How to resolve overcapacity? The government should judge the situation

At present, we often see the news of pushing forward the structural reform of supply side in various media. One of the tasks is to "remove excess capacity". It was suggested that what is excess capacity? Others asked, how can overcapacity be created?

Vice-Chairman of the 13th National Committee of the Political Consultative Conference, Su Bo, said in "China's Economic Lecture Hall": "Excess capacity means too much supply and too much quantity. When the price is high, the profit will be abundant, and a large number of people will invest in this field, and then want to take a share. Why does this problem always arise? To a large extent, there is blindness in the market. There is another reason for it. Our market is developing too fast, and the product heat has passed before a large amount of investment has completed the production cycle. This also leads to excess, which is also a natural cause.

Besides objective reasons, there are subjective reasons. Some local governments have contributed to overcapacity. For example, there is no need to increase investment in some projects, because the policy of giving it too cheap land and too low tax revenue will lead some enterprises to over-invest, resulting in more excess capacity, thus contributing to the situation that the fittest are invincible. However, in special circumstances, government intervention is a positive factor and is indispensable. Do you remember? In the short term, Lehman Brothers, the fourth largest investment bank in the United States, collapsed, followed by General Motors, the largest automobile manufacturer in the United States. In the face of this major crisis, the U.S. government took urgent measures to inject nearly $50 billion to pull GM back from the brink of bankruptcy. At that time, China's external dependence reached more than 60%, unlike now it has dropped to 30%. What is the degree of external dependence? It refers to the degree of dependence of our economy on foreign countries, and the greater the proportion, the greater the degree of dependence. At that time, many of our southern enterprises were affected. Faced with such a critical situation, our government adopted the strategy of driving the economy by investment and getting out of the financial crisis as soon as possible. The central government has invested nearly 1 trillion yuan and the society has invested 3 trillion yuan in infrastructure construction, such as paving roads, repairing bridges, water, gas and electricity, including post-earthquake reconstruction in Sichuan. Therefore, in the second year after the financial crisis, that is, in 2009, our economy has stabilized without much impact, growing by 9.4%.

We can proudly say that in 2008, we saved the global economy with investment strategies. Su Bo, deputy director of the 13th National Committee of the Political Consultative Conference, said, "We have highlighted the responsibility of a big country. We have taken it on our own, which has prevented our national economy from declining and supported the recovery and development of the world economy. At that time, the western countries thanked us because our massive investment caused the rise of infrastructure and raw materials in all aspects, and also bought many products from abroad, which stabilized their economies and contributed to the world.

Therefore, we should review the situation when facing the problem of overcapacity. Under normal circumstances, the government should try its best to reduce the details of intervention in economic development, but in the face of crisis, we should dare to take measures, dare to assume!