1997年亚洲货币危机最严重的时候，我写了一篇文章《天塌不下来》，基本内容是中国经济会无甚大碍地走出危机。中国政府当时决定不让人民币贬值，尽管，除香港以外所有东亚国家货币都在贬值。当时，稳定人民币汇率的政策在中国遭到很多人反对，特别是出口商。但最终证明，这么做不仅有益于中国，而且有益于其他东亚经济体。中国相对完好无损地走出了1997-1998年的东亚货币危机，而且赢得东亚国家与地区的感谢和尊重。

2008年9月，中国面临的外部环境同样不利，虽然这一回的方式完全不同。美国雷曼兄弟破产引发严重金融危机，其规模为1929年大萧条以来仅见。信心危机蔓延到欧洲和世界各地。一夜之间，美国和欧洲的信贷和流动性完全枯竭，到处是恐慌。美国和欧洲陷入衰退后，对中国和东亚经济体出口商品的需求陡然减少50%以上。

当时我写了另一篇文章《天塌不下来（二）》，再次认为由于中国和东亚经济与美欧经济存在部分脱钩可能，中国经济不仅能幸免，而且会在全球金融危机中继续增长。果然，尽管美国和一些西欧国家陷入金融混乱和经济减速与衰退，中国主要依靠其国内需求，设法保持了经济的增长，2009年和2010年GDP实际增长率达到9.1%和10.3%。中国和东亚经济体（日本除外）在这一时期的实际表现，消除了人们对部分脱钩假设的合理性的怀疑。

2012年初，欧洲主权债务危机处在高潮期，我写了《天塌不下来（三）》， 解释为什么面对欧洲主权债务危机，中国经济能够实现“软着陆”，并将继续依靠国内需求以每年大约8%的速度增长。2011年和2012年，中国经济实际增长率分别达到9.3%和7.7%。

2013年以来，中国经济进入向“新常态”调整的过程，即增长速度更慢、更具有环境意识、出口导向减弱、更重视服务产业、减少有型投入驱动和增加创新驱动。此后中国经济逐渐放缓，从两位数增长降到2013年增长7.7%，2014年增长7.3%。增长速度的放缓实际上符合中国的经济计划。今后中国实际GDP的增长速度预计将稳定在7%左右，进出口的增长速度也同样会下降。但由于最近中国股市的泡沫在7月份破灭，人民币8月份又意外小幅贬值约4%，世界市场出现恐慌，并出现了大批灾难预言家，预言中国经济将崩溃。今天，我又写了《天塌不下来（四）》，解释中国经济为什么应该能平稳过渡到“新常态”，并再次依靠国内需求，在今后几年实现每年平均7%的增长。

这一次的不同是，“危机”不像前几次那样由外部原因导致。当前的危机是国内和国际的信心危机，起因是中国工业部门放缓，以及和不合时宜的中国国内经济事件，如股市泡沫破灭和尝试优化外汇交易机制。尽管存在这些以不同方式被广泛曲解了的事件，但我认为，中国经济“硬着陆”是最不可能的。这主要是因为，中国制造业存在大面积的产能过剩，只要有总需求，就会有总供给，中国经济并不是供给约束型。由于掌握诸多政策工具的中国政府有管理国内总需求的独特能力，将来维持大约7%的经济实际增速并不难。

但鉴于许多产业产能过剩，以及一线以外的几乎所有城市住宅供应过剩，私营部门固定资产投资可能不会再像以前那样，成为总需求增长的可靠来源。仅仅降低利率，不会促使私营部门额外增加制造业或房地产业的固定投资。许多年来，美国、日本和欧元区的名义利率都接近零，但即使资产价格被拉上新高，也没有带来任何实际固定投资的显著增加。这足以证明仅有货币政策并不能有效刺激实体经济。现在所需要的，是维持和恢复公众对经济的信心，而这只能通过政府采取具体政策和行动来实现。

由于美欧经济复苏相对缓慢，加上中国工资水平持续上升，以及人民币自2005年以来大幅升值约25%，现在出口也不可能是总需求增长的源泉了。8月份人民币4%的贬值幅度不足以产生重要影响。况且，让人民币贬值幅度达到足以恢复玩具制造这样的劳动密集型轻工业，并不符合中国的最大利益，因为那意味着低生活水准。从中国角度看，继续人民币国际化的进程要重要得多，它可以使人民币直接用于国际交易的计价、清算和结算。为达到这一目标，人民币对美元汇率必须维持在一个稳定水平上。

过去几年里，中国家庭消费增长比实际GDP增长快50%左右。但由于家庭消费在GDP中比重很小，2014年约为30%，因此不足以产生巨大推力，使总需求出现根本改观。（2015年上半年，中国包括家庭和政府消费在内的总消费占GDP的60%。）为使家庭消费成为总需求的主要驱动力，家庭实际可支配收入的增长速度必须大大快于实际GDP的增长。尽管如此，家庭可支配收入占GDP的比例过半也需要一段时间。

故此，中短期内，总需求的显著增长必然来自公共基础设施投资和公共物品消费。预计政府在这两方面会带头行动。在这个时刻，通过增加公共基础设施投资和公共物品消费来刺激总消费有两个额外优势。首先，由于制造业产能闲置，公共基础设施投资和公共物品消费的边际社会成本很低。其次，提供公共物品等于实物收入再分配，举例来说，它让富人和穷人呼吸同样的空气，喝同样的水。这可以缩小中国事实上的收入差距。

In 1997, at the height of the East Asian currency crisis, I wrote an article, “The Sky is not Falling (天塌不下来),” basically saying that the Chinese economy would be able to emerge from the crisis more or less unscathed. The Chinese Government at the time decided not to devalue its currency, the Renminbi, even though every other East Asian economy, except Hong Kong, had done so. The policy of holding the exchange rate of the Renminbi steady at the time was opposed by many people in China, especially by exporters, but ultimately it proved helpful not only to China itself, but also to the other East Asian economies. China emerged from the 1997-1998 East Asian currency crisis relatively unscathed and also earned the gratitude and respect of the East Asian countries and regions.

In September 2008, the external environment facing the Chinese economy was similarly negative, though in a totally different way. The failure of Lehman Brothers in the United States caused a major financial crisis, the magnitude of which had not been seen since the Great Depression of 1929. And the crisis of confidence was spreading to Europe and the rest of the world. Overnight, credit and liquidity dried up completely in the U.S. and Europe. There was panic almost everywhere. The Chinese and East Asian economies faced abruptly reduced demands for their exports by more than 50 percent as the United States and Europe fell into recession.

At that time, I wrote another article, “The Sky is not Falling II (天塌不下来 (二)),” arguing once again that the Chinese economy would be able to not only survive but also continue to grow through the global financial crisis, based on the possibility of the partial de-coupling of the Chinese and East Asian economies from the U.S. and European economies. And, sure enough, despite the financial turmoil and economic slowdown and recession in the U.S. and some of the Western European countries, the Chinese economy was able to manage to continue to grow, based mostly on its domestic demand alone, and achieved real rates of growth of GDP of 9.1% in 2009 and 10.3% in 2010. Any doubts concerning the validity of the partial de-coupling hypothesis should have been dispelled by the actual performance of the Chinese and East Asian economies (except Japan) during this period.

At the beginning of 2012, at the height of the European sovereign debt crisis, I wrote yet another article, “The Sky is not Falling III (天塌不下来 (三)),” explaining why the Chinese economy should be able to achieve a “soft landing” and continue to grow at around 8% per annum amidst the European sovereign debt crisis, based on its own domestic demand. The actual real rates of growth achieved by the Chinese economy in 2011 and 2012 were 9.3 % and 7.7% respectively.

Since 2013, the Chinese economy has been in the process of adjusting to a “new normal”–a lower rate of growth, more environmentally conscious, less export-oriented, more service-sector focused, less tangible inputs-driven and more innovation-driven. The rate of growth of the Chinese economy has since been slowing down gradually from double-digit rates to 7.7% in 2013 and 7.3% in 2014. The slowdown in the rate of growth is actually consistent with the Chinese economic plan. The rate of growth of Chinese real GDP is expected to stabilize around 7% going forward, with similarly reduced rates of growth for its exports and imports. However, with the recent bursting of the Chinese stock market bubble in July and the slight but unexpected devaluation of the Renminbi of approximately 4% in August, the world markets have panicked and doomsayers have been coming out in droves, predicting the imminent collapse of the Chinese economy. Today, I write yet another article, “The Sky is not Falling IV (天塌不下来 (四)),” explaining why the Chinese economy should be able to make a smooth transition to a “new normal”, with an average annual rate of growth of around 7% over the next few years, based once again on its own domestic demand.

What is different this time is that the “crisis” was not due to external developments as the previous crises were. The current crisis was a crisis of domestic and international confidence, caused by the slowdown of the Chinese industrial sector and the unfortunate Chinese domestic economic events such as the bursting of the stock market bubble and the attempted refinement of the foreign exchange trading mechanism. Notwithstanding these events, which were widely misinterpreted in different ways, I shall argue that a “hard landing” for the Chinese economy is most unlikely. This is mainly because given the large and widespread excess production capacities in the Chinese manufacturing industries, as long as there is aggregate demand, there will be aggregate supply. Thus, the Chinese economy is not supply-constrained. Since the Chinese Government, with the many policy instruments at its disposal, is uniquely capable of managing domestic aggregate demand, it will have no problem in maintaining a real rate of economic growth of around 7% going forward.

However, given the excess manufacturing capacities in many industries and the excess supply of residential units in almost all except the very first-tier cities, private-sector fixed assets investment is not likely to be a robust source of increase of aggregate demand as it once was. Lowering the rate of interest alone is not going to induce additional private-sector fixed investment in either manufacturing industries or residential housing. Close to zero nominal rates of interest have prevailed in the United States, Japan and the Euro Zone for many years, but they have not caused any significant increase in real fixed investment even as they have driven up asset prices to new highs. This is ample proof that monetary policy alone cannot be effective in stimulating the real economy. What is needed is the maintenance and restoration of public confidence in the economy which can only be achieved through concrete governmental policy and action.

Neither is export likely to be a source of increase of aggregate demand, given the relatively slow recovery of the U.S. and European economies and the continuing rise in the Chinese wage rate and the significant appreciation of the Renminbi of approximately 25 percent since 2005. The 4% devaluation in August was too little to have any significant impact. Moreover, it is really not in the best interests of China to devalue the Renminbi enough to go back to labor-intensive light manufacturing such as toy-making, with the low standard of living that such activities imply. It is far more important, from China's point of view, to continue the process of internationalizing the Renminbi, so that it can be directly used for the invoicing, clearing and settlement of international transactions. For this purpose, the Renminbi exchange rate vis-a-vis the U.S. Dollar must be kept at a stable level.

Chinese household consumption has been growing approximately 50 percent faster than real GDP during the past few years. But because of its low share in GDP, approximately 30% in 2014, it will not give a sufficiently large boost to aggregate demand to make a material difference as yet. (Total final consumption, which includes both household consumption and government consumption, reached 60% of GDP in the first half of 2015.) In order for household consumption to become a major driver of aggregate demand, real household disposable income must increase significantly faster than real GDP. Even then, it will take a while before household disposable income exceeds one-half of GDP.

Thus, in the short and medium terms, any significant growth in aggregate demand must come from public infrastructural investment and public goods consumption. The Government is expected to take the lead in both. Increasing public infrastructural investment and public goods consumption to boost aggregate demand at this juncture has two additional advantages. First, given the idle manufacturing capacities, the marginal social cost of the public infrastructural investment and public goods consumption is low. Second, the provision of public goods amounts to a redistribution of real income in kind, since, for example, both the rich and the poor breathe the same air and drink the same water, so that it can reduce the de facto degree of income disparity in China.

READ IN SERIES:

The Sky is not Falling, I

The Sky is not Falling, II

The Sky is not Falling, III