Original: Gu Ziming This article is authorized to be reproduced on WeChat official account: Political Affairs Hall Plus2019
In recent days, the content of the article has been very focused, all discussing the entry of productivity and capital into China.
Firstly, Musk and Huang Renxun, who represent advanced productivity, followed by Morgan and Disney, who represent the direction of capital and culture. These smartest people in the world are using real money, silver, and action to vote and choose to bet on China.
However, the choice of capital will transmit pressure to the political arena. With the completion of a major change of blood in the work of the US State Department concerning China, the Executive Deputy Secretary of State and the head of the China Group have successively stepped down. Today, Assistant Secretary of State Dakang has received a visa and came to China, making another advance for Antony Blinken’s visit.
Talking about these capitalists and politicians is not about eating melons and watching dramas.
In this game, we forced the United States to take the initiative and achieved a great victory in diplomacy. However, the ice breaking trip between China and the United States in February was postponed to June, and the four months wasted in the process also required all parties to use faster actions to recover the time.
For example, the unified leasing of urban villages in Shenzhen has suddenly been accelerated, which is a microcosm of this change. State owned enterprises have suddenly accelerated and become second landlords, acquiring urban villages in the central urban area in a centralized manner, and in the future, they will be renovated and then sold to the market on a large scale.
If viewed separately, this issue can easily become emotional, but if it corresponds to the entry of the first four American capitalists into China, the core of the policy is matched.
Firstly, the unified leasing of urban villages has locked up the long-term land supply in the central urban area, preserved housing prices, and stabilized inflation.
This move has lifted the market’s illusion of newly acquired land entering the market, making the valuable luxury homes in the central urban area, like Bitcoin, possess strong financial attributes due to shortages.
Due to the bullish trend of urban housing prices, they can gradually stabilize the precarious urban housing prices in the short term, prevent the sharp drop in housing prices in South Korea and Vietnam from spreading to the domestic market and causing risks. In the long run, in the future, China and the United States can work together, such as in 2008, to absorb excess currency and the accumulated wealth of a few people with valuable real estate, and prevent hot money from speculating in agricultural and sideline food and other livelihood fields.
It can be foreseen that with the re entry of American capital into China, the prices of luxury residential properties in central urban areas and surrounding ordinary residential properties will gradually widen, and an insurmountable gap will gradually form. (Inside/Outside the Pass)
Secondly, after the state-owned enterprises fully control the market, they can initiate supply side reforms and increase prices to reduce inventory, and regulate labor production factors.
On the one hand, the state can give strong financial subsidies to young talents with high academic qualifications, so that they can live in the central city at a very low cost; on the other hand, the price discrimination caused by the rise of market-oriented rent will also promote the low academic groups and middle-aged and elderly people to gradually move out of the city center.
This is very similar to the supply side reforms in areas such as coal, steel, rare earths, and banks, trusts, IPOs, etc. in previous years. Not only can there be no intermediaries to make price differences, but after the national team controls the market, it can drive capital to converge in areas supported by the state through micro level price adjustments, gradually reducing outdated production capacity.
It is foreseeable that high-quality young people will converge towards first and second tier central cities under the drive of policies, creating more value, and the aging population will gradually converge towards the third and fifth tier. (Just like the recent internet layoffs and recruitment)
In the future, as new generations of giants such as Musk and Huang Renxun bring new technologies to China, China’s vibrant first tier cities and enterprises will be able to commercialize these products with the fastest speed and acceptance, and have the opportunity to once again create the Shenzhen miracle of the 1990s.
Thirdly, a new land finance mechanism will emerge to promote new infrastructure.
With traditional land finance becoming unsustainable, what needs to be done in the future is to levy real estate taxes on luxury properties that continue to appreciate in value, as well as impose “handling fees” on the leasing and transfer of various real estate.
The former needs to ensure its rarity like gold, while the latter needs to ensure that all transactions need to be registered with the government. With the local government cutting off newly entered small property rights and the national team becoming the second landlord themselves, both problems have been solved, and Shenzhen can gradually pilot various reforms.
With the expected future income of real estate tax and tax, front-line local governments can take the lead in packaging these future income into financial products, raising funds from financial institutions, and starting a new round of “X trillion” infrastructure construction for a new round of technological revolution, just like “Guangxi Huipo Parking Space”.
The unified rental of urban villages in Shenzhen may seem like a local government policy, but in fact, like the most advanced and astute capitalists in the United States, they are all following the latest group of people and the smartest people in the policy, smelling the benefits and starting to run away.
And this is just the beginning.
In this unprecedented upheaval, as Western capitalists have had to change themselves and re-enter China, China also needs to make drastic changes and endure the pain to welcome and digest a new generation of global capital and technology.