Break the "intraroll" competition, move towards high-quality development, and rectify the "intraroll" competition, and spread the clarion call more and more!

Recent articles from Bloomberg mentioned that the domestic industrial product ex-factory price (PPI) has fallen for 33 consecutive months, and this issue has also attracted attention:

The problem of overcapacity intra-volume cannot bring substantial results by relying solely on corporate self-discipline. We must make up our minds to completely solve overcapacity and anti-involume.

For example, there has been news recently that many central departments and governments in many places have taken frequent actions in rectifying the "intra-roll" competition, and industry associations have also spoken out one after another, proposing to resist the "intra-roll" competition.

From photovoltaics, lithium batteries, new energy vehicles, to e-commerce platforms, takeaway industry, product quality, etc. From a scope perspective, the areas of market focus are expanding.

When it comes to overcapacity, many people are more concerned about its root cause. Zhu Yunlai previously analyzed how overcapacity is formed in a speech at Tsinghua University:

Everyone is only pursuing GDP growth - so they are desperately investing in industrial projects and real estate - most of the money earned is used to invest, and residents share less, have low income, and cannot consume - they can only rely on borrowing to promote investment - the result is that they are overcapacity and more houses are built.

The consequences of overcapacity are generally like this: peers desperately cut prices and grab the market and invest a lot of resources to produce, which not only wastes, but also lowers the prices and profits of the entire industry.

In order to survive, enterprises can only become more and more "volume". In this way, employees' income becomes smaller and they dare not spend money, and consumption further shrinks, which in turn increases overcapacity.

In the end, it became such a negative cycle: everyone is getting more and more tired of working, but their income is getting smaller, and they have no confidence in the future, and they dare not consume. This is obviously contrary to our original intention of developing the economy to make everyone's life better.

Why does it become like this? Where is the root?

According to Bloomberg, the economic decision-making level has actually realized the problem, mainly including: local governments blindly investing for political achievements, and the tax system pays more attention to "production" rather than "efficiency".

1. Local political achievements promote blind investment

Under the assessment of GDP growth rate, localities try their best to achieve GDP. The fastest way is to invest heavily in industry and real estate. Therefore, many places, regardless of whether their population, industry is suitable or not, or whether the finance can withstand it, they all try their best to borrow money to carry out projects.

In this case, many investments have not been fully demonstrated at all. They are purely for political achievements. In the end, a bunch of unfinished projects and loss-making projects have left behind, causing heavy debts to the local government. For example:

There is a county in Guizhou that blindly borrowed money to apply for projects regardless of its financial strength, resulting in a surge of 195 times in local debt.

For example, Liuzhou, as of the end of 2024, the debt scale of the urban investment platform was close to 240 billion yuan, and the interest alone would be paid back more than 7 billion yuan per year, and the local fiscal revenue was only 14.9 billion yuan in one year - equivalent to half of the revenue was used to pay back the interest.

2. Production method statistics GDP, hidden dangers behind it

GDP usually has three algorithms: production method, revenue method and expenditure method.

my country is a major producer with a high proportion of exports. It mainly uses the "production method", that is, counting the GDP of various industries such as agriculture, industry, construction, and services.

Zhu Yunlai pointed out in his speech that although our GDP grew rapidly in the past, there were problems behind it:The proportion of investment is getting higher and higher, but the proportion of consumption of the general public is declining.

In this way, how can a huge investment be supported? Only rely on debt!

To put it bluntly, it is all chain reaction.

3. There are also disadvantages to charging VAT on the production side

The tax system actually directly affects the economic structure. my country is currently production-oriented and collects value-added tax in the production process. Every time the goods go through a processing and circulation process, taxes are required. These taxes are ultimately included in the price and are borne by consumers.

This tax collection method has also led to local governments paying special attention to enterprise production, opening more factories (because they can collect more taxes), and using subsidies and policies to attract enterprises to settle down. As a result, investment promotion in various places is "intra-converted", industries are repeatedly built, and finally production capacity is redundant and overcapacity.

For example, the United States imposes consumption tax, and only when the goods are sold are taxed, so their policies tend to stimulate consumption and promote market demand. After all, under their system, there is no tax on things that cannot be sold.

How to break the deadlock? Carry out "supply-side reform"!

According to Bloomberg, a new round of "supply-side reform" may be launched soon, mainly targeting the problem of overcapacity.

Specific measures may include: reducing the production capacity of Chinese companies in steel, coal, cement and other industries - because the production of state-owned enterprises can be directly regulated.

As for private enterprises, they are more likely to indirectly limit production capacity by implementing stricter environmental protection, labor and quality standards to achieve the purpose of reducing production.

But it should be noted that although such reforms can alleviate overcapacity, they may also affect GDP growth and will also put pressure on employment.

So it is necessary to find a balance between "decapacity" and "employment guarantee". To be honest, this tests the wisdom and execution of the policy.

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