Gao Peiyong: Macro Policy Allocation Must Coordinate Development and Security
Xi Jinping Economic Thought is characterized by a rigorous system, rich connotations, and profound depth. One of its essential components is the coordination of development and security. As a vital guarantee for our country’s economic advancement, the coordination of development and security must permeate every field and the entire process of economic work, and the configuration of macro policies is no exception. Facing the current grim and complex environment for economic development, we must adhere to systemic thinking [1], appropriately configure macro policies within the framework of coordinating development and security, and provide sound answers to three interconnected fundamental questions regarding macro-policy configuration.
Macro-policy configuration requires a cost-benefit analysis. This is an inevitable requirement of economic development. In the past, some analytical reports on macro policy focused primarily on policy benefits while rarely attending to policy costs. In reality, any measure in economic activity should ensure that "the gain of the winners exceeds the loss of the losers," or, from the perspective of the whole of society, "macro-level gains must be greater than macro-level losses." Whenever a policy is implemented, a corresponding price must always be paid to achieve its objectives. The principle and the bottom line—whether viewed from the overall situation or a local perspective—is that policy benefits must ultimately outweigh policy costs. Therefore, choices regarding macro policy should involve cost-benefit analyses to clearly calculate all relevant costs and benefits. We must evaluate policy gains and losses in a complete, accurate, and comprehensive manner, using this as the basis to determine what should be done and to what extent.
Macro-policy configuration requires setting a cost bottom line. National security is the foundation of national rejuvenation; security is the prerequisite for development, and development is the guarantee of security. Macro policies must coordinate development and security. Currently, as the changes unseen in a century [2] and the pandemic of the century intertwine, the world has entered a new period of turbulence and transformation. Global peace and development face severe challenges, and the external environment has become more unstable and uncertain. Our country’s development faces a new strategic environment where various "black swan" and "gray rhino" [3] events may occur at any time. Various risks are characterized by their wide distribution, strong interconnectedness and contagion, short windows for response, high requirements for immediate decision-making, and the difficulty of grasping the proper degree and timing. We must enhance our awareness of potential dangers, adhere to bottom-line thinking [4], and continuously strengthen our ability to prevent and defuse risks. Adhering to "bottom-line thinking" means that we cannot achieve policy objectives at the cost of sacrificing security; in particular, fiscal security must be placed in a more prominent position. Among all the security matters we face, fiscal security is the security with the most fundamental "bottom-line" significance. While striving to perform well in macro-control, we must safeguard fiscal security to the maximum extent, using a new security pattern to guarantee the new development pattern. Specifically, on one hand, we must ensure that the intensity of fiscal policy in the first quarter of 2023 connects seamlessly with the fourth quarter of 2022, avoiding sharp rises or falls; on the other hand, we must look beyond the current term to the long term, prepare for the worst-case scenarios, and reserve sufficient fiscal space to respond to future emergencies and potential difficulties. Overall, we should maintain a sense of awe toward fiscal deficits and be highly alert to fiscal risks, taking the non-compromise of security as our bottom line and placing fiscal and financial security in more prominent positions.
Macro-policy configuration cannot be a panacea that "conquers all under heaven" [5]. Currently, cyclical, structural, and institutional problems are intertwined in the operation of China's economy. Solving these problems relies both on policy arrangements and institutional transformation. Macro policy is not a universal elixir. Facing the "triple pressure" of shrinking domestic demand, supply shocks, and weakening expectations, we must insist on giving equal weight to reform actions and policy arrangements, with an emphasis on reform. It must be recognized that the strong resilience and great potential of the Chinese economy stem from the spiritual qualities and cultural genes of the Chinese nation—self-improvement, overcoming difficulties, and advancing with courage, possessing the ability to rise again after decline. This resilience stems from the common values that the people "use daily without realizing" [6]. However, transforming this resilience and potential into reality depends on reform actions. Therefore, we must currently take particular care not to let fiscal policy "conquer all under heaven." We must insist that what belongs to policy belongs to policy, and what belongs to reform belongs to reform, applying the right remedy to the case and implementing precise policies.
In summary, the configuration of macro policies requires the coordination of development and security. Under the prerequisite of coordinating development and security and firmly holding the security bottom line, we must smooth out macroeconomic fluctuations through appropriate macro-policy configuration. This will create a stable, secure, and predictable environment for development and form a comprehensive and reliable system for guaranteeing development security.