Not long ago, on the way to travel in Yunnan, I met a friend from Ordos . During the chat, he complained: "Every year, Ordos ranks among the top in the country in terms of per capita GDP. Why don't I feel that I have made money at all? It's not easy to buy a house?" Indeed, from the perspective of per capita GDP, Ordos is really rich.
His words made me think of a city in an instant: Wenzhou . Wenzhou's per capita GDP has been one of the lastest in Zhejiang in history, but Wenzhou is recognized as having many rich people. The footprints of the "Wenzhou real estate speculation group" have traveled all over the country.
Many people think that per capita GDP is high and the income level is high, but in fact it is a big mistake.
Why is the per capita GDP level of these cities far different from the actual income level of the people? Is it that the gap between the rich and the poor is large, and we are equalized? Or is there any statistical information problem? Today I will talk to you about GDP per capita.
per capita GDP=GDP/population. To understand the per capita GDP, you must first understand the composition of GDP.
GDP has three accounting methods: production method, income method, and expenditure method. The theoretically, the accounting results of the three methods are the same, but using the income method to explain it is more conducive to our understanding.
is calculated according to the income method, GDP=laborer remuneration + Net production tax +fixed asset depreciation + Operating surplus .
Worker remuneration refers to various forms of wages, bonuses and allowances, which can basically be understood as income.
Net production tax refers to the taxes paid to the government during the process of creating GDP.
Fixed assets depreciation refers to the loss of fixed assets, such as machinery and equipment, houses and buildings, etc.
Operating surplus refers to the balance after deducting the first three of the added value created, which you can understand as the operating profit of the company.
GDP can be regarded as the value created per capita, and income is the reward received by workers. Where did the difference between go? The price difference was made by the middlemen. Taxation and depreciation of fixed assets are the production costs of the state and enterprises, while operating surplus is the profit of the enterprise.
Per capita GDP reflects a region's output creation level, not a living standard. So if you want to measure the wealth income of a city, look at per capita disposable income will be much more reliable than per capita GDP. Is the purchasing power of a city strong? Is the housing price foundation solid? Let’s look at the per capita disposable income.
In the process of studying the composition of per capita GDP, I counted the relevant data of several cities in Shenzhen, Shanghai, Suzhou , Ordos, and Wenzhou in 2018. Since there is no fixed asset depreciation data, I cannot understand the depreciation of fixed asset and operating surplus in detail, so I added the industrial structure and Fixed asset investment to try to reflect the size of fixed asset depreciation. In this process, I found several characteristics:
(1) The industrial structure is closely related to the proportion of income in GDP
The higher and more sophisticated the industry and the more developed the tertiary industry, the more workers' remuneration will be divided in the GDP cake, in other words, the higher the income. Shanghai, which has extremely developed tertiary industry, accounts for as much as 47.6% of GDP, while Ordos, which relies on coal, accounts for only 21.3%. Even if Shenzhen and Shanghai, which are both first-tier cities, have a per capita GDP far higher than Shanghai, but Shanghai's per capita income level is ahead of Shenzhen.
The higher the industry, the more important knowledge and technical capital are, and the more rewards are shared by workers. As for manufacturing, because it requires a large amount of fixed asset investment, such as factories and machinery, its capital depreciation will be higher in GDP, thus diminishing the rewards given to workers.
Of course, in the manufacturing industry, there will be a big difference between traditional manufacturing and high-end manufacturing. High-end people like Shenzhen’s high-tech manufacturing industry. If they make chips, a 1 million investment can produce 10 million or even 100 million, while low-end people like Ordos’ coal industry, which repairs mines and builds coal preparation plants, and a 1 million investment may only produce 2 million.
Why do we need to accelerate the conversion of new and old kinetic energy? To put it bluntly, China is the center of the world's manufacturing industry. But in fact, they are all labor-intensive industries. We are responsible for GDP and developed countries are responsible for profits. We did the hardest thing, but the big part of the profit was from someone else's.
Like Suzhou, the largest industrial city in the country, foreign-funded factory buildings occupy most of the country. Suzhou is responsible for production and assembly, but with its technology, people can make huge profits by sitting overseas.
If China wants to increase its per capita income level, it must occupy the top of the world's industrial chain and produce high-value-added products.
(2) Whether the people have money depends on the workers' remuneration (disposable income), whether there are many rich people, look at the operating surplus
Shenzhen's workers' income is very low in GDP and the proportion of tax revenue is also low, which means that a large amount of wealth flows into the operating surplus, that is, it flows into the pockets of business owners. This is a good proof of why so many people in Shenzhen can’t afford to buy a house, and the housing prices are still so high; why is Shenzhen’s housing price income ranked first in the country, and the housing prices can still rise. To put it bluntly, Shenzhen has strong ability to create wealth, not the wealth of ordinary people, but the wealth of entrepreneurs and capitalists, and the wealth of rich people.
. Although Suzhou, although "depreciation + operating surplus" is not much different from Shenzhen, as the first industrial city in the country, Suzhou's GDP must include a large amount of depreciation of fixed assets. Moreover, most of Suzhou's industries are contracted by foreign capital, causing a large amount of wealth to flow out.
(3) The GDP of many regions is actually driven by investment rather than creating value
wenzhou's fixed asset investment accounts for 75.2% of GDP, and the value of Ordos is 42.1%. In fact, Ordos fixed investment has dropped significantly in 2018, with the proportion reaching 85.7% in 2017.
Ordos is a typical resource-based city. Many resource-based cities will have high per capita GDP. Among the top three cities with per capita GDP, Ordos produces coal and Dongying produces oil. Because of mining and refining these resources, it is necessary to invest in a large amount of machinery and equipment and factories, and there are a lot of losses and updates at every moment, thereby increasing GDP but diluting profits. So why do we need to "de-capacity" in the "three cuts, one reduction and one supplement"? What we need is not production capacity, but profit.
A typical phenomenon of investment creating GDP is: disasters promote GDP growth . The Wenchuan earthquake in 2008 caused huge losses of life and property, but in the later reconstruction process, a large amount of investment and construction was reflected in the rapid growth of GDP. In the years after the disaster, GDP grew rapidly. By 2017, the GDP of the 39 major-hit counties in the state had three times that of 2008, and the Aba Prefecture where Wenchuan is located was four times that of 2008.
Is the earthquake actually creating wealth? We all know that it is impossible. This is the limitation of the GDP statistics process, because houses and products damaged by disasters are not included in GDP.
Similar to this, in order to more accurately reflect economic creation achievements, the concept of green GDP has been proposed in recent years. Green GDP is the deduction of economic losses caused by factors such as environmental pollution, natural resource degradation, low education, out-of-control population, and poor management from GDP, representing the substantial and effective growth of the national economy.
For example, 10 billion GDP was created during the mining of coal, but the pollution caused was 8 billion to be treated. Therefore, as measured by green GDP, the value was only increased by 2 billion.
Returning to the real estate market also proves our always-off view: investment only chooses cities with high-end industries and rich people (high operating surplus proportion), rather than those resource-based cities.
In the past three industrial revolutions , China has missed the steam revolution, missed the electrical revolution, and barely caught the last train of the information revolution, but there is still a gap that cannot be ignored from the West developed countries such as Britain and the United States that have led previous industrial revolutions.
Admittedly, in the past 40 years, China has achieved extremely brilliant results, from 40 years ago that of the United States to 66% now, becoming the second largest economy in the world, , but the past development is more about weight than quality.
From the semi-feudal and semi-colonial era to the initial results of reform and opening up, after more than a hundred years, China has been poor and weak for a long time. Even now, people with bachelor's degree or above account for about 4% of the country's population. Most people can only participate in low-value-added low-end industries and make money by simply selling their physical strength. As the world's second largest economy, China's per capita GDP in 2018 was only US$9,800, which is only 15% of the US$62,800 in the United States. There is an extremely huge gap under the huge scale.
Standing on the high building in the middle of the night, looking out, under the bright lights and prosperity, what I see is staying up late and working overtime under low production efficiency. We can call it the hard work of the Chinese, but compared to this hard work, what I would rather see is the family reunion of the Chinese after get off work. Looking at the lights of office buildings, I have never been so eager to see the arrival of economic transformation and industrial upgrading.
Thankfully, the fourth industrial revolution based on technologies such as artificial intelligence, robots, 5G, and the Internet of Things has arrived. China's overtaking has already appeared, from the millennium plan to the pilot demonstration zone, the Greater Bay Area, Shenzhen, Hainan , Xiong'an have been laid out one by one. What is contained in it is not only the future of the real estate market, but also the future of cities and countries. I hope you will be cautious of arrogance and impetuosity, keep your original aspirations in mind, and forge ahead, so as to truly realize the great rejuvenation of the Chinese nation in our generation.
