Post-epidemic economic policy thinking: return to the core logic of the economy and focus on development

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Post-epidemic economic policy thinking: return to the core logic of the economy and focus on development
This report comes from the “Guanghua Thought Power” Macroeconomic Forecasting Paper Group of Guanghua School of Management, Peking University. It is written by Liu Qiao and Color.Liu Qiao is the dean of Guanghua School of Management and a distinguished professor of Changjiang Scholars of the Ministry of Education; the color is an associate professor of the Department of Applied Economics of Guanghua School of Management.Guide: 1.What kind of policy combination will help the Chinese economy break through after the epidemic?2.What happened to the core logic of the Chinese economy?3.What is the fundamental

difference between this round of new infrastructure and the four trillion yuan in 2008?4.Tax reduction, issuance of vouchers, supplements, how to activate corporate investment and residents’ consumption?5. How to break the pressure of “increasing expenditure and reducing income” brought about by the epidemic to the national finance?The new coronavirus pneumonia (COVID-19) epidemic that has raged since the end of 2019 has caused the Chinese economy to experience a storm in a storm.After experiencing the early retreat and loss of evidence of the outbreak, a country that has experienced various crises in the past has demonstrated strong organizational mobilization capabilities. The huge sacrifices of the people of Hubei and the high degree of cooperation and obedience of the people across the country have gradually strengthened us.The confidence to overcome the epidemic and effectively prevent the epidemic from continuing to spread.At present, the new coronavirus pneumonia has spread rapidly internationally, and there is even the possibility of a global epidemic. However, the overall internal prevention and control measures are improving, and the policy focus has gradually shifted from emergency measures against the epidemic to post-epidemic economic recovery.At the working meeting on February 23 to promote the prevention and control of the new coronary pneumonia epidemic and economic and social development, the highest level clearly pointed out that although the new coronary pneumonia epidemic has a significant impact on the economic operation, the long-term economic trend will not changeIt is necessary to make overall plans for the prevention and control of epidemic situations and economic and social development.Since then, the objectives of post-epidemic economic policy have been very clear: policies and policies need to fully hedge the impact of the epidemic on the economy, fight three major battles, do a good job of six stability, and ensure the realization of economic and social development goals;The policies implemented and implemented must deepen the supply-side structural reforms, promote China’s economic transformation momentum, optimize the structure, and change the growth model.Based on the above-mentioned multiple policy objectives, what kind of policy combination can help the Chinese economy break through after the epidemic?At present, many experts and scholars have put forward policy recommendations from different perspectives, which mainly use “guarantee growth” and “full-scale hedge against the impact of the epidemic on the economy” as a starting point, and adopt larger or even more radical economic stimulus policies, which is likely to become a consensus.We believe that when there are multiple goals in economic policy, the logic of policy design should be consistent with the principle of “incentive compatibility” in economics-which can solve the major problems that need to be solved urgently (steady growth to achieve short-term economic and social development goals), but notIt can lead to unexpected policy distortions (policy leads to the deterioration of long-term structural problems).According to this principle, combined with the reality that the core logic of China’s economy has changed, we should have new thinking about the policy combination and implementation path of China’s economic breakthrough after the epidemic.Specifically, economic policy discussions need to carefully analyze the impact of the epidemic on the economy and society to avoid “overhedging the impact of the epidemic on the economy” (hedging); the change needs to change the focus of the policy according to the changes in the core logic of the Chinese economy and choose a reasonablePolicy measures, grasp the policy strength and rhythm, and avoid unexpected results.Therefore, we believe that when formulating economic policies after the epidemic, we should grasp the core logic of the Chinese economy, adhere to the concept of expanding development, and return to the 19th National Congress of the CPC, the Fourth Plenary Session of the 19th Central Committee and the Central Economic Work Conference to achieve short-termGoals are compatible with long-term goals.What is the economic impact of the new coronavirus outbreak?As the initial country of the new coronavirus epidemic, China has effectively suppressed the spread of the epidemic through strong measures, but the epidemic has caused a huge distortion of the economy.The outbreak first hit the tertiary industry directly from the demand side.Among them, the industries most affected by transportation and storage, wholesale and retail, tourism, accommodation, catering, offline entertainment, agriculture, forestry, fishery and animal husbandry, together accounted for 36% of GDP.In addition, because the supply of factors needed to resume the production process was impacted by the epidemic, the flow of people, logistics, and capital was not completely closed, and the industrial chain and supply chain could not run smoothly. The impact of the epidemic on the economy has affected the supply side such as manufacturing, real estate, Import and export fields.According to the National Bureau of Statistics, China’s manufacturing purchasing managers index (PMI) was 35 in February.7, down 14 from January.3; Non-manufacturing PMI from 54 in January.1 to 29.6.The Manufacturing Purchasing Managers Index is a leading indicator highly correlated with GDP. Its February data indicates that China’s overall economic downturn may exceed expectations.Currently, experts, scholars and policy analysts are divided on the impact of the epidemic on the overall economy.Relatively pessimists even believe that China ‘s economic growth may be negative in the first quarter of this year. Without the support of expanded demand stimulus policies, the Chinese economy will achieve the replacements needed to double GDP in the decade of 2011-2020.5% -5.6% GDP growth will be difficult to achieve.Of course, the more general expectation in the market is that the impact of the epidemic on GDP growth in the first quarter will be 2-3 subdivisions, and the impact on expansion will be zero.Around 5 points.We believe that under the protection of active and effective policies (we will analyze what is positive and effective economic policies later), the epidemic will cause zero to the Chinese economy.The impact of the five factors is a reasonable estimate. The reasons are as follows: (1) Many scholars and policy analysts have calculated in detail the direct impact of the epidemic on transportation, wholesale and retail, tourism, accommodation, dining, offline entertainment, etcThe losses caused by the industry are on the scale of 1.3 trillion-1.Between 8 trillion yuan, considering that GDP counts value added rather than operating income, only a certain percentage of the business’s operating income can be classified as added value. Therefore, the actual GDP loss should be far less than 1.3 trillion-1.8 trillion; (2) When calculating GDP, the Statistics Bureau uses the income method for many industries, and even employees in these industries cannot be reworked or returned to work normally, or even their operations are interrupted, but the wages and taxes paid by the enterprise are still included in the GDP accounting, The reflected GDP deceleration is not as big as people feel (sorry, intuition is sometimes really unreliable!); ((3) Considering the impact of the hedging policy that is being and will be introduced one after another, after experiencing the economic backtracking in the first quarter, the economic data in the second and third quarters will rebound significantly, and the extent of the impact of the epidemic on the data involved may beFurther narrowed.0.The GDP losses of the five highest countries are roughly equivalent to those estimated by the International Monetary Fund (IMF).When democracy evaluated the impact of the epidemic on the global economy, the IMF said that the new pneumonia epidemic would transform.The global economic growth rate of 3% in 2020 is expected to decrease by 0.1 average.Considering that China’s economic scale accounts for about 16% of the global economy, 0.The five GDP declines in China correspond to approximately zero.One global GDP loss.Here we assume that the limited spread of the epidemic outside of China will also cause some economic losses.If 0.The estimates of the five exceptions are roughly reasonable, so China’s GDP growth rate will be 5 this year.At about 6%, economic growth is still within a reasonable range and can achieve two doubling strategic goals.Of course, it must be pointed out that our analysis predicts that the epidemic will not evolve into a global infectious disease.If the epidemic spreads globally and continues, then its impact on China and the global economy will be a terrible scene.In this case, the global supply chain and industrial chain will appear even longer, the global economic landscape will be completely disrupted, and this round of economy may even be forced to press the pause button.In this way, the impact of the epidemic on the economy will exceed the impact of the general public health events analyzed in the literature on the economy and society, and will have a continuous and profound impact on the global economy.Once such an extreme situation arises, China’s economic and social development goals will undergo major revisions, and the discourse system of our policy discussions will be completely different.Letting go of the extreme extremes temporarily, our overall judgment on the economic impact of the epidemic can get some empirical support from the response of the global capital market to the epidemic.Figure 1 illustrates the changes in the Shanghai Composite Index, Hang Seng Index and Dow Jones Industrial Index from January to February this year.As shown in Figure 1, the impact of the new coronavirus pneumonia outbreak was mainly to some extent before the epidemic spread in the world in late February.During this period, the stock market changes have two notable characteristics: First, the changes in the Hang Seng Index and the Shanghai Stock Exchange Index are highly coincident. During this period, after the one-time release of the impact of the epidemic on the stock market, the stock market showed an upward trend.The Shanghai Stock Exchange Index has almost returned to the level before the outbreak on February 20.Although the Hang Seng Index is not as good as the Shanghai Composite Index, the overall upward trend is very obvious before February 20; it needs to be pointed out that the impact of the new coronavirus epidemic in this period is mainly in China, and reports of rapid spread overseas have not yet appeared;The index had been adjusted within a narrow range at the end of January when the epidemic was turbulent, but the overall trend was stable, and it was significantly affected by the prevention and control of conflict epidemics by February 20.Obviously, the stock market from January 2 to February 20 gradually returned to the pre-epidemic level after the market panic caused by the epidemic was released at one time, indicating that the capital market believes that the impact of the epidemic on China’s economic fundamentals is basically controllableAfter the epidemic, China’s overall economic trend is expected to be good. The adverse effects of the epidemic will not change after the market digests it.Changes in the Dow Jones Index during this period also indicate that the global market believes that the epidemic has limited impact on the Chinese economy.Given the key fact that China is at the core of the global supply chain, we disagree with the judgment made by some analysts that China ‘s impact on the global economy is seriously overestimated.The frightened global market believes that the Chinese government has enough room for macro policy to hedge the impact of the epidemic. Because of this, the economic impact of the epidemic is short-term and relatively limited.The impact of the virus epidemic on the economy is an endogenous variable.The degree of its impact depends on the control of the epidemic and whether we adopt effective hedging policies.Our analysis above shows that if the epidemic does not develop into a global infectious disease, it will not pose a major threat to the achievement of China’s economic and social development goals.In this context, policy choices should avoid excessively increasing the GDP growth rate after the epidemic through flood irrigation.This excessive hedging has not only overdrawn the potential for future growth, but also added further structural dysfunctions in economic and social development such as the already highly serious leverage ratio and low return on investment capital.What happened to the core logic of the Chinese economy?After 40 years of rapid growth, the core logic of the Chinese economy is undergoing profound changes.The great success of China’s economy after reform and opening up can be explained according to modern growth theory.According to Robert the American economist?According to the “Solow Model” proposed by Robert Solow, a country’s economic growth can ultimately be attributed to the growth of factors (mainly including capital and labor) and the growth of total factor substitution (TFP).In terms of labor, in the past four decades, a large amount of labor has been continuously invested in China’s industrialization process, which has greatly promoted China’s economic growth.In terms of capital, we have invested in infrastructure, real estate, land, etc. to form supplementary fixed assets, and then use these assets as collateral to form bank credit, which has greatly promoted the expansion of social credit and accelerated the “monetization” and “capitalization” of the Chinese economy.”The degree provides a very scarce capital element for the Chinese economy.In terms of total factor advantages, the growth rate of long-term total factor conversion has maintained a very high growth rate due to the rapid advancement of industrialization.Comparing with the United States can explain the problem.The average growth rate of the total factor curve during the centuries of industrialization in the United States from 1870 to 1970 was 2.1%; and China has performed very well in the past 40 years. From 1980 to 1989, the average annual growth rate was 3.9%; the growth rate from 1990 to 1999 was 4.7%; the average annual growth rate from 2000 to 2009 was 4.4%.Of course, during the period of 2010-2018, the growth rate began to appear, and it dropped to about 2 per year.At around 1%, the decline of the previous full-factor gradual growth rate at this stage is closely related to China’s basically completed industrialization progress.At present, against the background that China’s industrialization process is almost over, the core logic of China’s economic growth is changing.Growth based on the intake of a large number of factors becomes unsustainable, and the driving force for growth is shifting toward the full factor.China’s total factor forecast level is now equivalent to about 43% of the United States.According to our calculations, by 2035, when China basically realizes socialist modernization, China’s TFP level will only reach 65% of that of the United States. It will also require the annual growth rate of the total factor orientation to exceed the United States.95 averages, that is, need to maintain 2 per year for the next 16 years.5% -3% growth rate.This is a big challenge facing the Chinese economy, because in the history of the global economy, we have not found that some countries can still maintain after completing the industrialization process.The annual growth rate of all elements above 5% is essential.We believe that China has many favorable structural factors in promoting TFP growth.First of all, the “re-industrialization” of the Chinese economy, that is, through the “digital transformation of the industry”, using Internet big data and artificial intelligence to drive the transformation of the industry, can bring room for improvement in total factor transformation (TFP).Second, “new infrastructure”-“infrastructure required for re-industrialization”.Around the industrial transformation, the construction of supporting infrastructure for industrial Internet, such as 5G base stations, data centers, cloud computing equipment, etc., will drive the growth of TFP.Third, big country industry.Up to now, although China has built the most complete industrial category in the world, it has not been able to form a “closed loop” on key components or technologies, and there is still room for development in the industry of major countries.In the future, the development of such civil aviation, aircraft engines, integrated circuits, etc. will provide the possibility of highlighting all factors.Fourth, more thorough reforms and the improvement of resource allocation efficiency brought about by opening up.In addition to technology, “further reforms” and “higher openness” can create an institutional dividend space and create the miracle of “maintaining a higher growth rate of total factor transformation (TFP).”For a modern economy, empirical research shows that the growth of total factor growth generally contributes more than half of economic growth.If China can create another economic miracle and achieve gradual development, the growth rate of the total factor forecast will be maintained at 2.More than 5%, then we may be able to achieve a long-term economic growth of about 5%-this is the biggest change in the core logic of China’s economy.Changes in the core logic of the Chinese economy are also reflected in other areas.For example, China’s industrial structure is undergoing tremendous changes.In 2019, our tertiary industry accounted for 54% of GDP, contributing nearly 60% of GDP growth.In addition, consumption, rather than investment in fixed assets, has become the most important momentum for the economy-in 2019, consumption has driven 57.The economic growth of 8% clearly exceeds investment 31.2% contribution to growth.At present, the overall agricultural GDP accounts for only more than 7%, but agriculture uses 27% of the labor force.By 2035, the proportion of agriculture in the past will replace about 3%, and the proportion of agricultural employment in the labor force is only 4%.In the next 16 years, 20% to 25% of the employed population in developing countries will need to flow from agriculture and low-end manufacturing to high-end manufacturing and services.Large-scale labor will be reconfigured, while changing the economic pattern and growth logic.We are facing the severe challenge of an aging population.According to our calculations, the proportion of China ‘s population over 65 years old will reach 23% by 2035, and the aging population will deteriorate, leading to changes in the consumer side. More and higher health care, pension, wealth management, social security systems, etc.Requirements; reduction, the aging of the population means a reduction in the savings rate, which poses a huge challenge for us to maintain a high investment rate in the future, and shakes the foundation of the model that we are used to using investment to drive growth.The pattern of income distribution will also change dramatically in the future.China’s current Gini coefficient is 0.467, the income of the population in the bottom 50% of income distribution accounts for only 15% of the total income, and the “per capita real income of the top 10% of income group” is 14 times that of the bottom 50% group.This ratio is much higher than France (7 times) and slightly higher than the US income gap level (18 times).If our future growth cannot achieve inclusiveness and inclusiveness, if we cannot allow a reasonable income growth of the large middle-income population and benefit the low-income population from economic and social development, our awareness of awareness and marketWill economic cognition fundamentally reverse in the future?Will anti-intelligence, anti-corruption, and anti-market economy sentiment gradually spread?The distribution of national income between the country and enterprises and individuals is uncertain and reasonable now. The reasonable disposable income of Chinese in 2019 is only a little over 30,000 yuan, with an average of 2,500 yuan per month, and our per capita GDP is close to 70,000 yuan.Does the distribution structure of income among countries, enterprises, and individuals help support consumption growth?Moreover, our current peak consumption of manufacturing products is coming to an end, and service consumption demand is rising.The epidemic also reflects the serious shortage of public health services. In fact, from low to high, insufficient supply of various types of service industries is a prominent structural problem facing the national economy.Look at the urbanization rate.By 2035, China’s urbanization rate may increase from the current 60% to 75% or even 80%.The advancement of urbanization can indeed bring a lot of investment opportunities, but we must be clear about the future flow of investment and improve the efficiency of investment.There is an important finding in our research: At present, about 88% of the population of prefecture-level cities in China is actually seriously insufficient-the actual population is less than 40% of the optimal population in the economic sense.The population is insufficient, the service industry is difficult to develop, and new industries are difficult to emerge; more importantly, a large number of real estate, infrastructure, public services and other investments that are accompanied by urbanization cannot be too efficient, and blind large investments eventually becomeInvalid investment.The proportion of China ‘s R & D GDP has exceeded 2.19%, reaching the average level of high-income countries.However, our large-scale R & D invests heavily in R & D, and the investment in basic scientific research only accounts for less than 6% of the R & D scale-without a large amount of basic science and feasible technology, it is difficult for us to play the key technologyThe dependence of other countries forms a relatively closed loop in the industrial supply chain.China ‘s per capita capital stock (including construction) is currently only a substitute for high-income countries to one-half, which means that we still have a lot of investment space in the future, but the decline in the savings rate brought about by the aging population opens up our future.Maintaining a high investment rate brings challenges.The micro-foundation (enterprise) of the Chinese economy is facing a high debt ratio (non-financial corporate debt is as high as 1% of GDP.More than 5 times) and the low return on investment capital (the average ROIC of A-share listed companies in the past 21 years is only 3%).To increase the return on investment capital (ROIC), the dependence of scale on a growth model that uses debt to drive a high investment rate needs to be solved.Among them, the corporate tax burden and the structural dysfunction of the business environment are one of the main reasons why the company’s ROIC is not high.China’s rapid economic development in the past four decades has benefited from actively participating in the division of labor in the global industrial chain.However, our current position in the global industrial chain is not high.The upstream level of China’s overall value chain (the proportion of domestic intermediate exports in total exports is an example of the proportion of foreign intermediates included in domestic exports) is only 0.01, lower than the average of forty open economies 0.04, is far below the upstream level of the US value chain (0.29).This shows that China’s position in the global industrial chain is not ideal, and key components and technologies are still subject to other countries.The above changes in the core logic of the Chinese economy remind us that when considering the current post-epidemic economic recovery policy, we should not retreat because of the short-term impact of the epidemic, and then take the old road of replacing water to stimulate flood irrigation; we should fully absorb thisLessons from the impact of the epidemic, reflecting on the core shortcomings of the economic system, focusing on the core logic of economic development, and formulating a policy combination that complies with the principle of economic compatibility of incentives, can achieve the policy goal of winning the well-off in the short term, but also for the long-termSustainable development, to achieve the major strategic goals of 2035 and 2049 and the basis for replacement.This time, the policy thinking should be a little different. There are now two Chinese economies: one is the Chinese economy, which is reflected in the scale and growth of GDP, and is currently undergoing a huge change in growth rate, kinetic energy, and mode; the other is reflected in the economy.China’s economy at the level of social structure-forecast growth rate with total factors, industry and employment structure, microeconomic vitality, income distribution pattern, residents’ quality of life, global value chain positioning, R & D intensity and innovation capacity, return on investment capital (ROIC)Wait for presentation.In the context of changes in the core logic of the Chinese economy, the economy reflected on the level of economic and social structure more truly reflects China’s economic and social development.Back to this round of new coronavirus epidemic.The overall expectation of epidemic prevention and control is good. Our previous analysis also shows that the impact of the epidemic on China’s economy is controllable, and a large probability will not pose too much uncertainty to the realization of China’s economic and social goals.According to this analysis, combined with the changes in the core logic of the Chinese economy, our scale is that the logic of this round of economic policy should be different from the past-its focus should be placed on the structural impact of the hedging epidemic on the Chinese economy.Because of the change in the core logic of the Chinese economy, the impact of this epidemic is more manifested in two aspects: (1) the impact on economic micro-funded enterprises, especially small and medium-sized enterprises; (2) the impact on employment.It is not only about efficiency, but also about people’s livelihood.The focus of economic policy during the epidemic is to help small, medium, and micro enterprises to overcome difficulties; and the focus of post-epidemic policies should be on responding to changes in the core logic of China’s economy, and introducing corresponding policies around the growth rate of improving the performance of all factors.Our policy recommendations are based on an analysis of the economic impact of the epidemic and changes in the core logic of China’s economy. Our economic policy recommendations on the breakthrough of the Chinese economy after the epidemic revolve around the following aspects: 1. Infrastructure and new infrastructure.China’s GDP growth rate is 6 in 2019.1%, but the growth rate of infrastructure investment is only 3.8%.After the outbreak of the economy, it is a natural policy choice to increase the scale of infrastructure investment.There is still room for development of traditional infrastructure, but infrastructure investment after the epidemic should also avoid returning to the old path of stimulus policy-because the local government’s fiscal behavior lacks constraints, the financial system assumes the “quasi-fiscal” function, and the implicit guarantee mechanism of state-owned enterprisesThe existence of many drawbacks of industrial policies has caused problems such as local government debt, increased risk of bad loans from banks, and large-scale overcapacity.(1) The “new infrastructure” surrounding “re-industrialization” involves industrial transformation and the construction of infrastructure supporting the industrial Internet, such as 5G base stations and data centers.The biggest challenge facing the Chinese economy is to maintain the growth rate of the advantages of all factors.”Re-industrialization” (Industrial Internet) and “new-type infrastructure” around re-industrialization promote the growth of TFP.From the perspective of 5G construction needs, the “macro station + small station” network coverage model will be adopted. In 2017, the baseline 4G base station reached 3.28 million, and the total number of 5G base stations will be 4G base station 1.1-1.5 times.If there are 4.75 million macro stations and 9.5 million small stations in the future, it is expected that the scale of 5G infrastructure investment will reach 1 by 2026.15 trillion, of which about 230 billion will be added in 2020.5G itself indirectly drives various sectors of the national economy through inter-industry connections and ripple effects.Therefore, based on the expenditure budget table and the degree of correlation between various industries, we measured the direct impact of the three major sectors on GDP and indirect conversion.It is estimated that by 2030, 5G is expected to drive the direct replacement of 3.4 trillion, indirect initialization 6.2 trillion.Following the calculation of the value added rate of each industry in the 2017 budget formulation, converted to value added caliber, 5G will directly drive GDP1 in 2030.3 trillion, indirectly pulling 2.1 trillion, total 3.4 trillion.(2) Out of the need to cope with changes in the core logic of the Chinese economy, “new infrastructure” must involve infrastructure investment related to people’s livelihood, such as old city renovation, rental housing, and investment in urban public facilities.The large-scale construction of infrastructure such as urban renewal can drive many considerable investments.Most of the old communities have poor living conditions and incomplete supporting facilities, which has seriously affected the living standards of residents and urgently needs to be reformed.According to statistics, there are 170,000 residential areas in need of renovation throughout the country, involving a construction area of 4 billion square meters.It is understood that the current capital investment in the renovation of old communities in various pilot cities shows that the average capital required for the renovation of each community is about 8.5 million yuan, and the required capital for renovation is 280 yuan per square meter.On average, two calculation methods can get that old communities will drive investment by about 1.3 trillion, if promoted in five years, 260 billion new investment can be made every year.In addition, renting a house is also really related to the direction of people’s livelihood investment. At the same time, it solves the housing problem of low-income families, promotes the formation of multi-subject supply, multi-channel protection, and the construction of a long-term real estate mechanism.”The central decision.(3) Similarly, “new infrastructure” also involves infrastructure construction and public service facilities in central cities and metropolitan areas.By promoting infrastructure integration and equalization of basic services, the urban agglomeration effect and the optimal population size that the city can accommodate are expanded, the formation of a unified large market is promoted, more people are substituted for the “market”, and the per capita income is achieved through agglomerationGrowth, through clustering to achieve the complementary development of the differences between the central city and surrounding towns, and ultimately narrow the development gap.And this emerging epidemic has exposed the deficiencies and shortcomings in urban infrastructure and public services, and it needs urgent improvement to improve the governance capacity of central cities.2. Continue to reduce taxes for enterprises.As mentioned earlier, one of the biggest changes in the core logic of the Chinese economy lies in enhancing the vitality transformation of enterprises, especially private enterprises.The new crown pneumonia epidemic has brought breakthrough impacts to enterprises, especially small, medium and micro enterprises, and adjustments that violate policies are also an important means to help enterprises overcome difficulties.We believe that the corporate expansion has been repeatedly lowered, and we can consider lowering corporate income tax to further reduce the burden on enterprises.In 2018 and 2019, the rate has been lowered. In 2019, tax cuts and fees will be reduced by more than 2.3 trillion, the main tax cut is expected.In response to the epidemic this year, the central government further reduced the tax rate for small-scale taxpayers from March to May from 3% to 1%, and exempted Hubei Province for 3 months.However, the income tax base is business income, which is a turnover tax shared by consumers; while corporate income tax is a tax on net profit.If the business is affected by the epidemic and its turnover increases, reducing the bail-out effect on the enterprise is not as good as reducing the company’s income, because the merger will directly increase the company’s retained profits.We recommend lowering the tax rates of all files at the same time, for four reasons: First, the current corporate income tax tiering method itself includes preferential benefits for emerging companies, integrated circuits and other enterprises that need the state ‘s key support.Treating or distorting industrial structure incentives for the first time in bins.Second, the epidemic has affected multiple industrial chains. Considering only a certain industry exemption.Third, Wuhan ‘s three pillar industries are optoelectronic information, automobiles and parts, biomedicine and medical devices. If you consider supporting these industries, you can directly increase the support for Hubei.Fourth, there is no public data on the proportion of each enterprise’s income in the enterprise’s proportional points, but some complicated calculations will not be accurate enough.We recommend that all filed corporate income tax rates be lowered by 20% in the next 3 months, and the general corporate income tax rate will be reduced from 25% to 20%.Since the scale of Hubei ‘s corporate income tax accounts for only 3% of the national scale, the sensitivity to the calculation of Hubei ‘s special preferential treatment in the adjustment of tax rates can be ignored.According to the total amount of national corporate income tax in March-May 2019 of 1,284 billion US dollars, assuming that the national corporate income tax budget for March-May 2020 remains unchanged, the tax savings for enterprises can be 12848 × 20% = 257 billion US dollars.In terms of the ratio of the central government and local governments to pay corporate income tax, 2018 data shows that the central government is 63% and the local government is 37%.And this ratio has not fluctuated much in recent years.Therefore, for the tax cut, the impact on the central government budget is 2570 × 63% = 161.9 billion, the impact on local finance is 2570 × 37% = 95.1 billion, and the financial impact on Hubei Province is 951 × 3% = 28.53 billion.3. Reward low-income people and stimulate consumption potential.Considering that consumption has become an important driving force for China’s economic growth, post-epidemic policies should pay special attention to counteracting the impact of the epidemic on residents’ consumption power and consumer confidence.The months of epidemic prevention and control have greatly suppressed the normal consumption demand of residents.Although the consumption of residents has budget flexibility, the recent epidemic has affected regional shifts, delayed the time for resumption of work, and residents’ disposable income may be significantly reduced. It is expected that the rebound in consumption after the outbreak will be less than expected.The restoration of residents’ consumption power and consumption confidence is not only related to the realization of the goal of winning the well-off society this year, but also can effectively promote the promotion of the medium- and long-term gradual development strategy.In this regard, we believe that the most direct way to stimulate consumption potential is to subsidize low-income people through tax cuts and subsidies.First, we can consider raising personal income tax thresholds, lowering tax rates and other ways to stimulate residents’ consumption.In a critical year for the realization of a well-off society in an all-round way, the government can increase tax cuts to further reduce personal income and stimulate consumption to reduce the impact of the epidemic on economic growth.In 2019, the individual tax reform raised the starting point, widened the low tax rate tax file, added special additional substitutions, and greatly optimized the tax rate structure.In view of the reduction of personal income tax, we believe that it is necessary to increase tax cuts for middle- and high-income groups, increase the threshold, and lower the tax rate.In the case of keeping the tax rate range unchanged, the lower threshold will be increased from 5,000 yuan / month to 6,000 yuan / month, a reduction of 3.60,000 yuan / year to 14.The withholding rate for each tax file of 40,000 yuan / year is 1%, 14.The tax withholding rate for each tax file from 40,000 yuan / year to 660,000 yuan / year is reduced by 3%, and the portion over 660,000 yuan / year is reduced by 5% (see the retrospective for details)Combining the statistical data of the Sinaapp survey and Zhang Lianqi’s calculation, the number of taxpayers before the adjustment of the tax threshold in 19 years was 1.8.7 billion people, the adjusted number of taxpayers is about 63.75 million.We estimate that the actual taxpayer population in China accounts for about 20% of the employed population.If the threshold for tax payment is raised to 6,000 yuan per month, the number of taxpayers nationwide will be reduced by 16.09 million, thus reducing the total income collection of 292.6 billion personal income (see replacement for detailed calculation).After recalculating the number of cancellations and the number of taxpayers after each tax reform, the 5000-6000 yuan / month employee will be exempted from paying personal income, reducing personal income by about 86.900 million yuan.Those with monthly incomes ranging from 18,000 to 31,000 yuan per month have the highest budget for levy reduction, reaching US $ 117.4 billion.Second, the policy of consumer vouchers may be considered to supplement low-income employed people and promote domestic demand replenishment.We recommend supplementing consumer voucher subsidies to low-income employed people who are severely affected by the epidemic, and sloping towards Hubei Province, where the epidemic is severe, to distribute consumer vouchers to all employees in Hubei Province.The consumption voucher policy can convey the confidence of the people to fight against the epidemic and call for a total of hardships.By providing supplements to compensate for the increase in income caused by the impact of the epidemic, guarantee basic living and stimulate consumption.The issuance of consumption vouchers may be a subsidy policy to the Hong Kong Special Administrative Region Government. Hong Kong intends to distribute 1 million in cash subsidies to citizens aged 18 or above.The total population of Hong Kong is 750.70,000 people, it is estimated that there are about 7 million people aged 18 or above, with a total expenditure of about 70 billion reconstructions. The total financial revenue of the Hong Kong government in 2018-2019 is 599.7 billion reconstructions, the total expenditure is 531.8 billion degraded, and the surplus is 67.9 billion reconstructions.Therefore, this “consumption coupon” expenditure is expected to have relatively limited fiscal revenue and expenditure pressure.Due to the set purpose, Hong Kong’s consumer voucher policy is difficult to ensure that consumer vouchers directly cover the consumption, and the effectiveness of the policy is greatly discounted.We have the following suggestions for the policy of issuing “consumer vouchers”: they cannot be issued by the whole population, and they need to be directed to specific groups of people.In 2019, the population of the country is 14 billion people. If the consumption vouchers are issued with a standard of 1,000 yuan, it will need up to 1.About 4 trillion yuan will greatly increase the financial burden.We recommend supplementing the employment population that is affected by the epidemic’s increased income and has a heavy burden on people’s livelihood, which can help people who are impeded by the epidemic to overcome difficulties, maintain social stability, and stabilize consumption.We recommend that the consumer voucher policy consider tilting to key areas (regions with severe epidemics such as Hubei).Hubei Province is a severely affected area. To date, the prevention and control of the epidemic situation is still the most important work in Hubei Province. The restoration and replacement of enterprises has seriously affected the income level of local residents.All members of the crowd issued coupons.We recommend that the amount of the voucher is 1,000 yuan.Adopt the Hong Kong approach and pay according to the monthly minimum wage standard in Mainland China.According to the national minimum wage standard issued by the Ministry of Human Resources and Social Security in 2019, Shanghai ‘s monthly minimum wage of 2480 yuan ranks first in the country, and Qinghai province has the lowest. The minimum wage is 1500 yuan, of which Hubei ‘s standard is 1750 yuan.At present, all parts of the country have begun to actively resume production and production. The cycle that really affects the production and income of residents can be changed to 2-3 weeks. Therefore, it is appropriate to issue consumer vouchers according to about half of the minimum monthly wage standard (that is, 1,000 yuan).Aiming at the consumption voucher subsidy policy, the cash vouchers were used to release the consumption vouchers of 1,000 yuan, and the consumption vouchers were distributed to all employees in Hubei Province. The country ‘s low-income working people except Hubei accumulate consumption vouchers.According to data from the Ministry of Human Resources and Social Security, the number of employed people in China reached 7 in December 2019.747.1 billion people, labor participation benefits7.7471/14 = 55.33%.If the low-income group with a monthly income of less than 3,000 yuan is recognized as the working population, it is estimated to be 2, and this group accounts for 31%.Therefore, it is estimated that, except for Hubei, low-income employed people are about (14-0.5917) × 55.33% × 31% = 2.With 299.9 billion people, the employed population in Hubei Province is about 3273.880,000 people.Therefore, the amount of subsidies for consumer coupons is: the amount of compensation for low-income employed people except Hubei + the amount of subsidy for employees in Hubei Province = 22999180,000 × 1000 yuan +3273.880,000 × 1000 yuan = 2627.3.1 billion.The fiscal policy is more proactive and effective. The various types of tax reduction and supplementary policies under the impact of the epidemic have brought pressure on the government to increase expenditure and reduce revenue. Stabilizing the economic development infrastructure also requires financial support.We suggest that we can actively explore various financing channels, reduce local government debt pressure and financial system risks, and avoid increasing infrastructure investment to aggravate structural problems.1.Increase the issuance of special bonds.Special debts can become a major source of financial strength.Our recommendations: First, expand the issuance of special bonds to 3 in 2020.5 trillion yuan.In 2019, new special debt was increased by US $ 2.1297 trillion. In order to cope with the steady economic growth of the epidemic, we recommend that the special debt issue limit can be expanded to 3.5 trillion yuan, about 1 more than last year.4 trillion or so.Second, increase the proportion of special debt invested in infrastructure.In the past, land reserves and shantytown renovations were the main investment in special debts, with only 26% invested in infrastructure.We believe that it is possible to adjust the structure of special debts and expand the proportion of investment in infrastructure to support policy-driven infrastructure.20% of the scale of special bonds can be used as capital for major projects to exercise the leverage of leveraged funds.If the proportion of infrastructure investment can reach 40%, and about 30% of them can meet the requirements of major projects, and the proportion of project capital is 20%, then 1 unit of special debt can be leveraged.88 units of infrastructure investment (0.4 × 0.3 × 5 + 0.4 × 0.7 = 0.88), special debts invested by one unit in infrastructure can be pried 2.2 units of infrastructure investment (0.3 × 5 + 0.7 = 2.2).If the specific debt issuance quota is expanded to 3 in 2020.5 trillion, the scale of capital invested in infrastructure can reach 1.4 trillion (3.5 × 0.4 = 1.4), an increase of about 800 billion in infrastructure construction compared to last year.08 trillion in infrastructure investment.2. It can give full play to the role of housing provident fund in infrastructure construction.At the end of 2018, the balance of the housing provident fund payment supplemented the balance of personal housing debts and other balances of about 800 billion. We believe that the plan for the reform of the provident fund system can be formulated as soon as possible to guide the provident fund to participate in the supply-side construction.By the end of 2018, the housing provident fund had delivered 872 to 373 affordable housing construction pilot projects.1.4 billion loans.We believe that in 2020, some of the idle funds of the provident fund can be appropriately revitalized, and the surplus fund of about 200 billion yuan can be used to allocate pilot project loans to support the renovation of old communities, house leasing, affordable housing and urban infrastructure.3. Consider vigorously promoting infrastructure real estate investment trust funds.The sources of China’s infrastructure investment funds are mainly financial expenditures and bank debt, and the securitization rate is very low.The use of REITs can revitalize China’s huge infrastructure stock assets, recover early investment, reduce the leverage ratio of enterprises and local governments, and allow more social capital to participate.As of 2017, the cumulative investment in long-term infrastructure is 113.68 trillion yuan, if we can encourage and promote infrastructure REIT in China, the securitization rate of 1% can reach a trillion-scale market scale.Existing real estate investment trust funds can give priority to supporting municipal projects such as railways, toll roads, trunk airports, water, electricity, steam and heat, infrastructure management such as pollution control, storage and logistics, new types of infrastructure such as information networks, and high-tech industrial parks andCharacteristic industrial parks, etc.Among them, the cash flow of toll roads is stable, and it is a suitable basic asset of REITs. The investment in construction gradually has reached 8.23 trillion.If we can focus on promoting the construction of infrastructure REITs this year, the toll road sector will achieve a securitization rate of 1%, which can revitalize about 80 billion of funds.Infrastructure real estate investment trust funds can gather key regions, key industries and high-quality assets with higher yields.We make the following suggestions: First, accelerate the pilot of promoting public offering infrastructure REITs.Judging from overseas experience, stricter access conditions for basic assets are an important change in the success of market development, and a high-quality savings infrastructure with stable cash flow growth should be selected.Second, preferential carbon dioxide.It is recommended that the regulatory department provide supporting support in terms of corporate income, revenue, and stamp tax based on the characteristics of infrastructure public “IT, public use, public revenue”.4. Consideration may be given to appropriate transfer of equity of listed state-owned enterprises.At present, there are 3799 A-share listed companies, of which 1104 are central and local conventional enterprises, with a total market value of 27.5 trillion, accounting for 40% of the total market value of A shares.6%, the annual progressive dividend always accounts for the market value.2%.In 2019, the State Council has completed the work of fully promoting the transfer of some domestic capital to enrich the social security fund. The transfer rate is unified to 10% of the company’s conventional equity. During the implementation process, it has accumulated transfer experience and achieved results.We suggest that you can consider appropriate accounting for the equity of listed state-owned enterprises and obtain equity dividends to supplement the fiscal deficit and ease the pressure.If the transfer of about 10% of the equity of state-owned enterprises is unified, the market value can be transferred2.75 trillion yuan, 60 billion yuan in dividends can be distributed every year.5. If necessary, consider issuing special government bonds.In the past year, special bonds were issued twice in the past year: 270 billion special bonds were issued in 1998 to supplement the capital of the four major banks in response to the 1997 Asian financial crisis; in 2007, 1 was issued.55 trillion special government bonds were used to establish CIC companies.We believe that under the current epidemic situation, there is uncertainty about economic growth.If the economy is severely damaged, it is necessary to increase counter-cyclical adjustment to stabilize the economy.In order to cope with the fiscal gap in which government revenue declines and increases in expenditure, especially its national debt indicators, the long-term feature is a variety of ideal ways of financing the fiscal revenue and expenditure gap.Due to the rising demand for long-term rapid economic development and inflation, it is possible to consider issuing about 2 trillion special national bonds if necessary.In the face of the impact of the epidemic, we need to strengthen the counter-cyclical policy hedging force to stabilize the economy, but we must also take the old road of flooding again, and we need to make appropriate adjustments to the growth target according to the impact of the epidemic at home and abroad.At present, the epidemic situation in many countries around the world is intensifying. If the spread of the new coronavirus is a major global event, its impact may be similar to the financial crisis of 1997 and 2008, resulting in accelerated economic growth in many countries and reduced external demand, which will have a serious impact on internal exports.Therefore, in the short term, we need to strengthen countercyclical adjustment, increase tax cuts and supplement efforts, make fiscal policies more proactive, and monetary policies more flexible and appropriate.However, we believe that when China’s core growth logic changes, it should pay more attention to structural issues when facing crises.In the early stage of the outbreak, the MLF has gradually cut interest rates in time, and a large number of reverse repurchase operations have provided redundant liquidity support. We believe that at this time, cross-flow flooding will occur, and even the real economy should be supported by precise measures to meet the needs of the real economy.Real credit needs.In order to ensure the long-term healthy growth of the Chinese economy, the growth target for the current year can be lowered appropriately to 5.5%, thereby formulating policies that are more scientific and consistent with the core logic of economic development.Editor Zhao Ze proofreading Li Ming

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