrative methods to adjust the structure.
The institutional basis for market allocation resources has not been fully established
Wu Jinglian said that it is impossible to realize the optimization and re-allocation of resources through the "three to one, one reduction and one supplement", which cannot be achieved directly by various administrative means in the hands of the government. The decision of the market in resource allocation can be used to solve the problem. Of course, we must also give full play to the role of the government. The role of the market and the role of the government must be accurately positioned.
The market has two main functions. One is to establish a mechanism for effectively allocating resources, and the other is to establish an incentive mechanism that stimulates the enthusiasm of innovation and entrepreneurship. Wu Jinglian believes that the advantage of the market mechanism is that administrative means can't do it, and "three to one, one drop and one make up" can only be achieved by these two important mechanisms.
Wu Jinglian explained, for example, that to go to the excess capacity of the steel industry, the previous method was to release the plan indicators by the administrative agencies and then decentralize the indicators. The specifications of the indicators can only be "one size fits all" according to the size of the enterprise, the old and new equipment, etc., otherwise it will not be reduced. However, according to such standards, it is often not the least efficient equipment and enterprises that are cut off. Wu Jinglian said that, in addition to the administrative departments to protect their own industries, they may indulge enterprises to increase production capacity.
The essence of "complementing the short board" should be to accelerate the development of industries with high efficiency and in short supply. The administrative approach is also very different from the market incentives. It mainly relies on political mobilization and the use of government policies to foster industries that the government believes should develop and enterprises that should be stronger and bigger, and rely on market mechanisms to reward and punish. And the outcome of the survival of the fittest is completely different.
The role of the government is not to directly adjust the structure, but to provide public goods; instead of manipulating the market and intervening in the micro-economy, it provides better conditions for the operation of the market and provides a stable macroeconomic environment for enterprises and entrepreneurs. And the rule of law environment. Of course, it also needs to work in places where the market does not work.
Therefore, the crux of the problem lies in the fact that the institutional basis for making the market decisive in resource allocation has not yet been fully established. Under this circumstance, the only way out is to establish and improve a unified, open and competitive market system as soon as possible. The current market economy system is not enough to undertake the task of effectively configuring and reconfiguring resources.
We are accustomed to calling the reform from planned economy to market economy "system reform", which is actually another expression of "structural reform." Since China has initially established the basic framework of a socialist market economy, it is also necessary to reform some of its structures. Therefore, it is entirely possible to use "structural reforms" to summarize the reforms that are going to be carried out now.
The practice of structural reforms in other countries is instructive to us. Wu Jinglian said that in 2004, the International Monetary Fund (IMF) had proposed some countries to carry out structural reforms, similar to what we are now experiencing. At that time, some people believed that many economic problems were caused by oversupply or insufficient demand. At the time, R. Rajan, director of the IMF Research Center, said that many economic problems were caused by problems in the operation of the market, not because of shortage of resources or excess or insufficient total demand.
Need to pay close attention to six reforms and three breakthroughs
Wu Jinglian believes that in order to complete the macro task of building a unified and open, competitive and orderly market system, it is necessary to carry out various reforms. Now, there are six aspects of reform that need to be carried out.
The first is the institutionalization of decentralization and decentralization, and speeding up the formulation and implementation of negative lists of market entry. The negative list system entered by the market is a basic system of the market economy and must be accelerated. This involves not only the basic rights of citizens but also foreign economic relations.
The second is to comprehensively promote financial reform. At present, the core issue of financial reform - interest rate liberalization and exchange rate marketization has been relatively smooth, even exceeding the original expectations. However, only these two reforms are not enough to ensure the success of the reform of the entire financial system. Other reforms must also be accelerated, such as the reform of the regulatory system in financial markets.
The third is the reform of the state-owned economy. At present, a considerable number of state-owned enterprises are inefficient and their operations continue to decline. If this situation cannot be changed quickly, it will drag the entire national economy. The Third Plenary Session of the 18th Central Committee decided to change the management of state-owned enterprises from direct management (ie, “management, management, management of assetsâ€) to management of capital. This is a significant reform. In this way, an effective corporate governance structure can be established among state-owned holding companies and state-owned shareholding companies in order to achieve equal competition among various types of enterprises.
The fourth is the implementation of competition policy. It must be clearly understood that competition is the soul of the market system. Without fair competition, it is impossible to find the price, and it is impossible to achieve rewards and penalties and encourage enterprises to strive for innovation.
The fifth is to speed up the construction of the free trade pilot zone. The free trade zone experiment is not only meaningful in foreign economic relations, but also directly contributes to the establishment and improvement of a unified, open and competitive market system. Therefore, experiments in this area should be accelerated.
The sixth is to persist in building a country ruled by law.
Wu Jinglian proposed that in order to advance the above reforms, it is necessary not only to propose tasks, to make designs, but also to take practical measures. It is necessary to make breakthroughs in three aspects.
The first and foremost issue is to unify the ideological understanding of leaders at all levels to the decision of the Third Plenary Session of the 18th CPC Central Committee and the Fourth Plenary Session of the 18th CPC Central Committee to form a consensus. Take the reform of state-owned enterprises as an example. Many people think that the reform of state-owned enterprises seems to be progressing too slowly. The Third Plenary Session of the 18th CPC Central Committee decided to reform the state-owned assets management system and to control the equity of the original state-owned enterprises through certain capital management companies as investment entities. However, according to the news released in the media, there is still a very different understanding of the market on this issue. Some staff of the state-owned departments also believe that they must continue to manage and manage matters. Under such circumstances, the realization of unity in understanding may be a prerequisite for the reform of state-owned enterprises to move forward.
The second breakthrough is to grasp the mechanism guarantee and put the main responsibility for implementing the reform decision into place. Taking the fair competition review as an example, the State Council requires that the newly formulated policies be reviewed in advance from July 1 this year, and the original systems and policies should be reviewed to gradually eliminate and abolish the rules and practices that hinder fair competition in the market. . However, although the government requires that self-censorship and external supervision be combined in the fair competition review to strengthen social supervision, in the specific work deployment, the relevant documents only propose the self-censorship of each policy-making body, but there is no clear external supervision and Who is responsible for and how to conduct social supervision. For example, the people complain that a certain policy does not conform to the principle of fair competition. Whoever accepts the complaint and whoever handles it must have a clear responsibility, otherwise the review will easily fail.
In the past, similar problems existed in the implementation of the Anti-Monopoly Law. Anti-monopoly law enforcement is handled by three departments, and interaction and coordination between them are often problematic. Although there is an antitrust committee on top of the three departments, it is not a permanent institution, but an interdepartmental deliberative body. Therefore, in the past when discussing the implementation of the competition policy and the implementation of the Anti-Monopoly Law, many scholars proposed to establish a high-level, highly authoritative anti-monopoly institution, or an institution that implements competition policy. In order to establish a mechanism guarantee for fair competition review, this proposal deserves serious consideration.
The third breakthrough is to implement the main responsibility. In accordance with the requirements of the central government to comprehensively deepen the reform leadership group, we must promptly improve the working mechanism for supervision and coordination, supervision and implementation, and accountability for institutions and personnel responsible.
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