Glamor Economics

Chapter 187

Chapter 23 Section 6 The Hidden Worry Behind the Prosperity—Economic Overheating

2004年4月13日，国家统计局发布了2004年一季度国民经济和社会发展统计数据：今年一季度国内生产总值同比增长9.7%。其中第一产业增长4.5%；第二产业增长11.6%；第三产业增长7.7%。中国经济在去年增长9.1%的基础上继续高位运行。

Among the various data released, the 43% growth rate of fixed asset investment is particularly eye-catching, especially in the first two months, investment increased by 53%, the highest since 1994 in the same period.Zheng Jingping, spokesman of the National Bureau of Statistics, said that the rapid growth of investment in fixed assets has resulted in intensified constraints on major raw materials, energy, transportation and other "bottlenecks" and increased pressure on prices. In 2003, it was surprising that China's economy could still maintain a high growth rate of 9.1% after being hit by SARS. In the first quarter of 2004, GDP grew by 9.7% year-on-year, and the growth rate of investment in fixed assets increased by 43%. "The Chinese economy is like a downhill highway bus!" "Financial Times" columnist James?Jin described his surprise at China's rapid economic development in this way.

In the early 20s, my country's GDP growth rate exceeded 90% for several consecutive years, and inflation continued for several years because the total supply obviously exceeded the total demand.It can be seen that overheating economic development is not a good thing.In economics, it is said that the actual growth rate exceeds the potential growth rate, which is called economic overheating. Its basic feature is that the demand for economic elements exceeds the total supply, which leads to a comprehensive and continuous rise in the price index.

Economic overheating has the following characteristics:
1. The growth rate of investment in fixed assets has been significantly faster than the growth rate of GDP for several consecutive years, which is an important reflection of economic overheating in one aspect.

2. The supply of energy raw materials is tight, and the price rises too fast.

3. Overcapacity and product backlog.In the current investment growth, many investments are stuck in the intermediate links. Some projects are poorly selected and have not formed production capacity, while others have formed production capacity, but the operation is insufficient and the production capacity is excess.These are reflected in the rate of economic growth. Although GDP, corporate profits, fiscal revenue, employment, etc. are available, there is a lack of final demand support, resulting in a lot of waste.

4. The pressure on resources and the environment is increasing, and safety production accidents occur from time to time.The problems of high resource consumption and waste brought about by economic growth have aggravated the pressure on environmental protection, which is also an important manifestation of economic overheating in one aspect.

Economic overheating can be divided into consumption-driven economic overheating and investment-driven economic overheating.The overheating of the economy due to the strong consumption of residents is called the overheating of the consumption-driven economy.An investment-driven economy is overheated, that is, overinvested, which has two meanings:
First, after the investment project is completed, the products produced do not have the expected market demand, a large number of products are piled up, and the funds cannot be recovered, resulting in a serious waste of production materials."Excessive" at this level refers to excessive investment relative to market demand.

Second, the scale of investment is too large, so that it exceeds the financial affordability, so that the investment cannot be completed according to the scheduled plan, and the expected production capacity cannot be formed."Excess" at this level refers to the excess of investment scale relative to financial burden.

[links to related words]

Total supply is the sum of the products and services produced by various sectors of the national economy within a certain period of time.The total supply can be expressed by the sum of the factors of production supplied by the society in a certain period of time or the sum of the rewards received by the factors of production.

Aggregate demand refers to the total amount of labor services and purchasing power for products actually formed by social expenditures that can be used for investment and consumption in a country or region within a certain period of time (usually one year).It depends on the general price level and is affected by factors such as domestic investment, net exports, government spending, consumption levels, and money supply.

Overcapacity It is generally believed that production capacity is the abbreviation of production capacity, which refers to the number of products that can be produced by all the fixed assets involved in the production of the enterprise under the given organizational and technical conditions within the planning period.Scholars have different views on what is excess.Some people think that oversupply is excess.Some people also believe that there are two states of oversupply, the first is that the supply is slightly greater than the demand, and the second is that the total supply abnormally exceeds the total demand. "Slightly greater than" means that in addition to meeting the effective demand, it also includes the necessary inventory and the need to prevent accidents.This excess is not a curse in itself, but a benefit.The latter state is the surplus state, which includes two aspects: on the one hand, the total supply is relatively insufficient for a certain period of time, and on the other hand, the total demand is relatively surplus for a certain period of time.

(End of this chapter)