Is it feasible to stimulate consumption and "send money" to the whole people?

Observer.com

2024-08-08 11:07Posted on the official account of Shanghai Observer.com

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01In order to boost consumption, economists have proposed the policy option of directly issuing cash or consumption vouchers to residents, but the implementation needs to consider issues such as the object, amount and form of distribution.

02 Wang Yi, chief economist of Great Wall Securities, believes that it is more appropriate to issue consumption vouchers than direct payment, and it is necessary to consider how to set up a consumption voucher model to achieve a multiplier effect.

03 Zhao Jian, president of the Xijing Research Institute, said that the mainland government should take a different technical route from developed countries on the issue of money distribution to avoid the phenomenon of raising lazy people.

04Qu Hongbin, former chief economist of HSBC Greater China, believes that the issuance of money and consumption vouchers is a short-term way to stimulate consumption and achieve faster results, and it can be solved at the technical level.

05 Experts suggest that the expansion of consumption can start from the aspect of increasing income, such as short-term distribution of money to low- and middle-income people, the issuance of consumption vouchers, and long-term promotion of structural reform measures.

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Focusing on boosting consumption and solving the problem of insufficient effective demand, economists have prescribed various "prescriptions", one of which is to directly issue cash or consumption vouchers to residents.

Since the pandemic, proposals calling on the government to issue money and coupons have often appeared, and voices of support and opposition have been heard endlessly.

So far, China has not adopted a direct plan of "universal payment" like some European and United States countries, but some local governments have implemented multiple rounds of consumption vouchers.

Whether it is issuing money or issuing coupons, it is a means to stimulate consumption in the short term, and the ultimate goal is nothing more than to exchange real money for the multiplier effect of "four or two thousand catties".

At the recent meeting of the Political Bureau of the CPC Central Committee to plan the economic work in the second half of the year, it was proposed to focus on boosting consumption to expand domestic demand.

During the China Chief Economist Forum and the 3rd Greater Bay Area Economic Development Conference held on August 1-2, a number of chief economists expressed their views on the above topics to the observer.

There are many practical issues that need to be considered in "sending money".

Wang Yi, chief economist of Great Wall Securities, said that whether it is to issue money or bonds, it is necessary to consider some issues in actual operation, such as who to issue, how much, in what form and so on.

"China has a population of 1.4 billion, is it for everyone, or is it for a specific group of people? There are many regions in China, and the income level of each region is also different, how to determine the amount of money issued in different regions? Wang Yi said that in some cities in the mainland, 5,000 yuan per person may be a lot, but in first-tier cities, 5,000 yuan may be considered nothing.

In terms of form, Wang Yi believes that it is more appropriate to issue consumption vouchers than to directly distribute money. "If gold is found, I suspect some people might save it. If you want to use consumption vouchers to better achieve a multiplier effect and pull leverage, you need to consider how to set up the mode of consumption vouchers. ”

In addition, he also compared the differences between China and the United States, believing that different national conditions can also lead to different choices.

"We are different from United States people, United States is a consumer-oriented country, people like to spend, so the government gives them money, they give consumption vouchers, they may amplify the leverage. In addition, there are more than 300 million people in the United States, while there are 1.4 billion people in the mainland, and if each person sends 10,000 yuan, it will be 14 trillion, which is very large. Wang Yi mentioned that in support of the "old for the new", the mainland has arranged 300 billion ultra-long-term special treasury bonds.

"If the total amount of money is calculated according to 300 billion or 500 billion, then the average person will get a few hundred yuan, I don't think it will play a role, if we send more, we may go the United States way, issue a lot of debts, if you issue a lot of debts, why not directly give this money directly to the industry you want to support?" He added.

Zhao Jian, president of the Xijing Research Institute, mentioned that after the United States paid individuals, the labor participation rate decreased and many people withdrew from the labor market.

Zhao Jian said: "The mainland government has always been cautious about handing out money. China is a socialist country that encourages traditional cultures such as hard work and self-reliance, and is more worried about 'raising lazy people'. Therefore, in the matter of distributing money, it may have to take a different technical route from that of developed countries. In fact, adhering to the direction of rule of law and marketization, protecting the legitimate income and property rights of private individuals, and 'distributing money' through market mechanisms may be better than redistribution. ”

He also mentioned that it is very important to screen the distribution population, because from the economic principle, if you give money to low-income people, their consumption elasticity will be relatively high, and when you send money to high-income people, their consumption elasticity and consumption margin are relatively low.

"There are five or six billion people in China who have not yet entered the digital world, some of whom may not even have a bank card, and these people are the ones who need money the most." Zhao Jian believes that the specific plan for giving money to specific groups may still be being designed, but the inclusive payment may not appear in the next few years.

On January 6, 2023, Jilin citizens walked past the advertisement posted with government consumption vouchers + shopping mall promotions. Visual China

"Many problems can be solved at the technical level, and you can try and then adjust"

Although some economists have raised these concerns, many economists believe that these problems do exist, but they can be solved through exploration, and we must dare to try.

Qu Hongbin, former chief economist of HSBC Greater China, told the Observer that sending money and consumption vouchers is a relatively quick way to stimulate consumption in the short term.

"In the past, counter-cyclical adjustment was more about the government spending money directly, such as building high-speed rail, building 5G, etc., and the distribution of money and consumption vouchers was actually the government giving money to specific consumer groups, and they decided how to spend it." Qu Hongbin believes that these problems such as who to send and how much can be completely solved at the technical level.

"It's simple, everyone can have a share, that's what Hong Kong does, and if it's precise, it can be distributed to low- and middle-income people. As for how much? You can take it step by step, try it out first, and then adjust it. ”

Shen Minggao, global chief economist of GF Securities, also mentioned Hong Kong's experience.

He said: "During the epidemic in Hong Kong, 25,000 Hong Kong dollars were issued per person, which is a cash coupon, but it has an expiration date, and if it is not used after a certain period of time, it will be automatically withdrawn." We may be able to send it to Alipay or WeChat, but we don't have to send it to everyone like in Hong Kong, for example, to send 2,000 yuan to each person in the middle and low income groups. ”

Li Zhan, chief economist of the research department of China Merchants Fund, mentioned that the local grassroots finances are relatively tight, and he believes that if the money is distributed, the central government should make a one-way special expenditure.

For example, he said that at present, there is a lot of pressure on college students to find employment, and the central government can provide some employment subsidies to support graduates during their unemployment. If some graduates are undergoing some professional training, skill upgrading, etc., the state can consider waiving a series of tuition fees for them during the unemployed stage.

Li Zhan believes that for low-income groups, money can be sent directly. "The mainland's social security and credit systems are very perfect, and money can be sent to this group very accurately, and there are no technical obstacles at all. If you want to issue consumption vouchers to this group, you can issue specific consumption vouchers according to their needs. For example, now that the consumption of dairy products is declining, the state can directly issue consumption vouchers for such foods to low-income groups or directly distribute them in kind. ”

Recently, Lu Ting, chief economist of Nomura Securities China, also wrote that he believes that the best opportunity to distribute money or consumption vouchers to the whole people has been missed and should not become a basic option for the central government. If we want to "distribute money", it should be targeted at specific groups of people, mainly to encourage childbirth and provide basic social security and medical insurance for socially disadvantaged groups, such subsidies can take into account stimulating consumption, promoting equity and enhancing the potential for future economic growth.

On June 25, 2020, in Xiangyang City, Hubei Province, shareholders of Tanxi Lake Community in Xiangcheng District displayed the consumption vouchers they had just received. Visual China

Income is the basis of consumption, and expanding consumption can start with increasing income

On July 30, the Politburo meeting of the Central Committee emphasized the need to increase residents' income through multiple channels and enhance the consumption capacity and willingness of low- and middle-income groups.

In this regard, Qu Hongbin said that income is the basis of consumption, so expanding consumption can start from the aspect of increasing income, and there are two main ways to increase income: first, short-term measures, such as giving money to low- and middle-income people and issuing consumption vouchers; Second, in the medium to long term, we can continue to promote some reform measures, such as giving 200 million migrant workers the same treatment as citizens. Stabilizing employment, stabilizing the real estate market, and activating the capital market are also the starting points for expanding consumption.

Shen Minggao also mentioned: "The issuance of consumption vouchers is a short-term measure to stabilize growth, while taking into account the improvement of people's lives and narrowing the gap between supply and demand. In addition, long-term structural reform measures are needed to drive a sustainable economic recovery. Structural reform measures, including supply-side scientific and technological innovation, industrial transformation and upgrading, also need the cooperation of the demand side to achieve results as soon as possible. ”

Zhao Jian believes that an important reason for the current lack of demand is the problem of income expectations, including the decline in wage income and property income.

He said: "It is difficult to solve the wage income in the short term, but we will find a way to raise the stock market, stabilize the housing prices, stabilize the people's houses, and the stock and fund accounts will not lose money every day, and slowly the confidence will be restored." ”

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