Analysis of global economic situation in 2021

2020 is a challenging year. For example, the wealth of global digital giants inflated like balloons, but the number of unemployed people continued to reach new heights; the salaries of the financial industry and it industry rose, but the vast majority of the labor market shrank sharply; luxury LV and Chanel were popular, but Zara and H & M, fast fashion brands, dropped by 40% or 50%; and in the equity market, head enterprises were chased by funds However, most of the projects are ignored.

These phenomena and data show a problem---Before and after the epidemic, the global economy and wealth situation will present a different pattern.

What kind of pattern is it?

Globally, the direction of the next decade is called "missing middle".

This phenomenon began to appear in the United States more than 30 years ago. From 1978 to 2018, the wealth share of the top 1% of the rich in the United States increased from 21% to 37%, while the wealth share of the middle tier, 40% - 90%, decreased from 37% to 22%. With the decline of the middle class, the light luxury and practical market representing the middle class began to decline, luxury and cheap became the two main trends of consumption. At the same time, the premium of high-quality education, medical care and culture is higher, and the community fragmentation is more serious; the confrontation and tension between the prosperous California, New York, Washington D.C. and the decaying rust area are growing. Whether it's wealth, social class, cities or consumption, America's moderate neutral zone is disappearing.

Therefore, "missing middle" does not mean "the disappearance of the middle class", but the global labor market, enterprise growth, consumption patterns, individual wealth, and even urban competition. Behind these big words are the changes of ordinary people's occupation, income, real estate and wealth.

If this trend is an iceberg in history, how did it form? In short, it is the result of global technological progress and financial deepening in the past half century. More specifically, digitization and negative interest rates are the main driving forces.

Technological progress represented by digitization improves efficiency and promotes growth, but it is also a highly biased technological progress, which leads to the two-tier differentiation of labor market.

At the same time when digitization accelerates the "head effect" and "differentiation", there is also a remarkable phenomenon in the world, that is, "there is more and more money in the market, and the interest rate is getting lower and lower.". On the one hand, the low interest rate environment will stimulate the rise of financial asset prices, and the rich with more assets will enter the positive cycle of "money makes money". On the other hand, the low interest rate environment has also stimulated the behavior of financial leverage, and asset bubbles have become increasingly normal. The victims of asset bubbles are often middle class. All of these have exacerbated the polarization of wealth, making the situation of missing middle more significant.

The new Covid-19 epidemic in 2020 has helped boost the digital and negative interest rates: first, the global online and the speed of digital progress after the outbreak. Second, in order to prevent the depression, all countries have taken the unprecedented "water release" and the global interest rate level has been downgraded again, which is also the fundamental reason for the K-type differentiation we saw in the middle and late stages of the epidemic. In other words, the epidemic accelerated the speed of historical evolution, making "the iceberg of history surface".

So the next decade is an era of shifting from growth to distribution. Differentiation will take place in various fields such as occupation, city, industry and assets.

After 2020, both countries and individuals will enter a dark, dangerous and turbulent valley. This is a global change. China is not an isolated island, of course, it will also be in the chess game.

In fact, China occupies the broadest and flat valley. In the past few years, China has shown great resilience, such as the scale effect brought by the huge volume, the mobilization ability of China's grassroots social organizations during the epidemic period, and the strong vitality of the complete industrial chain.

Standing at the time node of 2021, what is the biggest headache for all countries in the world? In fact, it is the cost of social friction caused by the polarization between the rich and the poor. But the paradox is that digitization is more inclined to the technological progress of the elite, and the ultra-low interest rate implemented to stimulate economic growth will lead to the rise of financial asset prices, which is more conducive to the rich. To be honest, it's a hard trade-off for all policymakers.

Where is China standing and where will it go ?

At present, China's factor endowment, potential growth rate and national cultural characteristics all provide an antidote to this problem

1、 Technological progress: China's factor endowment premium

Under the impact of digitization, labor market polarization is a trend: the middle blue collar and ordinary white-collar jobs disappear, are replaced by machines, and fall into the mire of high intensity, low income and less security. The sinking of the middle class and the fall of the bottom class lead to more and more obvious social stratification - such problems have emerged in Europe and the United States.

But each country faces a different situation. Acemoglu, a famous economist, proposes that technological progress will try its best to replace those factors of production with high prices - for example, the labor cost in the United States is higher, so digital technology innovation is more focused on replacing people with machines and algorithms; on the contrary, China's labor supply is sufficient and labor cost is low, so it may not be cost-effective to use machines to replace labor The progress of digital technology will be more inclined to the complementary of machine and labor force, which is the innovation under different factor endowments.

If you look at China's labor market, you will find many "new jobs": anchor of video website, editor of new media, customer service of online shopping platform, and many strange jobs, such as (bedding / hotel) sleeper, hair model, hand model and so on. In 2018, 200 million jobs were created in China's digital economy, accounting for 1 / 4 of the total jobs in that year, and the growth rate was far higher than that of traditional industries.

In other words, China's labor factor endowment determines that the promotion and replacement of artificial intelligence in China is not so fast. China's labor market polarization will ease a lot - although the historical trend is irresistible, is it a straight line or a gentle slope? This is really important for young people.

I remember the Greek philosopher Heraclitus's saying that uphill and downhill are the same road. As long as we don't make directional mistakes, we can still find the way up in the process of slowing down.

2. The potential growth of China's economy: the potential new middle class premium.

In the next 15 years, China's economy will double, with an annual economic growth rate of about 4% - 5%.

China will try its best to avoid the imbalance in the process of growth, and the fruits of growth need to be shared by the latter 50%. How to share? From the urbanization of sheds to the urbanization of citizens - to put it more bluntly, it is to let the "new immigrants" who work and serve in big cities get the rights of urban residents at a lower cost.

It's not just about fairness. To be honest, this is the biggest "efficiency" and "growth" problem of China's economy.

China is a big country with a population of 1.4 billion - less than 400 million Chinese residents have ever flown, 150 million have passports, less than 100 million have drunk Starbucks, and at least 500 million have not used the toilet In other words, China is planning to make another 100 million, 200 million, or even more people "middle class", so that the income of the middle class can be increased, the wealth can be increased, the liquidity can be created, the people below can have the opportunity to rise, and the people in the middle can have the hope to continue to climb.

Therefore, the problem in the next stage is not only the doubling of the economy. China will make the fruits of growth incline to the middle and lower classes, especially the people who were left behind in the last wave of growth distribution, making them the "new middle class". This is China's biggest growth potential.

How to make these people new middle class? First, let more people own assets - big city real estate is the first choice.

Professor Xu yuan of Peking University has put forward a plan called "secondary housing reform". At present, it is a path that can give consideration to both fairness and efficiency. This plan can be summed up in one sentence: "large scale construction of affordable housing in the core cities will help new citizens with migrant workers as the main body to settle down in the city at a lower price and create a new generation of middle class.

Real estate is the most important pillar industry in modern economy, which has incomparable pull effect with other industries. This is a social consensus. Chinese experts have made a calculation that if 10 million housing units are built every year for new citizens with migrant workers as the main body, with an average area of 50 square meters, an average investment of 1 million units and a direct investment of 10 trillion yuan per year, it can guarantee a high economic growth of 5% per year in 10-15 years - which will enable China to continue to be in the channel of "incremental economy" in the next 10 years.

3、 Safe assets: secular rational premium

In recent years, China's monetary policy has been conservative and restrained, so the yield of long-term treasury bonds has been maintained at a high level. Considering China's relatively high economic growth rate, China can be regarded as a "safe asset".

But I think the real "safe assets" do not come from monetary policy or industrial chain. It's just an appearance.

New pattern of Global trade

Today's Global trade structure has formed a situation of "tripartite confrontation". The three major economies are the Asian regional center with China as the center, the European regional center with Germany as the center, and the North American regional economy with the United States as the center. This situation is more ideal. Because it is more in line with the differences of rule making, management and globalization in three different regions.