Zhang Bin, Chinese Academy of Social Sciences: The central bank should let consumers understand that they will spare no effort to make money hairy, and they have to spend it if they don't want to

The New Economist

2024-07-09 19:02Published in Beijing Finance and Economics Creator

　　The "2024 Rongzhong Summer Summit" was held in Beijing from July 8 to 11. Zhang Bin, member of the 14th National Committee of the Chinese People's Political Consultative Conference, member of the Foreign Affairs Committee, and deputy director of the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, attended and delivered a speech.

　　Talking about "how to get out of the situation of insufficient demand", Zhang Bin believes that the essence of insufficient demand is a vicious circle, especially the decline in credit. In the face of the spontaneous vicious circle of the market, there must be a force greater than the market expects to reverse the momentum.

　　In terms of monetary policy, he cited Japan as an example, "Krugman said that the central bank must tell the market that inflation must be done, and that it must be an irresponsible central bank to solve the problem of insufficient demand."

　　He said that the central bank needs to make consumers and investors understand, "I will spare no effort to make your money hairy, will you spend it?" If you don't want to spend it, you have to spend it", "This plan looks ridiculous in Japan and sounds unacceptable to the public, but this plan is precisely the power to break expectations and reshape new expectations".

　　In terms of fiscal policy, Zhang Bin believes that it is necessary to spend more money, because the more the fiscal spends, the more market income, "the more the government spends, the more revenue from the non-governmental sector, it will be helpful to spending, growth, and change the vicious circle situation, but the intensity must be enough, and the strength is not enough to play a role."

　　In addition to fiscal and monetary policies, he also mentioned real estate and local government bonds.

　　In terms of real estate, Zhang Bin stressed the need to stabilize real estate, "if real estate companies are facing a thunderstorm situation, then there is no way for the entire market to return to normal."

　　In terms of local government debt, he pointed out that this is a long-term work that cannot be completed overnight, and the pace is particularly important. "When the private sector is deleveraging, the government should not deleverage, otherwise it will form a stampede", "We must grasp the rhythm, the government can deleverage when the economy is hot and demand is overheated, and when the economy is cold, when the private sector deleverages, the government should not deleverage, and must maintain cash flow first".

View original image 173K

•