It is often necessary to fly by plane for professional reasons. Whenever the airport is crowded, it feels as if the Chinese have gone to the airport. But this feeling is actually bewildered by the illusion, because China has a population of 1.39 billion, and the samples we observe are usually very small.
In 2017, the aviation division, which holds the airline operator's license from China's Civil Aviation Administration, carried five hundred and eighty eight million nine hundred and ninety nine thousand nine hundred and ninety nine passengers, up from more than 600m passengers in 2018, according to SabreMarket Intelligence.
But how many people have been on board the plane for 600 million people? Certainly not more than 200 million. First, there is usually a round trip, that is, there is a return. Assuming that two of the average three flying people are back and forth, then 200 million people travel by plane will produce a flight record of three hundred and twenty nine million nine hundred and ninety nine thousand nine hundred and ninety nine passengers; Secondly, quite a few of the 600 million passengers should have travelled to and from the plane many times, such as more than 80 flights by myself in 2018; and third, some foreign passengers were included among the passengers of domestic airlines.
For example, in 2017, the United States Aviation Division carried 965 million passengers on domestic and international routes, an increase of 3.4 percent over the same period last year, including two hundred and twenty three million three hundred and ninety nine thousand nine hundred and ninety nine passengers on international routes and 741.6 million passengers on domestic routes. The population of the United States is only 320 million, and the number of passengers taken by air is three times that of the population of the United States. It can be seen that there is a large number of times between the number of passengers and the number of people.
In 2012, China Eastern's chairman showed the limitless market potential of the airline industry by saying "three to four Chinese have never flown." By now, that share should have fallen, but even at 2 to 3, more than 900 million people had never flown. Because China is still a developing country with a low level of disposable income per capita and the income gap among domestic residents, I estimate that the main factor contributing to the high growth of passenger trips by air is the contribution of the high-income class, not the contribution of the growth in the number of people.
Taking the passenger throughput distribution of domestic airports as an example, it seems that the total throughput of domestic airports has maintained a high-speed growth, but if we look at the breakdown data, the differentiation is too big. Of the country's 229 airports, only 32 airports with 10 million annual throughput accounted for about 78.5 percent of the total passenger throughput, while the number of airports with annual throughput below 3 million accounted for only 8.9 percent of the total passenger throughput.
Eighty per cent of domestic airports contribute less than 10 per cent of passenger throughput, and small airports at the rear end have close to zero passengers a year. On the one hand, about 1 billion of Chinese have never flown, on the other hand, 80% of domestic airports lack throughput and face the dilemma of overcapacity. The reason behind it is the insufficient effective demand caused by the large income gap.
At least 500 million people in the country haven't used the toilet yet.
With 7.35 million trips to Japan in 2017, Japan has become China's second-largest export destination, with many going to Japan to buy electric rice cookers and toilet seats (smart toilets). But behind the snap-up of toilet seats does it mean that the purchasing power of Chinese consumers is so strong that demand cannot be met?
I do not think so, may as well look at the domestic toilet penetration rate is how high. According to the Bulletin on the main data of the third National Agricultural Census conducted by the National Bureau of Statistics at the end of 2016, 83.39 million households (36.2%) used water flushing sanitary latrines, and 7.21 million households (3.1%) used water flushed non-sanitary latrines; 28.59 million households (12.4%) used sanitary dry toilets; 106.39 million households (46.2%) used ordinary dry toilets; and 4.69 million households (2.0%) had no latrines.
In other words, the total number of households in rural areas with flush latrines is 36.2%, and assuming that by the end of 2018, the figure rises to 40%, there are still about three hundred and thirty nine million nine hundred and ninety nine thousand nine hundred and ninety nine households in rural areas that do not have access to pumping / flushing toilets.
So what about the town? The National Bureau of Statistics reported 71.7 percent of households with sanitary toilets in 2017. If you simply multiply the total population, nearly 400 million people will still have no access to sanitary latrines in 2017.
But sanitary latrines also contain aqua latrines, because no official data have been found on the use of flushing latrines by urban residents, but according to a recent report by China International Capital Corporation (< is China's housing vacancy rate very high? >), "26 per cent of urban stock houses do not have separate pumping / flushing toilet facilities", assuming that towns are calculated at a higher vacancy rate of 20 per cent. The urban population without flush sanitary toilets is one hundred and sixty nine million nine hundred and ninety nine thousand nine hundred and ninety nine (1.39 billion times 59% urbanization, 26% by 80%).
So it should be a conservative estimate to add up to more than 500 million people in rural and urban areas who do not have access to flushing sanitary latrines.
In fact, pumping / flushing toilet can be divided into toilet and squatting urinal. Most rural households use squatting toilet, which has no toilet cover. As a result, it can be estimated very conservatively that at least 600 million people in China have yet to use toilet seats with toilet covers, so the potential demand is still very large, far outpacing the potential demand for smart toilets.
Expanding domestic demand should revolve around 1 billion people
The study concluded that there are still 1 billion people in China who have never flown, and that at least half of their families have so far failed to use flush toilets. This reflects the domestic potential consumer demand is still very large, if domestic demand can be met, then there is no problem of overcapacity, almost the majority of traditional industries can be fully productive.
But on the other hand, from the shortage of airport utilization and the serious overcapacity of manufacturing industry, there is a serious problem of "effective demand" in our country. The same is true of the world today, with sufficient potential demand, but insufficient effective demand with realistic value.
Over the past 10 years, China has made remarkable achievements in reducing poverty, and the number of people living in poverty has fallen sharply. In addition, by raising a tax threshold, the share of taxpayer in urban employment will be reduced from 44 percent today to 15 percent, or about one hundred and twenty two million nine hundred and ninety nine thousand nine hundred and ninety nine fewer taxpayer from about 180 million in the past to 64 million.
In other words, China's relatively rich and relatively poor population of about 10% has been cared for, including the rescue funds set up everywhere today, which also reflect the government's love for private business owners, but over the years, The remaining 1 billion-plus low-and middle-income people seem to benefit directly from policy preference cases.
Taking into account purchasing power parity, the income of 316 million people above middle-class incomes in domestic towns is close to South Korea's average, but the size of the population is close to that of the United States. This segment of the population dominated China's consumption escalation by 2017, but consumption growth, which has been affected by income since 2018, has fallen sharply.
Therefore, in the future, to expand domestic demand, should be around the low-and middle-income level of about 1 billion residents launched. Because they are the biggest driver of domestic demand in China.
Expanding domestic demand is nothing more than two paths, one is additional investment, the other is to expand consumption. Investment is divided into three main categories, namely, infrastructure investment, real estate investment and manufacturing investment, but the sustained high growth of infrastructure investment has led to excessive local government debt ratio, while stimulating real estate investment in the past has been a trial and error. The result has been excessive leverage in the residential sector, which has affected consumption, and liquidity pressures on real estate companies due to tight capital and poor sales.
According to general estimates, real estate investment growth slowed to less than 5 percent in 2019, infrastructure investment growth barely exceeded 10 percent, and manufacturing investment growth slowed slightly. In this case, fixed asset investment growth still slowed down. In fact, in the last five years, China's investment (capital formation) contribution to GDP has been about twice as high as the global average.
Some people believe that China can increase investment in the information technology industry or a variety of high-tech areas to stimulate domestic demand, of course.
The problem is that China's economic structure is dominated by the traditional economic, the conversion between the new and the old is a long-term process, and the current relationship between the old and the new is about 2:8. It is certainly appropriate to increase investment in new areas. And investment growth in emerging industries is already fast, such as China's investment growth in high-tech industries reached 16 percent in 2017, while growth in 2018 has remained double-digit, but has slowed down, indicating that the "energy" of new drivers is not enough.
Therefore, in view of the above analysis, the focus of expanding domestic demand should be to expand the consumption demand of 1 billion people. But the question is, if these 1 billion people are not able to increase their income levels, how can they expand their consumption?
I think there are two ways to expand consumption, one is to directly increase the income level of these 1 billion low-and middle-income people through the redistribution of national income, and the other is to raise the level of social security and welfare of these 1 billion people. Indirectly increase their income and consumption levels.
In order to increase the income level of the middle and low income class, we can start from the following aspects: first, provide more employment opportunities and increase the total income of the middle and low income groups. At present, the economic growth rate is downside, some enterprises' layoffs have led to increased pressure on social employment, and the government department can increase employment opportunities by increasing investment in the areas of people's livelihood. Because with the aging of the population, the demand for social services will continue to rise, such as the live a retired life industry and the education industry in fact, it is impossible for enterprises to be able to cover through commercial operations, it certainly needs a large amount of investment in government.
Second, continue to increase tax cuts and reduce the social security rates of enterprises, reduce the burden on enterprises, and raise the income level of working class.
Thirdly, the administrative expenses of the government department should be compressed. Although there is no exact data to reflect the proportion of the administrative expenses of China's government to the fiscal expenditure, however, given the huge size of the administrative agencies and civil servants, I estimate it at the double-digit level, but the average country is below 10%. Should reduce the department and the personnel way, further reduces the administrative expense, increases the people's livelihood expenditure.
Fourth, through the issuance of shopping vouchers, targeted subsidies to low-and middle-income families, such as "home appliances to the countryside" was the way to subsidize farmers, stimulate consumption. The traditional thinking of helping the poor in China is to "empower people to fish", but the actual implementation results often lead to inefficiency and injustice. However, the authorities of the Hong Kong Special Administrative region (authorities) has adopted the way of giving money directly to the people, "giving people to fish", and on the contrary, it can reflect fairness. Promote consumption.
In addition, by raising the level of social security and welfare of these 1 billion people, it can actually increase the income of residents indirectly and increase the proportion of consumption. This, of course, must first fill the gap in social security funds, and then add additional investment. The measures can be taken to increase financial subsidies to social security, or to expand the scope and scale of state-funded transfer of social security.
If the low-and middle-income class's worries about live a retired life and health care are largely eliminated, marginal propensity to consume will increase significantly.
If the measure is implemented and efficient, it depends on how the government expands the size and proportion of its spending and how it effectively advances reforms related to it.
I think government is fully equipped with leverage and ability. Although the local government debt is heavy, the real leverage ratio is very high. However, local government has assets, mainly including four types of assets: state-owned assets, administrative assets, land and natural resources; In addition, the central government assets are also large, such as so many large central enterprises, and other substantial assets, and the leverage level is very low (currently around 20%), so there is more room for leverage.
Most of the assets of the developed economic have long been privatized, typically small government and poor government. Since the size of our state-owned assets is so large, we should be able to obtain financing and income through mortgage, reduction, realization and so on.
It is logical that China's economic will become more and more leveraged in the future under the grim situation that it is not rich before it gets old.
But it is not enough to benefit people's livelihood by increasing leverage to increase government spending, and reform needs to be actively promoted to improve the efficiency of improving people's well-being. For example, China's population that has never flown or used flush toilets is concentrated in rural areas, but rural areas must promote modern agriculture in order to improve efficiency and farmers' incomes. This needs to continue for many years of land contract system reform, promote the circulation of rural collective land and residential base.
Because of the modernization of agriculture, the model of large farms must be the future direction of development, so the production and lifestyle of China's rural areas are far from being stereotyped at present, only by increasing the intensity of rural and agricultural reform. Through land transfer and other market allocation of resources, planning the rural livable environment, so that the living conditions of the rural population has been fundamentally improved.
In addition, the reform of state-owned enterprises, the reform of finance and taxation and the reform of administrative system will also have an important impact on the fair and effective redistribution of national income. For example, in the field of overcapacity and in competitive industries, whether the state-owned enterprises should withdraw or continue to be stronger and bigger, and whether they can do so, are all realistic questions that must be answered. This involves the idea of state-owned enterprise reform, my point of view is to put "people's pursuit of a better life is our goal" in the first place.
If increasing the state's fiscal revenue can be obtained through taxation, payment of fees, or through the transfer of land, the division of state-owned equity, and the transfer of profits by state-owned enterprises, why can it not be obtained through the reduction of state-owned equity holdings?
Under the trend of more and more obvious characteristics of stock economic, the increase of enterprise concentration and the increase of loss ratio are both big trends. For example, with the weakening of PPI in 2019, the probability that SOEs account for a higher proportion of upstream enterprises' profits will increase. Therefore, the reduction of holdings may be able to make the benefits of national capital higher.
In short, to raise the income level of 1 billion people and the scale of effective demand, and to enhance the consumption capacity, we must rely on the government department to increase the scale of fiscal expenditure to promote two measures, one is to raise debt and leverage, and the other is to reduce the holdings of various types of assets; In order to increase the scale and proportion of financial expenditure in the field of people's livelihood, we must support it through a series of reforms, such as finance and taxation, administrative system, state-owned enterprises, rural land circulation and so on.