Chinese economists criticise 4 trillion yuan stimulus policy

These comments from two Chinese economists at the Bo An Forum 2014, criticise China’s 4 trillion stimulus package in 2008. Although praised at the time by domestic and foreign media alike, domestic economists are now, in a similar fashion to the foreign economists, questioning the distortion effects of the stimulus package. The Chinese economists are naturally careful with the language they use, but given that the package was executed by a previous administration, now is the time to apply hard economic analysis to previous policy.
 

Economists repeatedly call into question the 4 trillion stimulus package.

Source: Securities Times, 2014-04-09

In a discussion held this afternoon at today’s Bo An Forum, the two economists Zhang Weiying and Chen Zhiwu criticised China’s 4 trillion stimulus package launched after the 2008 financial crisis. Zhang Weiying said the government at the time believed that by just spending money they could avoid an economic slump. This approach achieved its specified goal, but at the same time brought with it more serious problems. Chen Zhiwu said that even though the long term effects of the 4 trillion package on China are as yet unknown, China currently needs to adopt monetary and fiscal policies in order to reverse the structural damage caused by the 4 trillion programme.

Zhang Weiying: Government intervention misled entrepreneurs

Zhang Weiying pointed out that using demand and supply management is completely misleading, essentially is an economy driven by the government or by entrepreneurs? Keynesian economics considers the economy is driven by the government. The government controls investment, consumption, exchange rate, and currency. But afterwards, in determining how the economy recovers, the most important driver lies in the entrepreneurial spirit, and demand. And in practice, Keynesian thinking has had harmful effects on the Chinese economy over the past few years, with government intervention misleading entrepreneurs. Genuine economic demand ought to stem from entrepreneurial creativity, not from the government.

Zhang Weiying said if monetary policy is used to create demand, or if other government means are used to create demand, then both spell disaster. If entrepreneurs are really allowed to create demand, then the demand created is real, so not demand derived from monetary easing, then the economy can enjoy sustainable development.

“Of course entrepreneurial judgement can lead to mistakes, but it’s evident that government judgement can sometimes produce greater mistakes. If entrepreneurs collectively make misjudgements which lead to a financial crisis, then it’s only because they’ve been misled by government policy.”

He further added, government intervention inhibits entrepreneur’s vitality, creating further problems. “After the 2009 financial crisis, our government executed Keynesian demand management policies, and assumed that merely by spending money an economic slump could be avoided. This line of thinking achieved its specified aim, but brought along with it problems, problems that are more serious than the problems it solved.”

“In 2009, I warned the government at the time not to provide stimulus, those enterprises that are bankrupt, let them go bankrupt. It’s only under these circumstances the Chinese entrepreneurial spirit can shine. Government demand management often restrains entrepreneurial thinking, misleading entrepreneurs into making wrong decisions. In order to meet certain targets, governments will often adopt the wrong policy. If the economic growth doesn’t change this year, then 2 years later there’ll be a catastrophic fall in growth.”

Chen Zhiwu: Still hard to tell if it’s possible to undo the effects of the 4 trillion package and ensure a soft landing.

Chen Zhiwu said, even though it’s still hard to tell the long term effects on China of the 4 trillion stimulus package, the pressing matter for China currently is how to use monetary and fiscal policy to turn around the structural damage caused by the 4 trillion package. But in the end whether or not it’ll be a soft landing, is still hard to tell at the moment.

Chen Zhiwu added, the 4 trillion package quickly lifted the Chinese economy in the latter months of 2008, starting a steady period of economic growth, in 2009 enjoying a year of over 10% economic growth, with 2010 much the same. In Beijing many scholars slowly began singing praise of the Beijing model, singing loud, and in some cases writing books. But in 2014, in fact beginning in 2013, there’s been a rethink, in one sense, what’s the long term effect of the drastic 4 trillion spent by the government at the time? At the moment it’s still too early to tell. Currently we are looking for ways, using monetary and fiscal policy, to as far as possible turn around the long term structural damage caused by the 4 trillion package. But finally, whether or not there’ll be a soft landing, at this moment there’s no way of knowing, but will ultimately allow us to see the result of the China model.

He further added, China, US and Europe all had different approaches in handling the 2008 financial crisis. China was completely led by the government, the US was mainly led by the market, and in Europe a combination of both.

America’s pain arrived quickly but lasted briefly, but thereafter the whole economy especially the private sector recovered, not stopping since 2009. And in Europe, the government intervened, particularly in the labour market, and more so than in China or the US, so the EU economy has yet to fully come out of the financial crisis.

Chen Zhiwu said, “These are three different systems, and everyone has their own opinion. In the end, as to which system we really like, Europe, the US or the China model, you can more or less guess which one I prefer, but I’m not going to say.”

http://news.stcn.com/2014/0409/11321444.shtml

 

经济学家连番质疑四万亿计划 或导致结构失调

2014-04-09 18:33 来源:证券时报网综合

在今日下午举行的博鳌亚洲论坛2014年年会的一个分论坛上,经济学家张维迎和陈志武对于2008年全球金融危机后中国推出的4万亿经济刺激政策进行了抨击。张维迎称当时政府的想法认为只要政府花钱就可要保持经济不衰落,这个某种意义上达到一定目的,但是带来问题要比解决的问题严重多;而陈志武则表示,尽管四万亿计划对中国社会的长期影响还未知,但是当前中国需要通过货币、财政政策扭转四万亿计划带来的结构性破坏。

张维迎:政府干预误导了企业家

张维迎指出,用需求管理、供给管理完全是误导的,本质上经济是由政府驱动还是企业家驱动?凯恩斯主义本身认为经济由政府驱动,政府通过控制投资、消费、汇率、货币、然后使得经济怎么运转,最重要的经济的驱动是靠企业家精神,包括需求。而实际上,凯恩斯主义这一思想对中国过去几年的伤害非常大,政府干预误导了企业家,真正的经济需求应该由企业家创造而非政府。

张维迎表示,如果用货币政策创造需求,如果用政府其他手段创造需求,我觉得都是灾难。如果真正让企业家创造需求,他是创造真正的需求,而不是货币形式的需求,这个经济就有持续发展。

“当然企业家判断可能出错,但是事实上证明政府判断出错可能更大,如果企业家整体犯错了就遇到金融危机,就一定是政府政策误导他了。”

他指出,政府干预抑制企业家精神,带来更多问题。“2009年金融危机后,我们政府实行的是凯恩斯主义需求管理政策,认为只要政府花钱就可要保持经济不衰落,这个某种意义上达到一定目的,但是带来问题要比解决的问题严重多。”

“我2009年就警告过当时政府不应该刺激,该破产的企业就应该破产。只有这种情况下,中国企业家精神才能焕发出来。政府需求管理经常会抑制企业家精神,误导企业家作出错误决策。政府经常为了一些目标,采取了一些不好的政策,如果我们今年(经济增长)速度不降下来,过两年就会有灾难性速度的下跌。”

陈志武:扭转4万亿影响 能否软着陆还不知道

陈志武也表示,尽管当年的四万亿经济刺激政策计划对中国社会的长期影响还未知,但是当前中国更多的是在在想办法把当初4万亿造成长期的结构性破坏,通过货币政策、财政政策尽量给他扭转一些。而至于到底最后是不是能够软着陆,我们现在还没有办法知道。

陈志武表示,4万亿方案让中国经济在08年最后几个月很快振作起来,09年进入大增长时代,一年GDP增长百分之十几,2010年差不多也是这样。在北京很多学者也慢慢以北京模式唱赞歌,呼声很响,也有一些人写了一些书等等。但是2014年的时候,实际上从2013年就开始进行一些反思,从某种意义来说,中国当初由政府主导的大刀阔斧的4万亿这个做法对中国社会长期的影响是什么样子?现在还太早。现在我们更多的是在想办法把当初4万亿造成长期的结构性破坏,通过货币政策、财政政策尽量给他扭转一些,到底最后是不是能够软着陆,我们现在还没有办法知道,这是中国的模式给我们看到的结果。”

他表示,中国、美国和欧盟政府在2008年金融危机中的对策不一样,其中,中国完全由政府主导,美国更多的由市场主导,欧洲介于两者之间的。

“美国它的痛是非常快的,但是很短暂的痛,但是接下来整个经济尤其企业阶层的复苏,从09年到现在一直没有停顿过。而欧洲因为政府干预,特别劳工市场干预,比中国、美国多很多,所以到现在欧盟经济体还没有完全从危机冲击中走出来。”

陈志武说,“三种不同的体系,每个人有不同的判断。到底我们更喜欢哪一种,喜欢欧盟式还是美国式、中国式的经济体制模式,你们大致可以猜到我的倾向是什么,我就不说了。”

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