中國學者呼籲北京將赤字率提高至5% (1/2)

Recently Yahoo News on-line reported the following:

Chinese Scholar Calls On Beijing to Raise Deficit Ratio to 5% (1/2)

Bloomberg News

Sun, November 19, 2023 at 7:00 a.m. GMT+8

(Bloomberg) -- China needs to decisively ramp up fiscal spending so it can support an economy damaged by Western restrictions on trade, according to a Chinese scholar studying an unconventional school of economic thought.

Jia Genliang — the co-author of the new book Modern Monetary Theory in China and a professor at the Renmin University of China in Beijing — said China should lift its headline deficit ratio to above 5% of gross domestic product on average for the next decade. That’s more than the 3% level the government has typically adhered to, and even higher than this year’s 3.8% ratio, which was set last month as part of a rare mid-year budget revision to help growth.

Jia’s advice adds to a chorus of economists calling for or predicting the government will roll out more fiscal stimulus to support the economy. Last month’s unusual budget revision and decision to issue another 1 trillion yuan ($138 billion) worth of sovereign debt appeared to many analysts to signal a shift in approach to policy as Beijing grows wary of debt strains on local governments.

Jia is one of the most prominent Chinese proponents of Modern Monetary Theory, whose principle is that countries which borrow in their own currencies don’t face a real debt limit because they can print money to pay for it. That theory has attracted attention in China over the past few years as authorities relied more on fiscal stimulus and infrastructure investment to help a slowing economy.

In Jia’s view, Beijing needs to do more as Western nations including the US maintain curbs on Chinese exports, crimping what has been a key driver of growth over the last several years. He also recommended the government hire more workers and increase public spending to lift residents’ income and consumption.

Here are highlights from a recent interview with Jia, which has been condensed and edited for clarity:

Does China’s economy need more policy support?

The economy is returning to a downward trend already present before the pandemic. The grim challenge of insufficient demand remains. Exports have been bad this year, and the overall trend is increasingly negative, even though it may improve next year. This is because the widening income inequality in advanced economies has led to a rise in protectionism, which means lower demand for Chinese goods in the long term. China will have no choice but to rely on domestic demand and the domestic economic circulation to achieve growth.

But China is facing a lack of consumption demand, which is fundamentally due to residents’ relatively weak income that fails to absorb products made in the highly-efficient industrial sector. Adjusting income distribution will be a long and difficult process.

I propose a much more direct and effective solution, which is to significantly raise the central government’s fiscal spending — and deficit ratio — to lift residents’ income. That will compensate for insufficient demand and resolve the issue of oversupply.

(to be continued)

Translation

（彭博）—一位研究非常規經濟思想學派的中國學者表示，中國需要果斷地增加財政支出，以便支持因西方貿易限製而受損的經濟。

新書《現代貨幣理論在中國》的合著者、中國人民大學教授賈根良 (Jia Genliang) 表示，未來十年中國應將整體赤字率平均提高到國內生產毛額的 5% 以上。 這高於政府通常堅持的 3% 水平，甚至高於今年 3.8% 的比率，該比率是上個月設定的，作為罕見的年中預算修訂的一部分，以幫助增長。

賈根良的建議讓經濟學家紛紛呼籲或預測政府將推出更多財政刺激措施來支持經濟。 在許多分析師看來，上個月不同尋常的預算修訂和決定再發行1萬億元人民幣（1,380億美元）的主權債務，似乎標誌著北京方面對地方政府債務壓力日益警惕的政策方針的轉變。

賈根良是中國最著名的 現代貨幣理論 支持者之一，其原則是，以本國貨幣借款的國家不會面臨真正的債務上限，因為它們可以印鈔票來支付。 過去幾年，這一理論在中國引起了關注，因為當局更依賴財政刺激和基礎設施投資來幫助放緩的經濟。

賈根良認為，隨著包括美國在內的西方國家繼續限制中國出口，削弱了過去幾年經濟成長的關鍵動力，北京需要採取更多行動。 他還建議政府僱用更多工人並增加公共支出，以提高居民收入和消費。

以下是最近對賈根良的採訪的要點，為了清晰起見，該採訪經過精簡和編輯：

中國經濟是否需要更多政策支持？

經濟正在恢復到大流行之前已經出現的下降趨勢。 需求不足的嚴峻挑戰依然存在。 今年出口情況不佳，儘管明年可能會有所改善，但整體趨勢越來越負面。 這是因為已開發經濟體收入不平等的擴大導致保護主義抬頭，從長遠來看，這意味著對中國商品的需求下降。 中國要實現成長，只能靠內需和國內經濟循環。

但中國面臨消費需求不足的問題，根本原因是居民收入相對薄弱，無法吸收高效率工業部門的產品。 調整收入分配將是一個長期而艱難的過程。

我提出了一個更直接、更有效的解決方案，那就是大幅提高中央政府的財政支出和赤字率，以提高居民收入。 這將彌補需求不足並解決供應過剩問題。

（待續）

Note:

Modern monetary theory or modern money theory (MMT) is a heterodox macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires. According to MMT, governments do not need to worry about accumulating debt since they can create new money by using fiscal policy to pay interest. MMT argues that the primary risk once the economy reaches full employment is inflation, which acts as the only constraint on spending. MMT also argues that inflation can be addressed by increasing taxes on everyone to reduce the spending capacity of the private sector. MMT is controversial, and is actively debated with dialogues about its theoretical integrity, the implications of the policy recommendations of its proponents, and the extent to which it is divergent from orthodox macroeconomics. MMT is opposed to the mainstream understanding of macroeconomic theory and has been criticized heavily by many mainstream economists. (Wikipedia)

2. The total budget deficit, or headline deficit, is equal to the sum of the structural deficit and cyclical deficit (or surplus/es).