[Tianfeng Research·Fixed Income] Sun Binbin/Chen Baolin Abstract: The level of middle-developed countries may refer to a relatively high level among developing countries, and the upper limit may be a lower level among high-income countries. . Specifically, the current price is $1

[Tianfeng Research·Fixed Income] Sun Binbin/Chen Baolin

Abstract:

level in moderately developed countries may refer to the relatively high level in in developing countries, and the upper limit may be the lower level in high-income countries. . Specifically, the current price is $15,000 to $20,000, and the constant price is $10,000 to $15,000. The per capita GDP of middle-developed countries is not fixed, the focus is on China's relative position in the world.

According to calculations, the level of 4%-5% may still be needed in the next fifteen years, and of course this also depends on the global economic situation. On the one hand, the policy still has demands for future growth, and on the other hand, the policy goals are changed from absolute goals to relative goals, which means that in the future countercyclical policies pay more attention to relative changes, rather than simply pursuing unilateral growth targets.

Back to the present, specific policy measures need to be further analyzed for more detailed meeting information of the Fifth Plenary Session of the 19th CPC Central Committee. However, from the above policy ideas, it can be reasonably estimated that for 2021, as the start of the 14th Five-Year Plan, the current expected growth rate level is completely above the target. Therefore, in the future, the overall policy regulation may still be based on preventing risks and stabilizing growth balance. We need to adapt to this policy environment.

From October 26 to 29, the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China was held in Beijing. It is worth noting that the communiqué of this conference puts forward the long-term goals of 2035, which clearly requires that "per capita GDP reach the level of a moderately developed country". How should we understand this? We try to have a discussion.

What is the per capita GDP level in middle-developed countries?

The concept of "middle-developed countries" is not an internationally common concept. It was first seen in Deng Xiaoping's three-step strategy fully expressed in 1987:

"Our original goal was that the first step of doubled in the 1980s. Based on 1980, the per capita GDP was only 250 US dollars, doubled to 500 US dollars. The second step of was to double again by the end of this century, with an average of 1,000 US dollars per capita. Achieving this goal means we enter a well-off society and turn the poor China into a well-off China. At that time, the GDP exceeded one trillion US dollars, although the per capita average of 1,000 US dollars at that time. It is still very low, but the strength of the country has increased greatly. The more important goal we set is 's third step , which will double again in the next century in thirty to fifty years, and will generally reach 4,000 US dollars per capita . To do this, China will reach a moderately developed level. is our ambition. The goal is not high, but it is not easy to do it."[1]

If we follow Comrade Deng Xiaoping's statement on 4,000 US dollars and the classification standards of the World Bank at that time, we believe that the level of middle-developed countries may refer to a relatively high level among developing countries, and the upper limit may be the lower level among high-income countries.

The Chinese Academy of Sciences released every year clearly defines "middle-developed countries". For example, the 2011 State Information Office press conference clearly stated that "developing countries can be divided into three categories: ranked 21 to 45 are middle-developed countries , 46 to 80 are primary-developed countries, and 81 to 131 are underdeveloped countries. China ranked 70th in 2005." [2]

From the perspective of the World Bank's income classification, China is currently a middle-to-high-income group. If we follow the above analysis, China's per capita GDP is expected to reach the current level of Eastern European countries by , corresponding to the current price of US$15,000 to US$20,000 and the unchanged price of US$10,000 to US$15,000. In addition, the World Bank adjusts the classification standards every year, so the per capita GDP of middle-developed countries is not fixed, the focus is on China's relative position in the world.

What is the implicit growth target in the next fifteen years?

First of all, we need to clarify some data processing details and can directly use existing data to verify.

current price is directly used to convert the current price per capita GDP and the average exchange rate to calculate . For example, in 2019, China's per capita GDP was RMB 70,891.78, with an average exchange rate of 6.91%. World Bank data shows that China's per capita GDP in 2019 was US$10,262.

USD constant GDP processing is relatively special.For example, the current per capita GDP of the unchanged US dollar (price in 2010) is US$8,254. The specific calculation process is as follows: in 2010, the per capita GDP was RMB 3,080.793 billion, with an average exchange rate of 6.77, equivalent to US$4,550.47; then through China's annual deflator index (GDP index: per capita GDP), the per capita GDP of the unchanged US dollar in each year can be calculated in turn. In summary, the unchanged GDP of the US dollar is converted into the unchanged GDP of the local currency at a fixed year (for example, 2010).

The processing of per capita GNI (national income) is different . The per capita GNI uses the average exchange rate decline in exchange rate fluctuations in the past three years, and uses the difference between the country's GDP deflator and global inflation (SDR Deflator) to eliminate the price impact [1]. Intuitively, the country's unchanged currency price GNI was converted into US dollar value at the latest exchange rate. Therefore, the income division is usually more consistent with the current GDP of the US dollar (especially the treatment of exchange rates), and often deviates from the unchanged GDP of the US dollar.

Overall, the relative position of "middle-developed countries" mainly depends on the current price GNI/GDP. Therefore, the nominal GDP growth rate can be reversed based on the current price and further estimated actual growth rate. Here we ignore the relative changes in exchange rates and population.

In 2019, China's per capita GDP is currently priced at US$10,262, and the level of medium-developed countries is US$15,000 to US$20,000. Assuming that the nominal GDP growth rate of countries with developed economies in the future is 3.96% (the global GDP growth rate in the past 20 years is slightly higher than that of high-income countries), corresponding to China's nominal GDP growth rate in the next 15 years 6.46%-8.39% (USD value). Since the financial crisis, China's GDP deflator index averaged 2.95%, of which, due to large changes in data caliber adjustments in 2019, it was eliminated. Assuming that this level will continue to be maintained in the future (maybe lower), the actual GDP growth rate will be in the range of 3.51%-5.44%.

Of course, this also depends on the future global growth situation. If the global economic growth rate declines, the corresponding GDP growth target can also be lower. What does

mean for the future?

From the above calculation, we can get two information: First, the policy still has demands for future growth. Taking into account many factors inside and outside the population, the level of 4%-5% may still be needed in the next fifteen years. On the one hand, this is in line with the fact that China's economy has gone down and the potential growth rate has declined overall. On the other hand, it reflects the policy requirements for steady and long-term development; Second, the policy goal is changed from an absolute growth target to a relative target, which means that in the future countercyclical policies pay more attention to relative changes, and are not simply pursuing a unilateral growth target. The IMF expects negative global economic growth and China is the only major economy with positive growth this year. Some scholars have previously proposed a "relative growth rate" assessment method [1]. Therefore, this year's policy ideas may also be reflected in the next 15th lunar month, at least during the 14th lunar month.

Securities Research Report "How to understand that per capita GDP reaches the level of middle-developed countries? 》

Report release agency Tianfeng Securities Co., Ltd. (Securities investment consulting business qualification licensed by the China Securities Regulatory Commission)