On Saturday, Dec. 3, six high-profile Chinese economists published a joint article calling for “opening up economic activities.”

They are Yao Yang, Huang Yiping, Zhang Jun, James Jianzhang Liang, Guan Qingyou, and Ren Zeping.

Yao is the Dean of the School of National Development at Peking University.

Huang is the Dean of the School of National Development at Peking University.

Zhang is the Dean of the School of Economics at Fudan University.

James Jianzhang Liang is one of the Co-founders and Executive Chairman of the Board of Trip.com Group Ltd.

Guan is the dean of the Rushi Advanced Institute of Finance.

Ren Zeping, perhaps the biggest online celebrity among China’s better-known economists, previously worked at Evergrande, Guotai Junan Securities, and the Development Research Center (under the State Council).

The text is sourced from Ren’s influential WeChat blog.

关于放开经济活动的建议

Recommendations on Opening up Economic Activities

In the early stage of the COVID-19 epidemic in 2020, due to the high rate of severe cases, our country took decisive measures to control the spread of the epidemic promptly, to protect the lives and safety of the people, to take the lead in realizing the recovery of the industrial chain in the world, and to lead the world in economic growth. The achievements were obvious.

With the epidemic entering the phase of Omicron, the scientific community has reached a consensus that the pathogenicity has weakened, and the infectivity has increased. With the popularization of vaccination and the accumulation of prevention and control experience, an opportunity has been provided to optimize epidemic prevention and control. Recently, various departments and local governments have been actively adjusting (their policies), and all sectors of society are encouraged.

What is worth paying attention to is that in recent years, due to the epidemic, our economy has been greatly impacted. In particular, small and micro enterprises and the general public are facing great difficulties. Many small and micro enterprises mainly engaged in offline businesses face difficulties in terms of survival, and layoffs are sweeping through various industries.

Our GDP grew by 3% in the first three quarters of 2022, far below the normal level before the epidemic. The economic growth rate in the fourth quarter may be significantly lower than in the third quarter. The data in October show that the “troika” of consumption, investment, and export is in an all-around decline. Investment in infrastructure and manufacturing is resilient, but the growth is also slowing down. Real estate, export, and consumption are showing a significant decline. Total retail sales of consumer goods in October was -0.5% year-on-year, down three percentage points from last month; Real estate sales amounted to -23.7% year-on-year, down 9.5 percentage points from last month; Exports (in USD) were -0.3% year-on-year, down six percentage points from last month.

Small and micro enterprises, which are the main employment force, face particular difficulties. In November, the manufacturing PMI of China's large, medium, and small-sized enterprises was 49.1%, 48.1%, and 45.6%, respectively, down 1.0, 0.8, and 2.6 percentage points from last month, and the decrease in small-sized enterprises was even greater. In October, the surveyed unemployment rate among 16 to 24 years old was as high as 17.9%, and the actual situation may be even more severe. According to the responses of various universities, the employment situation of college students this year is very grim due to the economic downturn and the layoffs of enterprises.

The report to the 20th National Congress of the Communist Party of China stressed that “to build a modern socialist country in all respects, we must, first and foremost, pursue high-quality development. Development is our Party’s top priority in governing and rejuvenating China.”

To this end, it is recommended that:

1. In the near future, priority should be given to opening up economic activities such as public transportation, office buildings, restaurants, hotels, logistics, shopping malls, and other places. Unify the national epidemic prevention standards and eliminate the over-strict restrictions on business trips and travel across the country. Do a good job of in public opinion about opening up economic activities. Development is the foundation of solving all problems, and is the foundation of dealing with the U.S. strategic containment, promoting the transformation of domestic economic structure, helping people realize better life, and resolving all kinds of risks.

2. Invite scientists in the medical field to study the feasibility of optimizing the plan (of opening up economic activities?), for example, to reduce the scope of lockdowns and stop carrying out mandatory, large-scale nucleic acid testing in an entire district or city. Strengthen the vaccination of the elderly and provide medical care for the vulnerable. Do a good job in popularizing the science of the weakened pathogenicity of Omicron.

3. It is proposed to set the GDP growth target for 2023 at 5% or more, which will send a clear signal to all circles that development should be given top priority and economic activities should be opened up, to stabilize expectations and boost the confidence of all parties. It is proposed to raise the deficit ratio in 2023 and launch a new round of activities to expand domestic demand with an emphasis on building 新基建 “new infrastructure,” to bring all industries back to work.

4. Support the development of the private economy and boost the confidence of private enterprises through effective measures to help restore the vitality of the market economy and the momentum of economic growth. The private economy plays an important role in the national economy and has played an important role summarized in "56789". [Pekingnology: Private economy accounts for 50% of tax revenue, 60% of GDP, 70% of innovation, 80% of urban employment, and 90% of new jobs.] Complete the special rectification of the platform economy, enter the stage of normal supervision, and give full play to the positive role of the platform economy in stimulating employment and promoting innovation.

5. Strengthen support for the transformation and upgrading of the manufacturing industry and the real economy. Step up support in lending, bond issuances, and equity financing in the new generation of information technology, new energy vehicles, lithium battery, energy storage, autonomous driving, artificial intelligence, and other industries, and foster new economy, new technology, and new industries in our country.

6. Optimize the real estate regulatory policies to promote a soft landing of the real estate market. 因城施策 Facilitate cities to implement their respective policies based on their respective situations, relax the previously stringent policies on purchasing and lending, and support residents’ non-speculative demand and the demand for improving their current living conditions. Stabilize the real estate market, including its “last meter,” support the reasonable financing needs of non-state real estate companies, reduce the credit risk of real estate companies, and promote the return of the real estate market to normal.

7. Make good use of financial instruments such as interest rate cuts, reserve requirement ratio cuts, and central bank refinancing to support enterprises in accelerating their recovery of economic activities. Through tax cuts, cash subsidies, mortgage subsidies, etc., give support to families with children to reverse the long-term low fertility rate and promote long-term balanced population development.

Our economy has great potential and strong resilience. Scientific epidemic prevention will bring social and economic life back on track and greatly boost all parties' confidence. Confidence is more important than gold. If the measures are effective, China's economy will return to the recovery track and lead global economic growth. (Enditem)