Why is there a phenomenon of "deindustrialization" in China?

Two Stages of Economic Growth Driven by Political Behavior The reason why China experienced an economic growth of more than 10% in the 1980s and the first half of the 1990s is because the development of China in that era was the development of most people, for example, township enterprises blossomed everywhere, and the development of China entered the development period of a few people after the mid-1990s. The key point is that the internal productivity of China was impacted by external forces during this period. After the mid-1990s, under the competition of external commodities, a large number of township enterprises closed down and withdrew from the historical stage, which led to the end of the first stage of industrialization in China. What followed was the influx of foreign capital, which further suppressed the internal traditional industries, and the traditional industrial state-owned enterprises in cities also closed down. Under this unprotected development, only a part of the coastal areas have been developed and most of the inland areas have been suppressed. Therefore, it is natural that the economic speed of 1990 can't go up in the late 1990s. In this case, instead of adjusting the unbalanced development strategy and discriminatory domestic policies, the government has adopted financial means and borrowed foreign capital to continue to maintain the growth rate, continue to tilt resources to developed regions, and continue to implement preferential policies for foreign businessmen and the rich. On the one hand, the social gap is widening, on the other hand, the industrialization process and industrial structure are deformed. Fission happened. Compared with the normal market economy, China's ultra-high critical growth rate of 8% in recent years can be said to be a kind of "forced growth". The so-called "compulsion" means that this kind of growth has non-economic driving force and guarantee conditions, and it is economic growth promoted by the government. There was also "forced growth" under the planned economy system, but the implementation mechanism was different at that time. In the era of planned economy, "forced growth" is achieved through the issuance, implementation and assessment of economic planning indicators. At that time, the index of implementing the plan was mainly economic behavior, and the promotion of officials at all levels was more linked to political correctness than to the percentage of exceeding the economic plan index. But today, the indicators of political achievements are completely based on economic achievements. As a result, the implementation mechanism of "forced growth" is stronger. Of course, this pursuit of GDP has gone through two stages since the reform and opening up. The first stage is to rely on internal forces, which was the main practice in the 1980s and the first half of 1990s, mainly relying on loans from national banks. As a result, more money was issued. In the second half of 1980s and the first half of 1990s, there were two high inflation, and a large number of bad debts appeared in banks, so the economic speed had to slow down. The second stage is from the second half of 1990s to the present, and the main method is to rely on foreign capital to boost China's economy. Anyway, no matter what method is used, no matter whose money is used, as long as the economic growth rate can reach a high speed. This method of indirectly promoting growth, like the economic policies of market economy countries, is to stimulate demand; However, there is also an important difference between the two, that is, the active fiscal policy in market economy countries is only aimed at specific plans or projects, while the active fiscal policy in China in recent years aims at achieving a locked economic growth rate of 8%, and the necessary amount of financial investment is often calculated according to the preset economic growth target. Whether it is through direct means or indirect means to promote economic growth, this driving mechanism has an important feature, that is, it pursues quick results and ignores the long-term effects of growth, and is unwilling to work hard to solve key problems that are ineffective or have negative effects on short-term growth but can enhance long-term growth potential. As a result, although the short-term economic growth goal has been achieved, in order to achieve this goal, measures such as exhausting resources and fishing are likely to be taken, or resources available for future use (such as excessive issuance of government bonds) are exhausted prematurely, or a large number of resources are wasted and used inefficiently, or some unrealistic "demand hotspots" (such as "holiday economy" and "education industrialization") are forcibly created. Such an economic growth path is often not necessarily conducive to economic development, and may even damage the future economic development potential. In particular, this unscrupulous pursuit speed has seriously distorted the industrial development and structure of China. The Influence of Economic Growth Mode on Economic Structure Change As a big developing country, China's economic modernization can't bypass the industrialization stage. In China, the emergence of high-tech industries can not actually replace the role of industrialization, especially when the rural population still accounts for more than 70% of the total population. For many farmers in China, high technology is a luxury, and the industrialization of backward countries must start with low-skilled people. If we start to engage in high technology, it will undoubtedly cut off a large number of people from the process of industrialization. The reason why China's township enterprises failed to continue well is mainly due to the impact of this wrong "high-tech" catch-up strategy and the impact of foreign industries along the coast, which lost the space for survival and development. In addition, the defects of the system are also a major reason why township enterprises in China are unsustainable. Under the planned economy, the dual division between urban and rural areas cannot be broken, and the unequal national treatment and traditional identity hinder the further development of township enterprises. In this system and policy environment, China's endogenous industrialization movement had to be aborted. In this case, a large number of farmers who have entered industrialization have withdrawn from the process of industrialization. Since 1997, the economic situation in rural areas of China has gone from bad to worse, and farmers have been unable to make ends meet. From 1997 to 2000, the growth rate of farmers' income declined for four consecutive years. This shows that agriculture without industrialization support can no longer drive economic growth. Therefore, some scholars in China put forward that we should speed up the pace of urbanization in order to transfer more rural surplus labor to non-agricultural industries as soon as possible. But they seldom mention that the premise of urbanization in developing countries is the smooth development of urban industry and tertiary industry. Without great progress in industrialization, the growth space of the tertiary industry is limited, and it is difficult for farmers to make a living in cities. Many scholars emphasize that the proportion of non-state-owned sectors in the national economy has greatly exceeded that of state-owned sectors. It seems that as long as the non-state-owned sector replaces the state-owned sector as the main force of economic growth, China's economic development will naturally embark on an unimpeded road. In fact, the change of ownership itself cannot explain whether the industrial structure has improved. The industrial structure and product composition of a country can only be known by looking at the social structure of the country. As long as this country is a society with dual structure of urban and rural areas. The industrial structure of this country is bound to be greatly divided, and the product structure is also divided into rich and poor. The process of industrialization in China is bound to be influenced by this social structure. Some industrial structures are improving, while others are weakening. The industrial structure adapted to popular development is weakening, and the industrial structure adapted to the development of a few "city people" is strengthening. This is the main manifestation of unbalanced industrial development in China. A large amount of foreign investment has just restrained China's industrialization. Some studies have pointed out that in China, because foreign investment is mostly carried out under the intervention of the government, the short-term behavior of the government and enterprises is to pay attention to the surface and ignore the essence, and the digestion and absorption of imported technology is seriously insufficient. China's funds for digesting and absorbing imported technology only account for one third of the funds for technology introduction, while the situation in Japan and South Korea is just the opposite, and the funds for digesting and absorbing are three times that of technology introduction. For many local governments, the goal of introducing foreign capital is becoming more and more vague, and even attracting foreign capital has become an end in itself, resulting in the situation of "opening for the sake of opening up and attracting foreign capital for the sake of attracting foreign capital". Many enterprises in China have failed to digest and absorb advanced technology through joint ventures, and cannot gradually form independent research and development capabilities. This "foreign capital substitution effect" also means that China's economy is becoming excessively dependent on foreign capital. Due to the obvious shrinking trend of formal manufacturing industry in China, if the speed of introducing foreign capital slows down in the future, the degree of industrialization will decline, which is quite dangerous for a developing country with extremely heavy unemployment pressure. The second "substitution effect" refers to the phenomenon that China's formal manufacturing industry is replaced by informal industrial production activities with simple technology and small scale. In the process of industrialization in any developing country, informal industrial production activities will be vigorous and active, but in general, these informal industrial production activities are mainly the supplement and support of formal manufacturing, and it is impossible to support economic modernization independently. In China, the protagonist has been replaced by a supporting role, and the formal manufacturing industry, which should have been the protagonist, has become a supporting role in industrial growth. Taking 1996 and 1997 with high economic growth rates as examples, the added value of formal manufacturing and informal industries in China increased by 379.8 billion yuan over the previous year, of which formal manufacturing contributed 40% and informal industries contributed 60%. From 65438 to 0997, the added value of formal manufacturing and informal industries in China increased by 20lO billion yuan over the previous year, of which the contribution of formal manufacturing in China accounted for only a quarter, while the contribution of informal industries accounted for three quarters, although this figure is not accurate, because the statistics of informal industries contain more water. Although China tries its best to maintain the economic growth rate in a critical state close to the industrial breakeven point, the growth supported by civil engineering investment has a weak impetus to the overall economy. This kind of investment mainly produces the demand for raw materials and energy, which has a relatively weak stimulus to the manufacturing industry and cannot drive industrialization. More importantly, such an investment structure can not only improve the current situation of the industrial structure, but also strengthen the current structural ills, which has little effect on increasing urban employment and raising the income of most people. In China, although large-scale civil engineering construction has improved the appearance of the city, some coastal metropolises and suburbs have also formed local "prosperity" under the impetus of foreign capital, and the minority class, which accounts for a few percent of the population, has begun to enjoy the living consumption level close to that of developed countries, but the stagnation of industrialization is accompanied by "weakness", coupled with the decline of rural areas, and the weak agricultural growth cannot increase farmers' income. As a result, China's economic growth rate is "sticking to" the "bottom line" of 7%-8%, while the unemployment rate remains high, the average wage of employees is on a downward trend, consumer demand continues to shrink, and prices are declining year by year. This is the real reason why economic growth is out of touch with the living conditions of most members of society. With the abnormal development of industrialization and the characteristics of "strong quality" and "weak quality", China's modernization actually falters, and the modern life of a few cities also lacks a solid foundation. Such an economic structure cannot meet the upward mobility needs of most members of society in the future. This model may support the rich life of the existing few people. But it is difficult to improve the economic and social status of most members of society. The reproduction process of an increasingly polarized society not only has its political atmosphere in China, but also its industrial structure has basically taken shape. If economic growth cannot effectively improve the economic structure, it will become a "symbol" more and more. To deeply understand the economic situation of China, we need to find the trend law that determines the economic and social status of most people through the symbolic significance of the growth rate. Cheng Xiaonong, a professor at Princeton University, and Zhong Dajun, director of Beijing Dajun Economic Observation and Research Center, are taken from Beijing Dajun Economic Observation and Research Center.