The current economic downturn is not a cycle problem that can be recovered in a few years.Since the reason is that it has been rooted in the structural problem of distorted wealth distribution. If the structure is not reformed, it will not be able to recover if it is too long.

China's economic growth has led to the world's attention.The biggest reason is that the real estate of the GDP (GDP) has always been unprecedented.Last year's newly started construction area and sales area, compared with 2019 before the epidemic, decreased by 54%and 59%, respectively, which was very bleak.

Due to the strong government intervention, there is no acute symptoms of economic collapse of foam economic collapse of real estate prices and developers' bankruptcy.However, the owners who feel the decline in real estate are entering the model of savings, resulting in the continued downturn of consumption.At the same time, the income from the sale of the city's land accounts for 30 % of the overall income of the local government, and it has also severely damaged local fiscal revenue.It can be said that the Chinese economy has entered a "slow collapse of the bubble economy."

Unprecedented downturn in the real estate market originated from excessive real estate bubble suppression policies starting in 2020.Assuming that there are no these policies, can the Chinese economy continue to maintain a 5%growth of 5%per year in the future?I think it is impossible.At present, the fundamental reason for China's economic downturn is that the economic growth model that has been dependent on loan investment in the past ten years has reached its limit.

The total amount of investment in industry equipment, government infrastructure investment, and real estate investment, from 15 years from 2009 to 2023 after the Lehman crisis, a total of 715 trillion yuan (RMB, the same below, about 133.6S $ 1).And most of the financial resources are interest -based liabilities.

This huge investment has indeed drove economic growth in this period, but there are also many unnecessary public investment and speculative real estate investment.Efficient investment cannot repay the loan. In this way, on the asset -liability statement of the Chinese economy, a large number of "assets" and potential bad debts with poor quality and potential bad debts.

If it is an ordinary country, the bubble economy will collapse here.If the human body is metaphorical, it is like vomiting or diarrhea after eating bad things, which will excrete toxins out of the body.However, the Chinese government has suppressed the decline in real estate prices and medals to the zombie enterprise that cannot be repaid or renewed (the "invisible government guarantee").Due to strong intervention, the bubble economy has not collapsed, but toxins have been stranded in the body.

The toxins here refer to the creditor's rights and interest that should be used as a bad debt.For another, for example, credit for invalid investment is like the company's employees with poor performance, and the interest of these credit is like paying for high salaries for poor performance employees.If such employees continue to increase, the company will be overwhelmed.

China has been postponing the treatment of backlog bad debts, and as a result, it has become a new loan during the exhibition renewal of loans, and has become a country with meaningless interest and transfer of unfair wealth.According to the author's rough estimation, the scale of China's wealth transfer is 4 trillion yuan per year, accounting for 3%of GDP.The wealth transfer benefits the state -owned departments and wealthy classes with a large amount of assets. The loses are families and private enterprises in the growth of mortgages.China was originally a country that government and state -owned departments have received more wealth distribution, and the people have received less wealth distribution. The above problems have further exacerbated the uneven distribution of wealth and distorted the economic growth model.

The slow collapse of real estate bubbles is just one side of the inferiority of China's overall balance sheet.The excessive real estate bubble control measures have caused economic downturn for several years in advance. Even without these policies, doom is inevitable.

Prime Minister Li Qiang said in a report in the National People's Congress in March that in order to support economic growth, he will issue a large long -term special government bond of 10 trillion yuan in high -term special Treasury bonds that will not be included in the fiscal deficit, and it is not one -time, but continuously issued in the next few years.This should be a measure that responds to the inside and outside calls required to be dispatched by the central government.

However, the stock market does not buy it.I think there are two reasons.First, I did not feel disappointed to the serious real estate problems and local fiscal crisis in the report of the Prime Minister's report.

Another reason, isn't it the root cause of the economic downturn -structural issues -a attitude of reform?The current economic downturn is not a cycle that can be recovered in a few years.Since the reason is that it has been rooted in the structural problem of distorted wealth distribution. If the structure is not reformed, it will not be able to recover if it is too long.Specifically, in order to deal with bad debts or increase the wealth distribution of the people, we must seek improvement of social security systems.As far as the local fiscal crisis is concerned, the rich land revenue of fiscal revenue can no longer return. Therefore, it is necessary to make structural adjustments to fiscal revenue and (with the central) expenditure and responsibility.

However, the treatment of bad debts will further hinder the prosperity and improve the social security and local financial countermeasures, which is also a great burden on the central government.As people often say, if "President Xi Jinping attaches importance to national security as more economic growth", it must set a lower growth rate in a period of time.

This year, the goal of "5%" has not been reduced, because in order to achieve three re -election, Xi Jinping put forward a convention of "the great rejuvenation of the Chinese nation", and also promised that "the per capita per capita GDP will be the same as the middle -developed countries by 2035"Target.

In order to achieve this goal, it is necessary to continue to maintain an increase of more than 4.5%in the future.He does not want to reduce the goal of growth and get the infamous infamous "if so, why should you be re -elected".

If you want to deal with structural problems in the future and maintain economic growth, the central government needs to issue more bold government bonds to increase expenditure.Today, China, which has become a large country of net creditor's rights with Japan, can digest a large number of government bond issuance in China (Note: The net assets of the end of 2022, Japan is 41.86 trillion yen (about S $ 3.74 trillion),China 3.358 trillion yen, Hong Kong 2.336 trillion yen).However, whether in China or the people in the Communist Party, "if a large amount of government bonds issue, the inflation will defeat the economy soon." Such a fixed concept is deeply rooted.

The Xi Jinping government can temporarily maintain a certain economic growth if the Xi Jinping government unlocked the ropes of the fiscal and finances, and it can also slowly solve structural problems.But from another perspective, the Chinese economy will be similar to Japan after the bubble economy collapses, so it will have greater resistance to this.

In any case, if hesitant, the situation of economic downturn cannot be eliminated. The local fiscal crisis and social anxiety will further intensify.If it is not forced to the edge of "National Security", can't the ropes restraining and sound fiscal ropes be unlocked?

The author is a visiting researcher at the Institute of International Issues of the Japan International Institute, and modern Chinese research experts