The county is an important development unit in China's administrative divisions. Since ancient times, the Chinese had been saying that "all under heaven will be well-governed if the counties are well-governed". According to the 2010 census statistics, there are 2,856 county-level administrative divisions in China, and that means there are 2,856 development units. From a national perspective, the quality of county economic development is directly related to the quality of China's economic development and the stability of social development. In the past, China's rapid economic growth period was also a period of rapid growth of the county economy. County-level economic development similar to the Top 100 Counties in China often plays an important role in the regional economy.
However, under the current economic situation in China, the county economic development has encountered certain difficulties. During the Chinese National Day holiday this year, Anbound has conducted some researches in a central province and communicated with some county officials. According to a limited observation by Anbound researchers, county officials are most worried about the current economy. An old secretary even asked the Anbound researchers if China's county economy would collapse. Before Anbound researchers could answer, the official answered for himself, "it will not be far from now". When asked the reason of his pessimism, the official of this central province said that the economic situation at the local county level, there is almost no sign of the good economy, so he could not help but be pessimistic.
The situation mentioned by the local official can be summarized as follows:
First, the industries are sluggish and many companies have closed down. In the central provinces of China, the county industries have been relatively weak. In the past two years, the downward pressure on the economy has increased, and a large number of private enterprises have closed down. In particular, the manufacturing industry has experiencing a tougher time. In the past two years, the local economy was "supported" by the real estate; now the real estate market is weak, and real estate companies are also in trouble. In counties with a normal economy, where such counties account for most of the county-level administrative agencies in the country, there is almost no decent business. The local official said that local enterprises are important carriers of the local economy, and will determine the liveliness of the economy, consumption, and financing. If a large number of enterprises fail, the local economy will immediately "dry up".
Second, the problem of grassroots debt is serious. In the county economy, in addition to the government debts that public opinion focuses on, corporate debt and personal debt problems are also quite serious. These different debts are interrelated, forming a local economic debt network that is mutually restraining. In many counties, in order to improve financing, local enterprises that are mostly private enterprises often guarantee each other and form a complex guarantee chain. Now as the environment is tightening, once the debt problem breaks out in a large enterprise, it would affect many other enterprises. It is worth noting that not only enterprises have evaded debts, private individuals are also facing debt problems. The phenomenon of personal debt and private lending is also common in the acquaintance society at the county level. Although this is not illegal at the company level, once more cases like this occur it will cause social problems that cannot be ignored. There are also many families that have seen divorce and bankruptcy to personal debt problems. Corporate debt and personal debt problems have affected the credit of the county's grassroots market.
Third, the financing environment is fully tightened. The financing environment is an old problem and extremely specific at the county level. On the one hand, bank financing is tightening the credit; on the other hand, it tries to maintain bad debts so that the debts will not "burst". Government financing is particularly tense; some of the large projects in the past are too huge and after being built half, they are facing the risk of being unfinished. It should be pointed out that the local debt problem and the financing problem are often the mutual cause of each other, and now a vicious circle has formed. Some developers have owed too much debt, and the banks have been forced to intervene. The local government and banks have been forced to take part and set up a working group to directly intervene to renew loans and supervise the funding of development projects. There are also local officials who complain that financial consolidation is now tightening, and the systemic tightening of the financing environment will immediately put local enterprises in trouble.
Fourth, the problem of difficulties in employment began to emerge. It is worth noting that the problem of employment difficulties has begun to show obvious signs in the county level. As corporate companies closing down and layoffs increase, it is getting even more difficult to find a decent job at the county level. Even if one can find a job, a decrease in income and incomplete employment have become more common. In addition, in recent years, at the county level, the mentality of hatred against the rich is constantly increasing, and the resentment against business owners and developers has also grown. It is after the companies really collapsed that the people find themselves unemployed.
Fifth, the grassroots officials are not confident enough. Under a variety of issues, grassroots officials are confused about the current situation and prospects. Many officials have reported that the current environment is less than ideal. For every person doing the work, there will be five or six people doing the supervision; the administrative forces are used to supervise and guarantee "correct procedures" and "political correctness", but the officials that are proactive and doing their job have become lesser. Some officials revealed to us in private that with the unideal environment, lacking of industries ad inactive market, it is impossible to rely on "politics" to enhance productivity.
Certainly, the problems of the county economy mentioned above are different in different regions. The developed coastal counties have a better foundation for economic development in the past, and with stronger industrial and financial base, such areas would not be in a tough situation. However, the situation in the central and western regions is a different story. The foundation of these areas is rather weak, and in the past few years, the industries in the areas have not been able to do well, and the real estate industry has also failed. The economy of such counties is experiencing larger problems.
Judging from what Anbound researchers learned, under the current complicated domestic and international situation, the biggest problem China faces is steady growth. If the economy cannot be stabilized, the negative impact will be systemic, and the county economy will bear the brunt. As we have analyzed in the past, from the 18th to the 19th National Congress of the Communist Party of China, China's development should be completing economic development and transition after the anti-corruption works to achieve the sustainable development and transformation of China's economy and society. The current problems at the county level reflect the difficulty of China's transition. In the future, various policy adjustments and reforms will need to focus on the development of the county economy, the settlement of county problems, and the improvement of the county development environment.
It should also be pointed out that to solve the current problems of the Chinese economy, letting the Chinese market to play its role and relaxing the macroeconomic policies will be inevitable. However, in the adjustment of macroeconomic policies, the policy department still places great emphasis on orientation and precise regulations. On the one hand, the policies are relaxed yet, on the other hand, it is emphasized that there will be no major stimulus plan. Anbound researchers point out that this kind of policy that emphasizes precision and orientation is difficult to achieve in actual implementation. If funds flow into the market, they will penetrate the market, and it is difficult to be artificially oriented. If there is too much emphasis on orientation and precision, it will constrain the effect of macro policy relaxation. This is a question that the macro policy department needs to reflect on.
Final analysis conclusion:
The development of the county economy in China has encountered different levels of difficulties, the the policymakers should pay attention to the risks it is facing. The difficulties faced by the county economy also indicate the direction for future policy adjustments and reforms. To revitalize the county economy, the relaxation of macroeconomic policies will be inevitable.
