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Macroeconomic and Venture Capital


									Macroeconomic and Venture Capital
Zhang Shuguang: macroeconomic and Venture Capital
Moderator: Here is a famous economist, Economic Research Institute
Beijing day is Mr. Zhang Shuguang, chairman of speech.
Zhang Shuguang: Good morning, very pleased to be able to participate
in Hefei Science and Technology Innovation and Venture Capital
International Forum. This will open in Hefei, can be very important
scientific and technological strength of a relatively strong Hefei,
Hefei in the middle of the development is lagging behind some, but
plenty of room for development. Really need to develop investment,
then the venture is to promote the development of a very important
tool, so this will put this place to open, I would like for the future
development of Anhui Province, for the development of central will
have great significance. TIEN Governor and Chairman of weeks we made a
very important speech, I would like to macroeconomic and venture a few
observations on the issue.
We all know that reform and opening up, China's economy has indeed
undergone a rapid growth in the face of China, great changes have
taken place, if we are to count from 78 to 04 years, China's economic
growth in GDP, 9.4%, China trading up 18% in 2004, we are more than 13
trillion total GDP, let's trade is more than 11 thousand billion. From
an economic aggregate terms, China accounts for 5,6%, but the
proportion of the world, from per capita terms, we even lower
proportion, as over one thousand one hundred U.S. dollars now per
capita GDP, which is very low level in the world , and China's recent
wealth is 9387 U.S. dollars a recent World Bank estimates, and the
United States far worse than we. But because relatively fast economic
growth in China, China's economy in the world economy incremental
proportion of increment which should be quite high, accounting for
about 20 percent a few. Because of this, China will become a world
economic stability and economic development into a very important
force, but by the world's attention.
Of course, before the period of macroeconomic trends for different
views, such as China Center for Economic Research predicted that
China's GDP this year to be down 8%, but also to deflation. Another
view was that China's economic development is very good, basically a
high-growth, the problem is not to prevent deflation, but rather to
prevent a rebound, I think that both views may explain the complex
situation of the current economic operation, from the end of January
situation, although China in macro regulation, but not slow economic
growth in China, an increase of 16% to August, the city's investment
of up to 27% in August, so the speed is rather slow, However, some
Chinese enterprises have another situation where the CPI we can say
that very low inflation rate is very low and very high asset prices
that real estate prices will be high, even to Shanghai where, indeed
some of property price to be scary, and the CPI, CPI 1 to 1.3% in
August so the shadow of deflation has enveloped our economy, it is
worthy of concern. Why is the State's macro regulation and control of
investment growth quite rapidly, I would like to have a very important
reason is that the Chinese economy really in such a high growth
situations described, and traction within the economy to promote the
economic development at, but some I think the macro situation is
supposed to do, such as real estate prices actually rose faster,
benefits no one. Up too fast because inevitably a certain time, to
drop down. After the macro-control on the economy will be great, not
good on the developers, now you want to earn profits, high profit,
once the bubble burst in what would result, urban residents do no
good, you want to want, which is now the property of our urban
population, 64% of real estate accounted for, once the house after the
price cut, we can think about assets value on people's psychology and
what is expected to be affected. There are no benefits for farmers, we
now have more than 200 million migrant workers, most of which
employment in the construction industry, once a falling house prices,
real estate, a shrink, what benefits to farmers. What are the benefits
for banks, and now developer of most of the loans come from banks,
once the good assets into a bad asset, we think about how to get on
days when banks. So I think that some of the problems is worthy of our
Of course, the short run the Chinese economy relatively fast at first,
is due to the existence of the Chinese economy a huge potential for
growth and development, but China's economic investments there are
some potential risk, why do you say, I would like to discuss three
First, we can see that China is a big country, the population,
especially in many rural areas, and now they are in the process of
high-speed city of them, and the development of urbanization, from
theory, from a practical point of view, is a the process of rapid
economic growth, because the efficiency of low resources from sector
to sector higher transfer process is the process of people's incomes
increase, we all know in 2004 the city's per capita income is more
than 9000 yuan, while rural per capita income less than more than 3000
yuan, if the process of urbanization to the rural population to urban
areas to improve the level of income, you will create much demand,
with demand, can the economy can not develop it? Let's now less than
40% urbanization, urban population is about 400 million within a
decade to 60%, China's urban population is over 800 million, this
really made a vast market of China's economic development there is
great prospects for China in a relatively long period of time which
will see a rapid growth. But China's urbanization has Cunzai a lot of
problems, because of some restrictions on our system, we can see that
we now have Daliang of Renkou Suiran flow of Guo Cheng, over 200
million Nongmin now into the city, but the migration of the size of
population is Henxiao , and there are several people in rural areas
which settled in the city, but not settled will be a short-term plan,
in other countries, developed country, the population migration is a
one-way process from rural to urban areas, but China population
migration, both flow into the city, but also flow back into the
village, and not a small amount of flow back, and some developed
regions the problem of shortage of migrant workers, it is relevant to
this matter. If this issue we can not pierce it, we can see that rural
and urban labor market is segmented, the city which the informal
sector and informal sector labor market is segmented, so that the
future for the Chinese economy there is a considerable development of
negative factors. Is real estate, you think of farmers into the city
will create a much later the market, but you have high prices, which
can afford it. So I think this is a problem.
There is also a problem, we can see that China's current economic
development indeed there is a transformation process, but there is
also a consumer upgrade process, we can see faster growth in real
estate, automobiles has grown rapidly, production and sales increased
rapidly. As for the various needs of modern means of communication is
a lot of, a Spring Festival period, the light message to take 100
trillion a year, one cent, we think about is how much the market,
optical telecommunications companies have made much money, we think
about, we now do the upgrade there is a consumption process with the
process structure is also compatible to upgrade, but there is also the
case of heavy industry development, the process faster than light.
Look to our growth is driven by investment, the investment ratio is
already more than 40%, and the growth does not slow, a considerable
amount of consumption, let's consume far more than in others, have
much less energy use, and damage to the environment are also high.
This is a very important issue which we can see our more than 20 years
of reform and opening up our markets to market-oriented at a fairly
large, and now more than 90% of the products have been liberalized,
the market to determine its price, but our very sluggish market
factors. Factors such as capital, is essentially a rule of the central
and state-owned enterprises, we are not funding price liberalization,
interest rate or by the central bank control, you can see we are in
the lending rate is 6%, while the market interest rate how many, 12
percent. You calculate the interest rate on the capital this piece, it
is not the interest. Let's land, basically ruled the government
market, in the past three decades, the state received from farmers in
recent years, local financial revenue from the land which took more
than 1 trillion, do not say how many lost. It is for this reason that
we the collective land rights of farmers with farmers contracting
system, made possible largely agricultural land market development,
you can see the agricultural land, essentially subcontracting also
subsidizing the money, not a single market. State farmers to tax,
basically allocated, nor a market economy, thus affecting the
effective use of resources.
Besides the labor market, we just said is split, and can see the
foreign-funded enterprises and private enterprises are mainly
dependent on the labor market, let the low price of labor, the Pearl
River Delta, and I went last year in February, the daily wage of 25
farmers in Dongguan money, farmers less you give him a little money, a
count, they would have many, many of the Government to do, such as
working conditions of enterprises, this is also very poor, and indeed
a harsh labor wages, which are impeding China's economic development.
There is indeed the years of reform and opening up, a policy to
encourage attract investment, encourage exports, encourage foreign
exchange earnings from this policy, in an early stage of national
development is necessary, we Chinese do as a world trade power, is
indeed to promote China's economic growth, attract investment, as
China's economic growth as a very important aspect, and foreign
markets is the development of these years a very important condition,
from a policy perspective, from the front view is correct, but if also
used to treat the former view, then bound to be wrong, because of
balance, we present economic performance has caused the middle of the
cycle of two-way and two-way dependence, the so-called two-way cycle
and dependence, from the real economy to look, we see that the Chinese
economy growing rapidly, require large amounts of raw material, and
China is also a shortage of resources of the country, so we need to
import large quantities of raw materials, let's dependency on foreign
oil 40%, imports of raw materials by China the production processes to
complete the production, then Zaochu products, one is dependent on the
external raw materials, manufactured products, we can not digest the
domestic market has, in recent years, annual export growth of almost
30% this year, slower export growth, import, or to At this rate of
growth. We are complete in the international market, said Marx
converted from commodity money to complete its commodity demand. Let's
product is dependent on foreign markets, from the money economy is
concerned, we of bringing in large, large exports have become the
bank's foreign accounts and money supply. Put more money, the central
bank by issuing bonds to hedge and heading back to the recent
withdrawn from circulation too little, you can see the money we
increased rapidly, 8, 10 points more than the end of long, currency
cycle is completed in China cycle, but we increased the foreign
exchange accounts, but also not take up, but also in banks, foreign
governments and businesses took the money and then to China for
investment, but also the completion of the foreign currency
circulation, and these two are wholly dependent on the international
market, so that two-way and two-way cycle of the dependency can be
said that China's economic growth is not a good thing. So I think that
now, do we have to adjust our policies need to consider time. In this
situation, there was much of China's economic prospects, but also
there is really middle of the development of some potential danger. To
maintain long-term stability of China's economic growth, really need
our policy, institutional and make great adjustments. Of course, you
can see our policy adjustments above these years great progress has,
in this place because of the time, I would like to talk about exchange
We all know that as we two-way circulation, two-way dependence, allows
us to more than a decade of time in which we are two surplus, the two
remaining, this will cause to the exchange rate pressure. The
adjustments to the existing exchange rate appreciation, but also to
adjust the exchange rate regime, I see an aspect of this is not
correct. From the appreciation of view, a 2% appreciation of the
appreciation pressure also does not solve the problem, you can see the
end of July, July's foreign exchange reserves increased by 21%, 1-7
months of 1457 U.S. dollars foreign exchange reserves, and last year's
situation is similar to but recently we can see as the future
revaluation of 2%, but also in appreciation of speculation, but the
U.S. government is also pressure to China again, I think the
adjustment of 2% is not about speed, but in tone, but to move, move
than the fixed Well, this move, the next move on easily. A total of
eight years we did not move, 97 years up to now did not move, so
moving is not easy. From 2%, not moving, I think the current system
can be described as "Four Unlikeness" because the exchange
rate adjustment after four practices, one is a floating exchange rate,
a release said in part that one basket, One is the small fluctuations,
and now behold a kind of not. I want to see from this adjustment, the
adjustment made after the conditions have a new, now you can go to
expand its floating rate policy can also be used to manipulate, really
prove that we are at this point is correct, is to improve of. But the
policy of which there are many discordant things, although in this
respect we on, but not with the other policy. After the exchange-rate
appreciation is a tightening of the factors, you will need the
appropriate policy adjustments, such as fiscal policy adjustment, we
merged the two currencies, and income tax issues, the transformation
of value-added tax issue is not pushed, it is very The important
thing, since it is crunch factor, it should be a corresponding
expansion of the factors to deal with it. Recently we can see that the
policy to cancel the mortgage, since monetary policy, exchange rate on
the forward market should be open, but the issue of the house have to
cancel futures itself theoretically inconsistent. So I think the
market for China's economic growth process, there are still many
problems. Since we have the market economy, and corresponding social
problems but also there is a lot of problems, education, health
issues, social security, there are still many problems to be solved,
only a good way to solve a series of questions, we have possible to
ensure the healthy development of China's economy. And financial
issues, more importantly, our investment, there are many relaxation,
but in very good control of the financing issue, if the advance
financing market and promote the liberalization of finance, I would
like to us today meeting is also an important issue, it is necessary
for the development of venture capital financing are you a series of
liberalization, it may develop, I think this is China's economic
growth in the future is very long and important issue, today's The
conference will make a push in this regard, I think it was a good
thing, thank you.
American West, mainly by issuing bonds and funds, of course, carry out
the project bond issue, the key one, I think that scientific proof,
there must be income. Of course, in order to better support the
development of high-tech enterprises, to develop our active financing,
the Government including the National People's Congress in a number of
laws and regulations to be amended. I, for example, local governments
are not allowed to issue bonds is provided inside the Budget Act, the
Government and the NPC is revising and research. Thank you.

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