This article is from WeChat public account: Economic Observation Network (ID: eeojjgcw) , author: Chenyong Wei, from the title FIG IC photo
To understand exactly how the “new infrastructure” will affect our country’s economy and understand exactly how the “new infrastructure” should be built, we must first understand the concept itself and the economic theory behind it.
The author believes that as a short-term stimulus policy, the key depends on whether it can create sufficient employment and demand. Judging from the characteristics of the “new infrastructure”, I am afraid it will be difficult to achieve this.
Recently, the term “new infrastructure” has quickly become popular in the media. Around the “new infrastructure”, a large number of scholars, experts, and industry professionals have expressed their opinions, and for a while, many very different and even opposing views have formed. Some viewpoints believe that “New infrastructure” is an effective means of stimulating the economy, which can effectively hedge the negative impact of the New Crown epidemic and guide the Chinese economy to quickly return to the right track ; / p>
Other viewpoints hold that the total amount of “new infrastructure” is not large and its nature is not suitable as a means of economic stimulus, so its effect on economic stimulus is very limited ; Others believe that “new infrastructure” is the interference of government forces on market order, which will not only help improve economic conditions, but also increase economic distortions and disrupt economic efficiency.
Interestingly, when people are arguing about the consequences of “new infrastructure”, the concept of “new infrastructure” itself is actually very vague. So far, the government has not given a very precise definition of “new infrastructure”, so various views on “new infrastructure” are actually based on different understandings of this concept.Based .
To understand what impact the “new infrastructure” will have on our country’s economy and understand exactly how the “new infrastructure” should be built, we must first understand the concept itself and the economic theory behind it.
Economic Theory of Infrastructure
To understand “new infrastructure”, we must first talk about “infrastructure” in a broad sense. “Infrastructure”, as its name implies, is the abbreviation for infrastructure construction. What is infrastructure? From the etymological point of view, it originated from the French infrastructure, which refers to the litter under the rails, which is what we usually call the roadbed. Around the 1930s, the term was introduced into English to describe public facilities that provide basic services for production and life. The term “infrastructure” in Chinese vocabulary is mainly translated from English literature.
When discussing the issue of infrastructure construction, many people are used to thinking about Keynesian economic theory. Proponents of infrastructure will be willing to use Keynes’s multiplier theory to demonstrate its rationality, while opponents of infrastructure will be more willing to seize Keynes’s “digging” metaphor to attack its absurdity. However, as long as we read Keynes’s General Theory carefully, we will find that it is not very appropriate to associate infrastructure with Keynes.
Keynes’s multiplier theory and the famous “digging” metaphor both come from Chapter 10 of The General Theory. In this chapter, Keynes mainly discussed the possible decline in aggregate demand and economic stagnation caused by a lower marginal propensity to consume. At the end of this chapter, he discusses the possibility of dealing with such economic stagnation through economic policy.
In Keynes’ view, the easiest way to end the decline in aggregate demand is to create some exogenous demand. Once there is a new demand in the economy, it will create new employment by itself, and provide the corresponding income for the employment, which will lead to new demand … This cycle is repeated, and new demand is created Will itself have a multiplier effect, and the originally stagnant economy will be activated and returned to the right track.
In the discussion, he gave an example of mining gold. He pointed out that from the perspective of generating value creation, mining gold mines is meaningless-mining more gold will only reduce the value of gold, and will not eventually increase the total value-but mining this The action itself brings employment, Trigger demand, and then produce the multiplier effect described above. In this sense, this meaningless behavior can play a role in restarting the economy.
Of course, in reality, gold mines are limited, and it is unrealistic to expect to use gold mines to get out of trouble during the depression. In response to this problem, Keynes suggested that similar public works could be used to achieve similar results. In discussing this, Keynes said humorously that if the Treasury Department could find someone to bury the dollar underground and then dig it out, it would achieve the same effect as gold mining-this is the famous example of “digging” Provenance.
It should be noted that In Keynes’s discussion, he did not point out that infrastructure should be used as a means of economic stimulus . In his theory, the most important feature of public works that are the most economic stimulus is to be able to create more jobs and more demand. As for whether it is useful or useful in itself, it is actually not. important. In fact, in Keynes’ view, public projects that stimulate the economy usually need to be purely “wasteful” rather than partly “wasteful”, and of course it is more unlikely to be as useful as infrastructure. Why is this? Keynes himself didn’t give much discussion, just saying that Pure “wasteful” projects will be more easily accepted than some “wasteful” projects .
I thought about Keynes’s proposition for a long time, and then I finally wanted to understand the truth. Fundamentally, Keynes was a supporter of the market economy, and of course he knew the use of public works to stimulate the economic consequences of the economy. Therefore, , he only regards public works as a “medicine” for depression, not as a substitute for the market economy. Since it is a dose of “medicine”, it should be taken in time when you want to eat, and there will be no dependence after eating . And if this “medicine” has other value, these two purposes cannot be achieved:
On the one hand, when discussing the feasibility of this project, people may pay more attention to the value of the project itself and ignore its stimulating effect on the economy, which may affect the passage of the project;
On the other hand, when the stimulus policy has achieved its purpose and needs to be withdrawn, some interest groups may hinder the withdrawal of the stimulus policy in the name that the project itself still has value.
BaseFor the above two factors, only from the perspective of stimulating the economy, “useful” projects are not as useful as “wasteful” projects, and they are not as flexible as “wasteful” projects. The so-called “useless is better than useful”, which may be used to describe this idea.
From what has been discussed above, we know that, by its very nature, infrastructure is not well-suited as a means of economic stimulus-at least from the original intention of Keynes, this is the case. So, where does the theoretical foundation for infrastructure investment come from? It is quite interesting that it does not come from any Keynesian, but from an Austrian economist-Paul Rosenstein-Rodin (PaulRosenstein-Rodan) .
In the early years of his academic career, Rosenstein-Rhodan’s research focused on classic propositions of Austrian economics, such as “marginal utility” and “time value”, but what made him famous in economics It is his contribution in the field of development economics. In his book “Several Issues of Industrialization in Eastern and South-Eastern European Countries” published in 1943, he proposed the well-known “big push” theory (TheTheoryoftheBig- Push) . This theory holds that just as an airplane takes off to obtain a certain initial speed, a country’s economy must undergo an industrialization process in order to achieve economic development.
In the process of industrialization, the formation of capital is indispensable. Rosenstein-Roadin divides capital into two categories, “socially shared capital” (SocialOver-headCapital) and “private capital” (PrivateCapital) . Among them, “socially shared capital” is roughly equivalent to what we call infrastructure. From a functional point of view, there is a big difference between the two types of capital. Private capital can receive direct income, while the role of socially distributed capital is mainly reflected in its externalities.
In general, the direct return of socially allocated capital itself may not be able to offset its costs, but it will greatly promote the economic returns of certain industries, so from the perspective of overall economic returns, infrastructure will likely Produce considerablePositive returns. For these reasons, Rosenstein-Roadin believes that the government should first build the infrastructure related to these industries before proceeding with the development of specific industries. In this way, in the subsequent development, these industries can obtain sufficient economic returns and their development speed will be faster.
What exactly is “new infrastructure”
Through the lengthy discussion above, we can clarify the fact: Infrastructure should be used to lay the foundation for long-term development and to serve the future returns of specific industries. It may not have the economic stimulus itself It may not be suitable for use as a short-term regulatory policy.
Now let’s put our focus back on “new infrastructure”. First of all, we need to clarify the question of what constitutes a “new infrastructure”. Regarding the connotation of “new infrastructure”, I now have a lot of opinions. I have summarized them, and they mainly come from the following sources:
The first source was several important central meetings. For example, the Central Economic Work Conference in December 2018 clearly stated that “to play a key role in investment, increase manufacturing technology transformation and equipment upgrades, accelerate the pace of 5G commercial use, and strengthen artificial intelligence, industrial Internet, the Internet of Things, etc. “New infrastructure construction”, and at the Standing Committee of the Political Bureau of the CPC Central Committee on March 4, 2020, put forward the “acceleration of 5G network, data center and other new infrastructure construction progress” statement. Some scholars have synthesized the views of these important conferences and believe that “new infrastructure” should refer to the five major areas of 5G networks, data centers, artificial intelligence, industrial Internet and the Internet of Things.
However, in all these meetings, the expression of “new infrastructure” is based on the method of enumeration, and the word “wait” is used to indicate omission. This means that thinking of “new infrastructure” as the above five areas is likely to make this definition too narrow.
The second source is the report from Central Media. For example, in many articles and reports, CCTV ’s statement is used to divide “new infrastructure” into 5G infrastructure, UHV, intercity high-speed railway and intercity rail transit, new energy vehicle charging piles, Data Center, Artificial Intelligence and Industrial Internet. However, this report from CCTV was made a year ago and has not been repeated in subsequent reports, so there may still be problems with its accuracy and timeliness.
The third source is some companies and researchInstitutional reference. For example, in a research report by GF Securities, “new infrastructure” was divided into 17 areas, and in the recent 2020 Alipay Partner Conference, Ant Financial CEO Hu Xiaoming even revised the version. Later Alipay was also included in the category of “new infrastructure”.
So, which of the above definitions of “new infrastructure” is more reasonable? In my opinion, rather than comparing the authority of these definitions, it is better to think back to the concept itself. Obviously, the so-called “new infrastructure” should be the opposite of the “old infrastructure”. As mentioned earlier, according to the definition of Rosenstein-Roadin and others, infrastructure is an input to achieve specific economic development goals and help the development of specific industries, so a key indicator to distinguish between “new” and “old” infrastructure, It should be the difference in the economic goals they serve. Then, compared with the past, what changes have taken place in China’s economic development goals?
The most important point is that from the pursuit of high growth to the pursuit of high-quality development. Therefore, all infrastructure that can serve the goal of achieving high-quality development should be included in the category of “new infrastructure”. According to this standard, those areas proposed by the Central Conference and the Central Media can certainly be counted as “new infrastructure”, but at the same time, like Alipay, or other soft digital infrastructure, can also be classified as “new infrastructure” This big concept is below.
After clarifying this point, we need to respond to a question: whether “new infrastructure” can be an effective means of hedging the “epidemic” and economic stimulus. In my opinion, the answer is no.
In the previous discussion, we said that as a short-term stimulus policy, the key depends on whether it can create enough employment and sufficient demand. But judging by the characteristics of the “new infrastructure”, I am afraid it will be difficult to achieve this.
First, in terms of overall volume, the scale of the “new infrastructure” is not large. Some studies have shown that if “new infrastructure” is defined as the seven areas referred to by CCTV, the total investment that can be reached within the year is about 1.1 trillion, which is difficult to achieve an effective hedge against the impact Effect. Of course, as we said, the scope of the “new infrastructure” may actually be wider than this, so the total investment it may bring will be larger, but in general, it is still not enough to achieve a hedged epidemic. purpose.
Second, from the nature of “new infrastructure”, most of them are capital and knowledge-intensive. This means that compared to traditional infrastructure, the same amount of investment scale can bringThere will be fewer new jobs. Therefore, if they are purely for the purpose of short-term stimulus, their effects are actually not as good as “old infrastructure” such as “iron buses”. Third, many of the “new infrastructure” serve the digital economy, and an important feature of the digital economy is that its development will not only lead to an increase in prices and a corresponding increase in GDP while bringing about improvements in social welfare. . This feature determines that if you want to use the “new infrastructure” to stimulate the economy and improve GDP, I am afraid it will be the same.
So does this mean that “new infrastructure” is not important? of course not. On the contrary, because “new infrastructure” can effectively improve the quality of economic growth and social welfare through relatively small investments, it should be carried out as a focus of future economic development. Although the epidemic has brought some disturbance to the economy, it has not changed the direction of the entire economic development, and high-quality development is still our goal. As long as this remains unchanged, the importance of laying the foundation for future high-quality growth will far outweigh short-term stimulus.
In fact, the reason why we need economic growth and GDP is to promote employment and improve people’s quality of life. In this epidemic, we have seen that new economic forms such as the digital economy can actually achieve this goal very effectively. In this case, why do we have to pursue the intermediate goal of GDP? In contrast, bypassing GDP and starting directly with the quality of economic growth may be more desirable.
How should a “new infrastructure” be built
The next question is how exactly a “new infrastructure” should be built.
China is a major infrastructure country. Since the reform and opening up, China has invested huge human and material resources in the field of infrastructure construction, and the results achieved are obvious to all. However, we must also see that in the past, there were many problems in the infrastructure construction process.
First, in the process of infrastructure construction, many people pay special attention to the resulting short-term economic performance, but ignore the long-term effects that infrastructure should play.
Second, the high investment in infrastructure has increased the risk of economic operation on a large scale. In order to finance the huge expenditure of infrastructure, both the government and enterprises need to significantly increase their debt ratio. Due to the restrictions of the “Budget Law” and other laws, local governments in China cannot borrow at will. They can only borrow from major commercial banks or policy banks by establishing local government financing platforms. However, with the full tightening of the central governmentLoans to local government banks were blocked, and local governments had to find other financing tools. And a large part of these financing instruments are of the nature of shadow banking.
At present, excessive leverage and huge shadow banking have become two major dangers to the Chinese economy, and their emergence is more or less related to infrastructure construction.
Third, the large-scale infrastructure construction has triggered a serious “retreat from the country and the people.” In previous large-scale infrastructure construction, state-owned enterprises have been the main force of construction. Not only do they get cheaper loans, more subsidies, they also get higher-return projects. The tilt of this policy has greatly increased the relative competitive advantage of state-owned enterprises, while the development of private enterprises has been suppressed accordingly.
In addition, the previous large-scale infrastructure has caused the after-effects of overcapacity and soaring house prices. It is for this reason that many people talk about infrastructure and change color. In response to the above issues, we must attach great importance to the implementation method of “new infrastructure”, so as to effectively improve the quality of “new infrastructure” and avoid various negative effects in the “old infrastructure” process . Specifically, the following points should be taken seriously:
First, short-term stimulus effects should be avoided as an indicator for selecting “new infrastructure” projects. In many discussions today, the “new infrastructure” has been transformed into a panacea that can take into account both short-term and long-term, demand and supply. In my opinion, this statement is dangerous. As mentioned earlier, the nature of short-term, demand-side stimulus tools and long-term, supply-side enablers are very different, and the characteristics of the “new infrastructure” itself make it difficult to afford short-term stimulus tools. Roles.
In this case, if we continue to use the short-term stimulus consequences as indicators for selecting and evaluating related projects, it may be seriously misleading, and the projects selected at the end may be neither helpful for the short-term nor helpful. The long-term “four dislikes”. In contrast, the use of longer-term, social indicators as the basis for selecting “new infrastructure” projects may help us find more important and more worthwhile investment projects.
In particular, it is important to point out that those “general purpose technologies” that can promote productivity in all sectors of the entire economy in the long run are (GeneralPur-poseTechnologies) , And “key technologies” essential for the development of some key industries (Criti-calTechnologies) should receive special attention. From the perspective of short-term GDP growth and employment creation, these technologies have little effect, but in the long run, they will It is the key to the competitiveness of the entire country, so it must be given priority support and development.
Secondly, in the process of “new infrastructure construction”, top-down supply and bottom-up demand should be taken into account. In development economics, there have always been two ideas about the construction of infrastructure: one is that the infrastructure advocated by Rosenstein-Roadin is first, and the related industries are driven after the infrastructure development; the other is Hirschman advocated that the relevant industries should be released first and let them develop, and the demand for infrastructure will increase. Naturally, the construction of infrastructure will be required in turn.
In the past practice, China basically adopted the Rosenstein-Roadin idea and provided advanced infrastructure to clear the way for economic development. This approach has its advantages, of course, but it must advance a huge amount of funds in advance, resulting in problems such as high debt. On the other hand, Hirschmann’s thinking can make the infrastructure adapt to the development of the real world, and make it have immediate consequences for economic development. Due to the needs of related industries as support, financing is relatively easy, and the government’s fiscal pressure will be relatively small.
In view of this, in the construction process of the “new infrastructure”, the government may wish to consider both ideas. It is necessary to make advance investment in some key technology areas that are related to long-term development, while also paying attention to the voice of the industry. To provide some of the infrastructure they sorely need. For example, during this epidemic, there is a great demand for a digital support platform for the service industry in the market. If the relevant infrastructure can be provided in a targeted manner, the benefits will be considerable.
Third, in the process of “new infrastructure”, we can consider giving private capital more room to play. As mentioned earlier, state-owned enterprises have been the main force in all large-scale infrastructure construction processes. In recent years, although many infrastructure projects have begun to open to private capital through PPP and other methods, due to various reasons, the restrictions on private capital are still very large.
In fact, compared with the government and state-owned enterprises, private capital has a stronger sense of market and can also create more business models to support its own business purposes. For example, cloud computing technology is an important infrastructure. According to common understanding, it should be completed by the government. But in reality, the development of cloud computing in China is almost always driven by private capital. They not only revolutionize technology, but also create a huge market for it.
Considering this, we may wish to lower the barriers to entry for some infrastructure projects and allow private capital to come in and become the main force for these infrastructure projects. The government only needs to do a good job of macro control and formulate relevant standards.
This article is from WeChat public account: Economic Observation Network (ID: eeojjgcw) , author: Chen Yongwei