Setting off a New Round of Reform and Opening Up

On June 23, 2019, the Academy of Chinese Economic Thought and Practice (ACCEPT) of Tsinghua University convened the 36th Tsinghua University Economic Forum on China and the World with the theme of "China's Economy under Sino-US Friction".

Gao Shanwen, Chief Economist of Anxin Securities, Guan Tao, former Director of Balance of Payments Department of State Administration of Foreign Exchange, Wei Shaojun, Director of Microelectronics Department of Tsinghua University, Yuan Gangming, former American Trade Representative Timothy Stratford, and Neil Schwartz, researcher of China and World Economic Research Center of Tsinghua University attended the meeting.

Li Daokui believes that although China's economy is under downward pressure in the short term, it still has great potential in the future. In recent years, China's achievements in scientific and technological innovation have repeatedly reached new heights, and further policies should be issued to release vitality. In the aspect of industrial upgrading, there is a huge space for the renovation and transformation of traditional industries, including steel industry, which can bring about a new round of economic growth. In the long run, the biggest growth point of China's economy lies in the expansion of middle-income groups. According to the analysis of the report, it is entirely possible for China to double the current number of middle-income people from 400 million to 800 million in 15 years. This is a powerful guarantee for China's economic development and a major achievement for human development.

Li Daokui suggested that the state promulgate a number of substantive policies to set off a new upsurge of reform and opening up, boost confidence and vitality, and repel the international trend of "anti-globalization" and curb China's development. In terms of reform, raising the rate of return on state-owned assets and carrying out the reform of mixed ownership can greatly increase national fiscal revenue and provide a solid foundation for tax reduction and concessions; in the international arena, we should further encourage international trade and transnational investment, especially to further open domestic markets to developed countries friendly to China, such as the European Union, Japan and the United Kingdom, and lower the access threshold, so as to deal with those from the United States. Pressure. Gao Shanwen believes that the stock market and the foreign exchange market have fully absorbed the worst situation of the trade war, if not negotiated, the impact on the market will not be great, and if the negotiation results exceed expectations, it will have an upward impact on the market. In response to the contractor incident, Gao Shanwen pointed out that although the relevant departments believe that the risk is controllable, there is still anxiety among practitioners in the banking market. Small and medium-sized financial institutions account for a quarter of China's social financing. If the risk exceeds expectations, it will create huge hidden dangers. According to Gao Shanwen, China's domestic demand decelerated in 2019, which was influenced by trade frictions, but the main reason was that the tightening effect of the government's de-leveraging policy since last year was still released and continued. At present, the internal and external environment of China's economy is more complex, so we need to come up with practical plans to deal with it through a new round of high-level reform. Guan Tao pointed out that the combined effect of weak external demand and insufficient domestic demand led to the slowdown of imports, which was not caused by the increase of export competitiveness, and the trade surplus reflected the downward pressure of the overall economy. The state proposes not to pursue economic growth, but to adhere to high-quality development and maintain employment and financial stability. In terms of foreign investment, in recent years, the United States has tightened restrictions on China's investment in the United States. Policy uncertainty has led to a rapid decline in China's investment in the United States.

It is said that in the long run, China's investment in mature markets will be reduced, and investment in emerging markets, especially along the belt and road, will grow steadily. According to Guan Tao's view that "trade surplus has a supporting effect on the stability of RMB exchange rate", if the expansion of surplus is due to insufficient domestic demand and economic slowdown, it will suppress market expectations instead. In fact, the pull on RMB exchange rate is downward, which force is greater depends on the market.

Wei Shaojun said that although China can achieve 25% independent production of mobile phone chips, it still relies heavily on imports in the fields of computers, servers, high-end communication chips and processor chips. In 2018, although China's total imported semiconductor products amounted to $312 billion, accounting for two-thirds of the world's total, about half of them were used for the re-export of whole machine production. At present, there are few related products involved in Sino-US tariff interaction, but if the situation escalates further, the semiconductor industry will inevitably be affected.

Wei Shaojun believed that the current situation had exceeded the expectations of the American Semiconductor Association, which turned to lobbying Trump and the U.S. Department of Commerce to oppose further tax increases and avoid losing both sides. Internet and mobile communications have provided a strong impetus for global economic growth in the past period. Supply chain globalization is the basic condition for economic prosperity. If supply is cut off due to the escalation of friction between China and the United States, both sides will face chain reorganization, which is a lose-lose situation. Wei Shaojun pointed out that there are many semiconductor industries in China that can meet the relevant production needs, but it will take time to make use of their engineering advantages to become bigger and stronger.