中國學者呼籲北京將赤字率提高至5% (2/2)

Recently Yahoo News on-line reported the following:

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

Bloomberg News

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

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How do you see China’s external environment as trade tensions rise?

MMT shows us that in a closed economy, the private sector’s net financial assets equals the fiscal deficit. And a trade surplus comes from other governments’ fiscal deficit.

We don’t need to fear even if trade surplus becomes zero, because we can replace exports with a higher fiscal deficit. As the de-globalization trend deepens, other countries are set to implement increasing trade restrictions on China.

China must turn to domestic circulation, and the key is to increase the fiscal deficit to maintain ample capital in private sectors. If we realize this, we will be unafraid of overseas protectionism and Western countries’ containment.

China has the world’s biggest market. We can totally rely on the government’s fiscal capacities and domestic circulation to achieve a medium to high growth again, and usher in a golden era for economic growth.

How do you assess the impact of the government’s decision to lift the budget deficit?

Its greatest significance is that it broke the myth of the “red line” of a 3% fiscal deficit ratio. Setting the ratio at 2.8% last year was an important factor for the economy’s challenges in 2023.

The move to lift the ratio broke a rigid way of thinking, and represents a pragmatic approach. It has led to heated discussion and praise, and had a strong impact on people’s psychology. It will help further break this dogma that has long been abandoned by the international community.

In recent years, China has seen obvious fiscal austerity compared with the US, Japan and European countries. So we still need to further liberate our minds.

What are the most urgently needed policies, in your opinion?

We need to solve the unemployment issue and make wage increases an engine for growth. This requires a job guarantee program that I first proposed in 2020, which can be funded by the central government and organized by local authorities. It will essentially mean the government sets a minimum wage and hires any unemployed workers who are willing to work but couldn’t find a job.

In addition, China needs to resolve the local government debt issue. In the short term, localities should be allowed to issue more general bonds, and the central government should use special sovereign bonds to replace local debt. In the longer term, there should be a reform to the central-local fiscal system.

China also needs to invest in areas such as digital economy, green energy and core technologies, and make them a new growth engine to replace property and traditional infrastructure. We also need to invest strategically in the next industrial revolution in sectors such as nanotechnology, new energy and bioengineering.

Translation

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您如何看待貿易緊張局勢升級下中國的外部環境？

現代貨幣理論告訴我們，在封閉經濟中，私人的金融資產淨值等於財政赤字。 貿易順差來自其他國家政府的財政赤字。

即使貿易順差為零，我們也不必擔心，因為我們可以用更高的財政赤字來取代出口。 隨著逆全球化趨勢的深入，其他國家對中國的貿易限制也將越來越多。

中國必須轉向國內循環，關鍵是增加財政赤字，以維持私人資本充裕。 當我們意識到這一點，我們就不怕海外保護主義和西方國家圍堵。

中國擁有全球最大的市場。 我們完全可以依靠政府的財政能力和國內循環，再次實現中高速成長，迎來經濟成長的黃金時代。

您如何評估政府取消預算赤字決定的影響？

其最大意義在於打破了3%財政赤字率「紅線」的迷思。 去年將此比率定為2.8%，是2023年經濟構成挑戰的重要因素。

提高這一比例的舉動打破了僵化的思考方式，體現了一種務實的態度。 引起了熱烈的討論和好評，對人們的心理產生了強烈的影響。 這將有助於進一步打破這項早已被國際社會拋棄的教條。

近年來，與美國、日本和歐洲國家相比，中國的財政緊縮政策明顯。 所以我們還需要進一步解放思想。

您認為最迫切需要的政策是什麼？

我們要解決失業問題，讓薪資成長成為經濟成長的引擎。 這需要我在2020年首次提出的就業保障計劃，該計劃可以由中央政府提供資金，由地方當局組織。 這本質上意味著政府設定最低工資並僱用任何願意工作但找不到工作的失業工人。

此外，中國還需要解決地方政府債務問題。 短期內，應允許地方更多發行一般債券，中央政府應利用專項主權債券取代地方債務。 從長遠來看，應該對中央和地方的財政體制進行改革。

中國還需要在數字經濟、綠色能源、核心技術等領域進行投資，使其成為取代房地產和傳統基礎設施的新成長引擎。 我們還需要對奈納米技術、新能源和生物工程等領域的下一次工業革命進行策略性投資。

So, a university professor in Beijing and a believer of Modern Monetary Theory says that China should lift its headline deficit ratio to above 5% of gross domestic product. Also, he says that China needs to use wage increases as an engine for growth through a job guarantee program. In addition, he suggests that China can resolve the local government debt issue by allowing the issue of more general bonds etc. I am interested in knowing how much faith does the CCP has in MMT.