Li Lu on The Predicaments of Our Era: China, America & the Global Economy | Peking University 2024

[Transcript]

English Transcript

Li Lu: Let's start by discussing the first question.

What are the predicaments of our era?

Let's discuss them from both domestic and international perspectives.

Domestically, I think many of you have experienced this deeply, especially today's students. You may feel this even more deeply. Employment is indeed facing a lot of pressure. According to data from the National Bureau of Statistics, the unemployment rate among youth aged 16 to 24 has reached approximately 20%.

Behind the unemployment problem lies the issue of private enterprise confidence. Currently, China has about 700 to 800 million employed people. Of these 700 to 800 million people, about 90% are employed by non-government enterprises, primarily private enterprises. The government accounts for only about 10% of employment.

Therefore, the unemployment issue mainly reflects the challenges faced by the private sector. In recent years, private entrepreneurs have faced a series of issues concerning property rights and even personal safety. There have been a series of issues.

Of course, behind this also reflects a decline in consumer confidence.

The second issue is our economy. Over the past 40 years, China has developed to account for over 30% of the global manufacturing value-added. However, its domestic consumption represents only about 14% to 15% of this output.

In other words, half of China's manufactured goods must be exported to other countries around the world, with developed nations as the largest customers.

Although Southeast Asia has become China's largest trading partner in recent years, much of this trade does not involve final consumption in Southeast Asia but rather re-export trade. Therefore, a significant portion of the final consumption ultimately comes from developed countries.

Internationally, China also faces a series of challenges, particularly in its relationships with developed nations, whether in China-U.S. relations or China-Europe relations.

Over the past few years, as economic challenges have emerged, we have implemented a number of economic policies. These economic policies have mainly focused on the supply side.

But our problems are mainly on the demand side, leading to deflationary trends.

In China, the term "involution" has gained popularity. What does "involution" mean? "Involution" essentially refers to competition in a deflationary environment. Under normal economic growth conditions, competition does not take the extreme form of "involution." Instead, it takes the form of an upward spiral.

Another issue is the significant depreciation of wealth-based assets, particularly real estate and the capital markets. Real estate once accounted for about 70% of household wealth in China. Today, it still represents around 60% and remains the primary source of household wealth. The sharp declines in real estate prices and capital market prices inevitably impact consumer confidence and expectations for the future.

Additionally, in today's stricter regulatory and political environment, the bureaucratic system lacks effective positive incentives, leading to widespread "lying flat" (inaction), which hampers policy transmission and implementation.

These are some of the predicaments China faces domestically.

Internationally, over the past five to six years, since our last talk, the most significant global variable has been the U.S.'s fundamental reassessment of its role in international affairs.

Since World War II, the U.S. has served as a "stabilizing anchor." It established what is known as the "American Order." It has maintained peace and stability in international trade, ensuring maritime security, or "Freedom of the Seas." It has encompassed a series of systems, laws, dispute resolution mechanisms, and global capital flows, with the U.S. playing a core role in all aspects.

But in recent years, Americans, from the elites and middle class to ordinary citizens, have increasingly questioned whether it is worth playing this role. The U.S. has indeed taken on a large share of the cost of maintaining the international order, with about 80% of global military spending.

At the same time, in many areas, it has served as the ultimate purchaser, currency provider, and final consumption market for the global economy, effectively stabilizing the global order. Yet, many Americans now believe that the U.S. has gained little in return.

Regarding China's rise, there is a widespread view in the U.S. that China benefited from the "American Order." But after rising, China has posed a fundamental, or even adversarial, challenge to it. Based on this perception, whether accurate or not, it has led the U.S. to fundamentally reassess its role and resource allocation in maintaining this global order. This shift has not only altered China-U.S. relations, but also raised fundamental questions about the future of the global order.

How will it evolve? What challenges will Chinese industries face, and what role will they play?

To summarize, both domestically and internationally, a series of issues have emerged in recent years that can be referred to as the "predicaments of our era." These predicaments are not confined to specific times or places, nor are they short-term phenomena. Instead, they reflect deep uncertainties about the future.

This is the first question we wanted to discuss, a description of the phenomenon.

 

中文版本

李录: 首先我们先谈第一个问题。

我们这个时代的困惑是什么？

主要是在国内和国际两个方面。

在国内呢，我想大家生活在其中都有很深的体验啊，首先我们今天的同学，这个体验会更深。这个就业确实是面临了很大的压力啊。国家统计局的数字呢也表明，大概年轻人16到24岁的失业率在20%左右啊。 这个就业的问题背后，肯定就是这个民营企业的信心问题。

因为今天中国的就业呢，大概是7亿到8亿人啊。这7亿到8亿人呢中间，90%是由非政府企业提供的，主要是民营企业。政府提供的就业大概就是10%左右啊。所以就业的问题呢，主要折射的是民营经济的问题啊。当然我们也知道，这个民营企业家最近一些年呢，无论是对财产的安全，甚至于人身的安全呢，都出现了一系列的问题啊。

当然背后折射的也是整个消费者的信心啊。

第二个问题呢，就是我们的这个经济体呢。中国经过四十几年的发展，我们的制造业在全球的整体制造业呢，这个附加值占到30%以上。但是中国只消费其中14%到15%。也就是说我们的生产，中国生产里面有一半啊，中国生产的食物有一半要销售到全球各个国家。而且我们的这个最大的客户啊，最大的客户还是发达国家。

当然我们在东南亚呢，已经成为第一大出口，但是东南亚并不是最终的消费，很多都是转口消费。所以最终的消费呢，在很大程度上还是要回到发达国家。那么这些当然我们背后还面临一系列国际上的环境挑战，尤其是和发达国家，无论是中美还是中欧关系啊。

所以我们的过去几年因为经济的情况呢，出现了一些问题呢，我们也实行了一些经济政策。这些经济政策主要是集中在供给侧啊。我们的问题主要出在需求侧，那么也引起了这个通缩的现象啊。所以我们国内很多人都在强调“卷”。

这个“卷”呢是什么意思呢？卷实际上就是在通缩状态下的竞争。正常的经济增长状况下的竞争，就不是“卷”的形式啊，而是一个螺旋向上的形式。

那当然了就是说，我们另外的方面的问题呢，就是财富性的资产出现了大规模的缩水。那无论是这个房地产，还是资本市场。尤其是房地产，通常家庭财富大概一度占到70%左右。今天大概60%左右啊，仍然是家庭财富的第一来源。房地产价格和这个资本市场价格的大幅下降，当然也会影响到所有人的消费信心，对未来的信心。

因为我们的官僚体系呢，在一个趋严的环境下呢，也表现出了缺乏正向机制啊。出现了大规模的“躺平”现象啊，影响到政策的各种各样的传导啊。这是我们在国内看到的一系列的困惑。

在国际上呢，这个最大的变量在过去这五六年的时间里面啊，距离我们上一次演讲啊，就是美国呢对于自己在国际社会中过去上百年扮演的角色呢，开始发生了根本性的质疑。

尤其是在二战之后呢，这个美国一直在国际关系中扮演这样一个“锚”的作用啊。实际上这个整个的国际关系呢，我把它称之为是一个“美国秩序”啊。它不仅维系着和平，还维系了我们整个国际贸易，从这个叫“Freedom of the Seas”，就是在这个航海贸易上的和平。到国际秩序、资本流动，一系列的制度秩序、法律纠纷，还有这个国际资本的流动啊，都扮演着核心的作用。

但是最近一些年呢，无论是精英还是中产阶级，还是下层百姓呢，都对美国扮演的这种角色的得偿发生了根本性的质疑。这个美国确实承担了维系国际秩序大概80%左右的军事支出啊。同时在各种方面呢，尤其是扮演最后的购买者啊，还有这个货币的提供者，还是最终的消费市场啊，都扮演了一个“锚”的这样一个作用。

在这个过程中，是不是得不偿失？

尤其是在这个过程中呢，对于中国的这个崛起啊，至少在美国广泛地认为是搭了这个美国秩序的顺风车。但是呢，崛起之后，对美国秩序带来了根本性的，甚至敌对性的挑战。所以基于这样的一种认知，和我们不谈这种认知的对错啊，这个美国对于美国在国际秩序、美国秩序中应该扮演的角色，应该投入的资源，发生了根本性的质疑啊。

所以这个就不仅带来了中国和美国关系的变化，同时也带来了对整个国际秩序这样一个根本性的提问、根本性的疑问啊。

这个秩序未来会是什么样子？那么中国的产业在这过程中又扮演什么的角色啊？

总结下来就是，无论在国内和国际上呢，过去都出现了一系列的，应该可以称为是时代的困惑。它的困惑不仅是一时一地，也不仅仅是短期，而是造成了大家对于前途、未来的很多不确定性啊。

这是我们谈的第一个问题，这个现象的描述啊。

 

Source: https://youtu.be/8jJA4vHWvLc?si=9LVjxvd7IKBJx49o

 

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