Introduction
On November 12, the Grand Financial Thought Salon (the 193rd issue in total) and the "Finance and Common Wealth" online seminar (the 1st issue) of the "Financial Development Promotes Chinese Modernization" series (the 1st issue) co-sponsored by the International Monetary Institute of Renmin University of China (IMI) and the Department of Monetary Finance of the School of Finance at Renmin University of China were successfully held. Secretary of the Party Committee and President of the Chinese Academy of Fiscal Sciences Liu Shangxi attended the salon and delivered a keynote speech. He pointed out that common prosperity and Chinese-style modernization with people at the core are two aspects of the same relationship; promoting common prosperity requires finance to shift from a material-oriented logic to a human-oriented logic. Editor, to promote common prosperity, we must demonstrate human subjectivity, creativity, and civilization. These three qualities are indispensable in the process of promoting common prosperity. This is also a manifestation of humanistic logic; solving the farmer problem is the key to our country's move toward common prosperity. Three major challenges need to be addressed: the duality of the market economic system, the duality of social identity systems, and the duality of public ownership. Only by breaking down the three "duals" theoretically and institutionally can we narrow the gap between urban and rural areas and truly move toward urban-rural integration. Only by starting from the urban-rural dual structure can we promote structural reforms and promote common prosperity.
Common prosperity is a very complex issue and a difficult problem in the development of human civilization. So far, no country has been able to solve this problem perfectly. China is the most promising, most well-positioned, and most likely to be able to solve this difficult problem in the development of human civilization and gradually move towards common prosperity.
The report of the 20th National Congress of the Communist Party of China pointed out when elaborating on Chinese-style modernization: "Chinese-style modernization is a modernization in which all people have common prosperity. Common prosperity is the essential requirement of socialism with Chinese characteristics, and it is also a long-term historical process. We insist on realizing the common prosperity of the people. We should take the people’s yearning for a better life as the starting point and foothold of modernization, strive to maintain and promote social fairness and justice, promote common prosperity for all people, and resolutely prevent polarization.” The reason why I quoted this passage is that as a difficult problem in the development of world civilization, China is best equipped to solve this problem. In this passage, a description has been given. The key word in this description is Chinese-style modernization, and the basic feature of Chinese-style modernization is common prosperity.
From this point of view, the path of Chinese-style modernization is fundamentally different from the traditional path of modernization. The basic logic of Chinese-style modernization is also different from traditional modernization. The biggest difference here is that other modernizations in the world are based on material-centered logic, while my country's modernization is based on human-centered logic. In the elaboration of Chinese-style modernization, the focus is always on the people. Therefore, in this passage alone, the people appear several times. This is why Chinese-style modernization becomes Chinese-style, that is, its underlying logic is different from the modernization of other countries.
Past leaders have elaborated on the issue of common prosperity. Mao Zedong pointed out: This wealth is common wealth, and everyone has a share. The key here is how to understand that everyone has a share? They all have the same share, but there are still differences. If it is the same, it may be egalitarianism . If there is a difference, how big is the difference? Under what circumstances and under what conditions is this difference reasonable? This is the problem we are currently facing. Deng Xiaoping pointed out that the essence of socialist development is to liberate productive forces, develop productive forces, eliminate polarization, and ultimately achieve common prosperity. Therefore, what Comrade Xiaoping said is that common prosperity cannot be achieved quickly. Therefore, this has the same meaning as the report of the 20th National Congress that emphasized that common prosperity is a long-term historical process. Since common prosperity is a difficult problem in the development of human civilization, it will certainly not be achieved easily, nor can it be achieved in a short period of time. As a long-term historical process, how long is it? According to the central document, common prosperity will not be basically realized until at least the middle of this century. This is just basic. I am afraid it will take longer to truly realize common prosperity, which also involves the understanding of common prosperity.
Therefore, common prosperity, as a difficult problem in the development of human civilization, is still a vision now. This vision is the vision of the world, and it is also the vision of China’s development. It is also a basic feature of Chinese-style modernization. Promoting common prosperity has always accompanied China’s modernization. In this sense, common prosperity and people-centered Chinese-style modernization are inextricably linked. The underlying logic of China's modernization is people-centered and people-centered. From this point of view, the progress of Chinese-style modernization can be measured by the progress of common prosperity. In turn, the progress of common prosperity can become an important symbol of China's modernization drive.
Promoting common prosperity is the current task. The current income gap, consumption gap (including the public consumption gap, that is, the public services provided), and ability gaps between urban and rural areas, regions, and groups are relatively large. The guarantee of bottom-line fairness is insufficient, hindering the construction of a new dual-circulation development pattern. Therefore, in this sense, promoting common prosperity is also an urgent task at the moment. How do we view the challenges that common prosperity brings to us in theory or practice? Since it is a difficult problem, it will manifest itself both in theory and in practice. We have done some exploration and research on this issue, but of course it is still superficial and preliminary. Here today, let’s talk about the challenges facing common prosperity from a theoretical perspective.
01 Theoretical challenges of common prosperity
1·How to integrate prosperity and common prosperity?
The concept of common prosperity itself consists of two words, one is prosperity, and prosperity requires everyone to share, that is commonality. So if we break down the word common prosperity, we can see that behind it is the relationship between efficiency and fairness. Wealth corresponds to efficiency, how to create more material wealth and make us richer. Sharing refers to fairness, how everyone can share and avoid polarization. However, everyone has different views on the issue of efficiency and fairness. We regard common prosperity as a historical vision and long-term goal. Common prosperity and prosperity must be combined and integrated, but we must also see the relationship between efficiency and fairness behind it. It has long been considered an incompatible relationship. The more popular view now is " conflict theory ". Economics emphasizes efficiency, and society emphasizes fairness. Therefore, focusing on efficiency will harm fairness, and focusing on fairness will harm efficiency. The two seem to be incompatible and will form a seesaw effect. Everyone saw that this theory would cause problems no matter which side it was oriented to, so the "both-consideration theory" came into being. The balance theory is the result of the government adjusting the initial distribution of and , that is, the government will do the redistribution and pay more attention to efficiency in the initial distribution. This view was once very popular, which is to let the market talk about efficiency and the government to talk about fairness. Let the market and the government combine to achieve balance, but balance will hardly make the government's policies escape the "pendulum effect" dilemma. It may focus on efficiency in one period and equity in another period, swinging back and forth like a pendulum.
Whether it is the conflict theory or the balance theory, both views focus on the material level and on dividing the cake. If we jump out of the material level, transcend the perspective of distribution, and focus on the perspective of human development, we will shift from the material-oriented logic to the human-oriented logic, and efficiency and fairness will be integrated. This will not only improve efficiency, but also promote fairness, thereby promoting common prosperity. When efficiency and fairness are integrated, common prosperity is logically established.
2·The development of things, the development of people and the Matthew Effect
This involves a further understanding of common prosperity. The concept of common prosperity just mentioned has issues of efficiency and fairness behind it. If we look at it as a whole, whether common prosperity is based on things or people is understood, which involves the relationship between the development of things and the development of people. If we understand it based on things, we cannot get rid of the "Matthew effect" produced in the "stock-flow" distribution cycle. This is also what we usually call the Matthew effect endogenous to market economy . The "Matthew Effect" of the market economy is the cycle of stock and flow. The stock is wealth, assets or property, and the flow is the flow of income.How wealth comes from is transformed from the surplus after deducting consumption from income, and this wealth in turn generates income flows through the appreciation of wealth or the conversion of wealth into capital for investment. This is what the common people say: "The rich get richer." The first "money" refers to stock, and the latter "money" refers to flow. Money begets money. This is the cycle of stock and flow.
Finance can play a huge role in the issue of money making money, which can lead to the amplification of the "Matthew Effect" endogenous to the market. How to curb the "Matthew Effect" in finance depends on theoretical and institutional innovation. Finance itself hates the poor and prefers the rich. The richer you are, the more money they will lend you, and the more opportunities you have for development and the more money you can make. The less money you have, the less money you have, the less finance will pay attention to you, and the less opportunities you have for development and making money. Therefore, the characteristics of finance that dislike the poor and love the rich are based on the logic of things. As long as it is based on the logic of things, this "Matthew effect" cannot be avoided. To reduce and eliminate the "Matthew Effect", we must turn to humanistic logic. At least this "Matthew Effect" can be contained through humanistic logic, and it is impossible to completely eliminate it. Because in the process of development, whether it is income or wealth, there will always be a gap. From this perspective, financial innovation involves an underlying logic issue, which is the shift from material-oriented logic to human-oriented logic. This is a major challenge facing Chinese finance. The financial literature we usually see and these popular financial frameworks are basically based on material logic. How to turn finance into a humanistic logic cannot be accomplished by finance alone. It requires a change in society as a whole, especially a new understanding of value, credit and their measurement standards.
Poverty is the poverty of ability. It is crucial to improve the abilities of all people. To promote common prosperity, human subjectivity, creativity, and civilization must be demonstrated. These "three qualities" are indispensable in the process of promoting common prosperity. This is also a manifestation of humanistic logic. The ruling philosophy of the Communist Party of China particularly emphasizes the supremacy of the people, people-centered development, relying on the people for development, and development for the people. In fact, it is a humanistic logic, which is to demonstrate human subjectivity, creativity, and civilization.
The so-called subjectivity means that in the relationship between people and things, people control things instead of being dominated by things. Creativity, the biggest difference between humans and animals is that humans can create tools and create more value in modern society. This is in the economic sense. In the social sense, humans not only create economic value, but also create social value, that is, public value. Value creation with things as the carrier is to produce more material wealth, while value creation with people as the carrier is the development of people themselves, including human qualities, skills, knowledge and creativity itself. Civilization here refers to being different from the traditional assumption of economic man, which is self-interest, but people are also "social beings" and have an altruistic side. There should be both self-interest and altruism, and this element of altruism, altruistic people, are doing more and more altruistic behaviors, which means that human civilization is improving, which reflects that the civilization of society is constantly surpassing commercial civilization and material civilization. Human civilization is the micro-foundation of human civilization and a symbol of human development breaking away from the shackles of material interests. In this sense, humanistic logic is to focus on people's subjectivity, creativity, and civilization, and to reflect it in institutional arrangements and policies, that is, how to truly promote people's own development, and see more things and people.
The current finance is actually based on "asset credit". The so-called asset credit is based on the value of the object to measure the credit level. For example, a loan requires a mortgage, and the subject matter of the mortgage is the asset, which is valuable. This kind of credit is credit based on an asset, that is, credit based on things. If you have assets, you will be given a loan. If you don't have assets, you will not be given a loan. The more assets you have, the more loans you will get, and if you have less assets, you will get less loans. This is the material-based logic of modern finance, based on asset credit. Obviously, the "subject credit" of modern finance is missing. Only in the sense of property rights can it be related to who the subject is. " proletariat " has no credit.In the agricultural societies of the past, there used to be this type of subject credit, such as personality guarantees. In daily life, people borrow things or even money from each other. There is no formal agreement on creditor's rights and debts, and many of them are guaranteed by personality. When I was a child, I felt embarrassed when lending money or writing an IOU or an IOU, and the person receiving the IOU also felt distrustful. But in a modern market society, it is normal to win an agreement in this kind of lending relationship, so there is nothing to be embarrassed about. Therefore, this also reflects that the main credit of modern society is actually gradually disappearing, just like the disappearance of species that once existed, this kind of credit based on people themselves is getting weaker and weaker. It is not difficult to see that the logic of modern finance is increasingly turning to trusting things rather than trusting people. If you have wealth, property or assets, I believe you. If you don’t have things, you can’t prove it. I don’t know whether you have the ability to pay back the money in the future. This is based on current property and actual value. According to the labor theory of value, it is based on dead labor in the past. As for how much value a person can create in the future, future value cannot be used as credit to be mortgaged by banks. This material-based logic of finance leads finance to only believe in the value of wealth created in the "past" and not in the value of wealth created in the "future"; it only believes in the value of things and not the value of people. This is inconsistent with the humanistic logic that increasingly emphasizes creation, innovation drives development, and the knowledge economy. This is also the source of financial instability, because the value accumulated in the past is not fixed. Once it changes, there will be a chain reaction of interrelated balance sheets.
Now venture capital focuses more on investing in people rather than investing in things. Because venture capital does not look at collateral, but at the innovator's innovative complex and ability to innovate, which is based on people making venture capital . In this sense, subject credit in the modern financial system is actually gradually developing. However, overall, this kind of financial behavior based on subject credit is seriously insufficient, because the entire financial system is based on the credit of things, and human credit is actually placed in a very secondary position. From this point of view, the relationship between the development of things and the development of people involves the underlying logic of the entire current system and policy system. Our current system and policies are involuntarily developed along the material-centered logic. Although we say that we should put the people as the center and the people first, it is still very difficult to truly switch to the human-centered logic, and there is still a long way to go.
3·Fair results, fair opportunities and distribution expectations
A key issue involved in fair results and fair opportunities is "distribution expectations". Nowadays, there is a lot of talk about expectations. For example, the weakening of expectations is one of the current "three major pressures", but the concept of distribution of expectations is rarely mentioned, and it was not even a concept before. Whether we focus on fair opportunities or fair results, which side we prefer, is essentially a matter of distribution expectations. How to guide allocation expectations? If we emphasize fairness in results, the focus of distribution expectations will undoubtedly be on the government. If we talk about fair opportunities, the focus of distribution expectations will shift to one's own efforts, which will have a different impact on the economic and social development dynamics. Both fairness of results and fairness of opportunities must be emphasized, but the connotation of fairness of results should be defined as "bottom-line fairness," that is, fairness of results above the bottom line, rather than egalitarian fairness of results. Bottom-line fairness aims to prevent polarization. According to the "Seven Principles" summarized in my country's practice (child education, education, income for work, medical treatment for illness, support for the elderly, housing, and support for the weak), polarization must be prevented and the basic consumption of social members must be guaranteed.
implements the "four basics" in accordance with the "seven principles": basic nutrition, basic education, basic health, and basic housing, thereby ensuring that everyone has basic capabilities. The gap in results must still be acknowledged. The government's role is more to create conditions for promoting fair development opportunities so that everyone's efforts match their income, which is what we often call starting point fairness and process fairness. In the process of promoting equal opportunities, the role of inclusive finance is very important.Inclusive finance is to change the side of what people call "dislike the poor and love the rich", so that finance can love the rich but not be dissatisfied with the poor. That is to develop inclusive finance. Therefore, from the underlying logic, inclusive finance is also moving beyond the material-oriented logic to the people-oriented logic and subject credit to promote more equitable development opportunities for everyone.
02 Practical challenges of common prosperity
To promote common prosperity, the practical challenges currently faced are also huge. As far as our country is concerned, it is now in the primary stage of socialism. This primary stage can be observed from several aspects:
From the perspective of productivity, our country is not a rich country, but is still the largest developing country. The development task is very heavy. We still need hard work to become a rich country and a moderately developed country. In the process of development, we are now faced with aging before we get rich, aging quickly before we get rich, climate change before we get rich, and major global changes. Now, the world is changing, the times are changing, and historical changes are unfolding in an unprecedented way. These three changes are also described in the report of the 20th National Congress of the Communist Party of China. This describes the extremely uncertain environment that China currently encounters in the process of development. This is a huge challenge.
From an institutional perspective, my country is still a dual system between urban and rural areas. From a social perspective, our country is still a "peasant society" with farmers as the main body, with the people as the center and the people first. When analyzing the country's population structure specifically, farmers are still the majority. Judging from 2021, the population with farmer status (agricultural household registration) accounts for 53.3% of the national population. The basic problem of "peasant society" is the peasant problem. More than half of the people are farmers, which means that the current social structure of our country is one in which farmers are the main body. Therefore, the current social situation in our country can be referred to as "peasant society". Our country is a "peasant society". This is a reality that has not changed over the past 40 years since reform and opening up. It is obvious that the basic problem facing our country is the problem of farmers. The problem of farmers is how to reduce the problems of farmers in the process of modernization. If farmers have always been fixed in the countryside, many people are still farming, or their social identity has always been that of farmers, it is difficult to talk about the modernization of farmers. Without the modernization of farmers, there would be no modernization of agriculture and rural areas.
The process of modernization is a process of structural change, and it is also a process of eliminating the dual structure of urban and rural areas. This means that in the future, the identity of farmers should no longer exist except for professional identity. There is only a professional distinction and no social identity distinction. This issue is the most important issue in the modernization process of our country, because different statuses lead to different treatment in all aspects, and the basic social rights they have are also different. Therefore, from an overall perspective, solving farmers' problems is the key to our country's common prosperity. Farmers make up the majority of the population. To expand the middle-income group, its potential also lies in the farmers. Especially the migrant workers, they are the most promising, potential and best-equipped group to become a middle-income group. Migrant workers have worked and lived in cities for a long time, accumulated a lot of experience, and have been outside for many years. They are more likely to become a middle-income group than farmers who have been in rural areas for a long time. To expand the middle-income group, the prerequisite is to shrink the farmer group. Of course, there are some citizens, but overall farmers are still the majority. To solve the problems of farmers, we must start from the dual structure of urban and rural areas. my country's urban-rural dual structure implies three dual structures: economic duality, social duality and ownership duality. These three dualistic structures are superimposed and nested on each other, forming three major interrelated challenges in the process of my country's modernization. They can only be resolved and dealt with through structural reform and innovation of institutional mechanisms.
1·Market economic system duality
my country has been exploring market-oriented reforms for 14 years. It was only after Deng Xiaoping's speech in the South in 1992 that socialist market economy was officially proposed. The socialist market economy is a great creation of our party. Through the "separation of two powers", it has achieved the combination of state ownership and market economy, and through decentralization of power, it has achieved the continuous development and growth of the private economy, and the mixed development of state-owned capital, private capital, and foreign capital.However, my country's market-oriented reforms are mainly carried out in cities, while market-oriented reforms in rural areas are very limited. For example, there is a commodity market in rural areas, but the land market, housing market, and mortgage market basically do not exist. Rural property rights are not tradable and cannot be monetized or capitalized. The allocation of rural stock resources is solidified, so the efficiency of allocation and use of rural resources is low. Rural property rights cannot appreciate with the growth of the national economy. There is no cycle of property stock and income flow in rural areas. It is difficult for farmers to enjoy the dividends of the capital market, and farmers are basically outside the capital market. The dualization of my country's market system is substantially different from the dual economic structure mentioned by Lewis.
From a financial perspective, rural areas are on the edge of the financial system and are out of touch with the financialization trend of the economy. There is a financialization trend in economic development. This financialization trend does not mean that the financial industry accounts for a higher and higher proportion of GDP, but that finance is becoming more and more permeable. Financialization is first of all monetization. For example, the monetization of agricultural products produced in rural areas means converting things into money. In the past, it was also called commercialization. If it is self-produced and consumed without monetized transactions, it means that the value of farmers’ production results cannot be uniformly measured in currency, and farmers have no monetary income. Farmers' production and life have been restricted, and rural finance has also been restricted. The financialization of the economy is not only reflected in monetization, it is also reflected in the financialization of economic relationships. Various economic relationships are increasingly turning into creditor-debt relationships, equity dividend relationships, and risk insurance relationships. This is a financial relationship. Physical transactions and financial transactions are increasingly integrated. For example, financial leasing, down payment for buying a house, and commodity transactions also generate financial transactions, forming a creditor-debt relationship. The financialization trend of the economy is constantly expanding, which is further reflected in the wealth or property structure, with the proportion of financial assets increasing. This trend exists both globally and in terms of my country's development.
In cities, the proportion of household financial assets is much higher than in rural areas. However, most of the resources owned by rural residents cannot be traded, have no market value, and cannot participate in the process of economic financialization. The financialization of the entire economy and national wealth and the securitization of assets are inevitable trends. Only through financialization, that is, assetization and securitization, can we obtain the dividends of the entire economic growth, but farmers are separated from this. This makes it difficult for farmers to become as rich as urban residents, resulting in the majority of our population being unable to share the dividends of development through the market and economic growth. This is a systemic problem, not a problem caused by the farmers themselves not working hard. Another issue related to this is the duality of the social identity system.
2· Social identity system duality: citizens and farmers
Urban and rural social systems From a social perspective, there are differences in identity. Citizens and farmers are two concepts. Behind these two concepts are two identities. Behind the two identities are differences in basic rights. As a labor force, farmers have the freedom to go out to work, but as members of society, families have many restrictions on migration. In the city, it is difficult for migrant workers to enjoy equal treatment in the same city in terms of employment, entrepreneurship, and financing, etc. It is difficult for migrant workers' families to enjoy equal treatment in the same city in terms of children's education, elderly care, and affordable housing. These migrant workers or migrant workers who have had this experience in the city should say that they have a deep understanding of this. Although my country's urbanization rate has reached 64.7%, it includes nearly 300 million migrant workers. This means that the urban-rural duality has been replicated in cities. The citizens in the city include old citizens and new citizens, and these new citizens include migrant workers. However, migrant workers' families are part of the new citizen group, but their basic rights are not equal to those of the old citizen group.
This social identity limits the accumulation of human capital of peasant families, limits the use of human capital, and limits their education and mobility. Education and mobility are both important ways to accumulate human capital, but they are restricted due to social status.As a result, farmers are already far behind in their starting point, their abilities are generally low, and their social status is restricted. They are obviously at a disadvantage when participating in market competition. They are easily locked into low-income groups in the social distribution structure. Farmer families have to go out to work for one generation, the second generation, and the third generation. Their abilities have been in this low state for a long time, and their income levels have also been in such a low-income family from generation to generation. This may result in the majority of the population, including migrant workers in cities and farmers in rural areas, being in a low-income state for a long time, which hides the risk of the solidification of social groups and social classes. This lack of vertical mobility is undoubtedly not conducive to social stability and the sustainability of development, let alone promoting common prosperity. Therefore, the problem of farmers is not only a binary issue of the market system from the perspective of marketization, but more importantly, it is an issue of farmers' social identity.
3·Public ownership duality: state ownership and collective ownership
This is a basic issue in the urban-rural dual structure. Cities correspond to state ownership, and rural areas correspond to collective ownership. The two types of ownership were gradually formed after the founding of the People's Republic of China.
The socialization and structuring of collective ownership are subject to the constraints of marketization and financialization. For example, in a joint-stock company, the rights of shareholders are clear, but in the collective ownership economy , as a member of the collective economy, the property rights of farmers are not clear in law. Now except for things like farmland, forestland, and homestead land (rights) that are clear, everything else is unclear. Because in addition to these contracted cultivated land, agricultural land, forest land, and occupied homestead land, these property rights have been clearly defined by farmers as belonging to farmers in law. However, there are also collective construction lands and other collective properties in the collective economy. It is not clear what their relationship is with farmers. Some places are exploring ways to turn farmers into shareholders. However, under conditions where marketization is not complete, farmers can become shareholders in different ways, but the flow is very difficult. This kind of share is not like a joint-stock company issuing shares . Once you buy the stock, you become a shareholder. You can exercise shareholder rights, earn the price difference, and sell the stock at a certain time. There is no such mechanism and no such market for farmers.
The connotation of ownership in modern society is changing. This change has shifted from the traditional possession-centered to use-centered. Ownership is retreating behind the scenes and use rights are moving to the front. This is a basic trend in modern society. In this basic trend, finance actually plays an important role. No matter any kind of socialization or structuring of ownership is inseparable from finance, there is no doubt that my country's rural areas lag behind the cities in this trend. Therefore, rural efficiency is lower than urban efficiency, which is an important reason. How to integrate these two types of ownership is actually closely related to the socialization and structuring of ownership, which is inseparable from financial support.
03 Where is the way out?
Only by breaking down the three "duals" theoretically and institutionally can we narrow the gap between urban and rural areas, truly move toward urban-rural integration, and promote common prosperity. Only by making farmers and their property rights more fully "mobile" can farmers' problems be truly solved and farmers can join the ranks of modernization. Farmers’ biggest wish for a better life is actually not to want to be a farmer, but to get rid of their identity as a farmer with their existing property rights. If farmers are "fixed" in the land and in the countryside, regardless of finance or finance, their role will be diminished at the margin, or even difficult to play. Therefore, urbanization, the urbanization of the population, that is, the citizenization of farmers is an irreversible trend. Any approach that goes against this will lead to huge hidden risks and even lead to the interruption of the modernization process.
In the past, marketization and industrialization reduced the number of farmers working on the land, but now there are still many social farmers and collective farmers. How to further reduce them in the future has become a core issue in expanding the middle-income group. There is no doubt that this requires improving their capabilities and breaking the constraints of the system.Only when capabilities are improved, the capability gap is narrowed, and there is greater openness of rights, that is, a shift to humanistic logic, can this problem be truly solved.
Only by realizing the integrated development of urban and rural areas led by new urbanization, reshaping the social structure, economic structure, regional structure, and reshaping the social distribution structure can we have the premise and foundation. Some are results, some are premises, some are foundations, and some are derivatives. The relationship here is very complex. From this point of view, it is better to start from the issue of urban-rural dual structure and promote structural reform. In this process, we should also include the financial system, shift from material-oriented logic to human-oriented logic, and promote common prosperity.
Due to time constraints, I will just talk about this. Please criticize and correct me if I am wrong. Thank you!
Q&A session
Ben Shenglin : The current international situation is very severe and complex. The global economy is facing multiple risks and challenges, which is the problem of resisting shocks. Against this background, what is the significance of our country’s goal of promoting common prosperity?
Liu Shangxi: is currently facing a highly uncertain international environment. In this case, how to build a new development pattern? The new development pattern involves the mutual promotion of internal circulation and external circulation. Judging from the import and export data in October, this data has turned negative. We see that the risk of uncertainty is increasing. The role of external demand in driving my country's growth is weakening, and domestic demand is also very weak. How to make domestic demand gradually stronger? This can be viewed in both the short and long term.
In the short term, some policy measures and means are generally used to stimulate. Such as fiscal policy , monetary policy how to stimulate consumption. As consumption is an important part of domestic demand, it is now even more important to consider this issue from a long-term perspective. It is no longer enough to just be satisfied with policy measures. This is directly related to common prosperity. From the perspective of the gap between rich and poor, the greater the gap between rich and poor, the weaker domestic demand will be, and the smaller the gap between rich and poor, the stronger domestic demand will be. This is a theoretical logic. In real life, if the gap between rich and poor can be narrowed, domestic demand will gradually become stronger in the long run.
Of course, narrowing the gap between rich and poor will not happen overnight. From the current point of view, it is more about ensuring the bottom, rather than pulling down the high ones to narrow the gap, but making a fuss about the low ones. For example, due to the impact of the epidemic, many people have lost their jobs, individual industrial and commercial households can no longer operate, and their lives have encountered difficulties. How to ensure the basic income of these most affected groups will help expand domestic demand in the short term, especially the expansion of consumption. The central government has many policies in this regard, such as the "three guarantees", ensuring basic public services, ensuring local operations, and ensuring basic wages. To ensure basic public services is to ensure the basic life of residents, how to secure the bottom line and ensure bottom line fairness. In an environment of high uncertainty, bottom line fairness and basic guarantees become more and more important. This is more important than pulling the high ones down and narrowing the data gap.
Ben Shenglin: You just emphasized that solving the problems of farmers is a key issue in solving common prosperity. The report of the 20th National Congress of the Communist Party of China specifically mentioned that poverty alleviation has indeed laid the foundation for common prosperity for great achievements, to achieve an effective connection between consolidating and expanding the results of poverty alleviation and rural revitalization, and to promote high-quality rural revitalization services. How can the financial system support rural revitalization?
Liu Shangxi: From a financial perspective, a large number of loans and bonds have also played a positive role in the process of poverty alleviation. In fact, from a broader perspective, the role of finance is to help some poor areas, such as those that have been lifted out of poverty but whose foundation for poverty alleviation is not yet solid and relatively fragile, make their resources tradable, asset-able, and capitalizable. In some places in rural areas, people are holding a golden rice bowl and begging for food. The reason for this phenomenon is that there is no marketization, monetization and capitalization.How to monetize their resources through digitization, make non-tradable resources tradable, and allow originally tradable resources to be sold at a better price. For example, some specialty industries in poverty alleviation areas did not have brands before, so the added value was relatively low. If finance helps them build brands, the added value will be high. Recently I saw a piece of news that even similar fruits abroad are becoming more and more popular, while many domestic fruits cannot be sold. A very important point here is that there is no brand. How to make it form a commercial brand. Finance can play a role in this. Of course, it can also improve its quality and technical level. In these aspects, finance can help and promote its marketization and capitalization.
For example, when I mentioned that farmers become shareholders, they are not shareholders of joint-stock companies, but the collective economy has revitalized rural resources. The revitalization of these rural resources cannot be separated from financial means. Only by revitalizing can resources be turned into assets and farmers become shareholders. There are some explorations in some places, which requires finance to play a role.
Of course, for inclusive finance, for those who do small business, the mortgaged assets are not enough, how to rely on their main credit, and they are really serious about doing things, not cheating, and have turnover. It is not risky to lend him such a small amount of risk. How to provide financing services to such people in a timely manner, which can better solve the problem of information asymmetry under the current conditions of digital finance, there is good exploration in this aspect. For example, MYBank in Zhejiang serves long-tail customers and has good practical experience. This can be expanded to more places and expand the digital financial model to benefit more rural farmers, especially those with low incomes. There is great potential in this regard.
Ben Shenglin: How do you view the potential efficiency obstacles and efficiency challenges of state-owned capital and state-owned enterprises? Can the state-owned economy really play an effective role in common prosperity?
Liu Shangxi: The long-term management model of state-owned enterprises has been to manage people, affairs, and assets. Now it has shifted to focusing on capital management. Its goal is to improve its capital allocation efficiency and usage efficiency. Capital management means how to optimize the allocation of state-owned capital and how to allocate it according to market principles to achieve macro-level preservation and appreciation, which has potential benefits for society. Why potential? The wealth accumulated by state-owned enterprises cannot be simply distributed to everyone. It can only be transferred to social security funds through the budget to provide pension subsidies, or part of it can be turned over through the state-owned capital operating budget and then used in public expenditures, so that it can be shared by all people.
Theoretically, state-owned capital is owned by the whole people, and everyone has a share. However, legally it is impossible to quantify it to everyone, and it is impossible for everyone to get a piece of dividends from state-owned enterprises. In fact, it is not possible, at least there is no such operating mechanism now. The more important role of state-owned capital is to stabilize the economy and avoid major economic fluctuations. Stabilizing growth actually stabilizes employment and indirectly brings certainty to everyone's livelihood. In this sense, state-owned capital should pay more attention to the overall situation, not just for value-added and profit, but also for its social attributes. This social attribute is not simply reflected in dividends to all people, but creates conditions for economic stability, employment stability, and the stability of everyone's livelihood. As the country's underlying asset, state-owned capital is fundamental and should and can play such a role. Of course, now state-owned assets and private assets are developing in a mixed manner. After the state-owned economy and the private economy have gone through mixed reform, you have me in you, and you have me in you, forming complementarity, which may make the economy more dynamic and creative. From an international perspective, it helps to enhance China's international competitiveness, which is even more important. State-owned enterprises have their advantages, and private enterprises have the advantages of private enterprises. The reason why mixed ownership reform is needed is that the advantages complement each other. Combining the two, it may be more appropriate to understand it from this perspective.
This article was organized by: Zhang Bijia
This article was supervised by: An Ran
layout editor | Tu Jiayin
editor in charge | Li Jinxuan, Jiang Xu
director production | Zhu Shuangshuang
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