Liang Jianzhang: if the measures are right after the epidemic, Chinas GDP can grow by 6percent

 Liang Jianzhang: if the measures are right after the epidemic, Chinas GDP can grow by 6percent

The novel coronavirus pneumonia epidemic is spreading to many countries around the world. The confirmed cases in Japan, Korea, Europe and the United States are also rising. This has become a public health event that the whole world needs to face.

At the critical moment of prevention and control of the domestic epidemic, some cities announced to take 14 days isolation measures for the entry of people from countries and regions with serious epidemic situation, and strictly prevent the external inflow. However, such an entry restriction policy may face a more complex problem while preventing epidemic.

So, how can China find the best balance between opening up and epidemic prevention when it is defending both internally and externally? Will the current policy of isolation, which is aimed at the entry of foreign people, lead to the decoupling of Chinas economy from the rest of the world? How to avoid the risk of decoupling? How does the domestic economy recover? Can Chinas GDP maintain a growth rate of 6%? Is stimulus needed? When will the tourism industry recover? How to see the liquidity crisis of HNA Group under the epidemic situation? To this end, on March 1, a reporter from Beijing News interviewed Liang Jianzhang, the co-founder of Ctrip group, chairman of the board of directors and professor of Guanghua School of management, Peking University.

Core point of view:

1. If the external exchange, especially the exchange of science and technology, is affected due to isolation, the economic innovation of many countries and the future economic vitality will be negatively affected.

2. No country can afford to be isolated from the world. When other countries outside China China novel coronavirus pneumonia as a pandemic, China can not be alone. Especially when the victory of domestic epidemic prevention is in sight, we will soon face this problem: how to find the best balance between openness and epidemic prevention.

3. It is recommended to strictly distinguish external isolation, and the one size fits all isolation method is not advisable, but it is reasonable to isolate people from high-risk countries.

4. In order to avoid the risk of economic decoupling, we must strengthen all-round exchanges with the world, including commodity exchanges, information exchanges, capital exchanges and personnel exchanges. Keeping information and money open becomes even more important when people are temporarily blocked from communicating.

5. China must maintain a moderate GDP growth rate. It is suggested that the government should introduce policies such as investment and encouraging the liberalization of fertility to stimulate the economy. If the measures are in place, 6% growth rate is possible.

6. The new crown epidemic has an impact on Chinas global supply chain status, but there will be no supply chain transfer in a month or two.

7. The epidemic hit the global tourism industry hard and the recovery was slow. The domestic tourism industry will recover faster than the international tourism industry, and will continue to cooperate with HNA in the hope that it will survive.


The global spread of the epidemic is prone to reverse panic

Alert to the risk of decoupling

China novel coronavirus pneumonia has become a global public health event. What do you think is the difference between China and other countries?

Liang Jianzhang: the transformation of the epidemic situation is very fast. At present, the Chinese government has the most preventive ability and measures, but it is also a blood lesson. Prior to that, the Chinese government has played a strong executive role and taken strong measures such as large-scale community isolation to control the outbreak in Wuhan first, and many factories and enterprises are also returning to work. Nowadays, the epidemic is spreading all over the world. There are a lot of community infections in South Korea, Italy, Iran and other countries. At the same time, there is a trend of further spread in the United States, Japan and other countries in Europe. Due to various reasons, these countries are unable to take strong blockade and isolation measures like China, so they can only take common measures to deal with influenza, only treat severe patients, and try to reduce mortality. This influenza epidemic prevention strategy is in sharp contrast to the Chinese epidemic response.

Beijing News: compared with the strong measures in China, how do you evaluate the epidemic prevention measures in other countries?

Liang Jianzhang: the effectiveness of the epidemic prevention strategy depends on the mortality of the new coronavirus. In Hubei Province, the mortality rate of the epidemic is as high as 3-4%, but the data may be overestimated to some extent, because the actual number of infected people, the denominator, may be underestimated. A more accurate estimate comes from the mortality rate outside Hubei, which is between 0.5% and 1%, several times higher than that of influenza (0.1% - 0.2%). In the future, with the continuous improvement of medical programs and the introduction of new drugs, especially the valuable treatment experience of China, there is a possibility that the mortality rate will be reduced to the same order of magnitude as influenza in the future. Of course, the influenza epidemic prevention measures may objectively lead to more deaths of patients, which is a great tragedy for the whole world. But compared with the huge number of people who die from flu every year, the tragedy is in the same order of magnitude. Therefore, after the initial panic period, the influenza epidemic prevention measures will gradually become the normal, to ensure that the economies of all countries will not stop or collapse. Under such a measure, the incidence rate and death toll of countries may be higher than that of China. But they have no choice but to use limited medical resources and latest treatment methods to minimize deaths.

Beijing News: at present, some cities in China have taken isolation measures for the entry of people from some countries and regions with severe epidemic. If the epidemic spreads further, do you think it will expand the scope of isolation?

Liang Jianzhang: if the world adopts the flu like response, in turn, it will cause huge pressure on Chinas strong response. We are more likely to have reverse panic at a very high cost. At present, some cities have taken 14 days isolation measures for inbound guests, but some places in the implementation process are one size fits all for all inbound guests. Although, I think this one size fits all isolation is definitely not desirable, but it is reasonable to isolate people from high-risk countries, because after these countries adopt relatively weak influenza response, their citizens have a higher risk of infection than the Chinese. Therefore, only from the perspective of strict epidemic control, we should limit and isolate these problems Foreigners. But the problem is that the epidemic control in most countries is not as strong as that in China. If isolation measures are strictly adopted for most countries, Chinas economy cannot afford such a cost.

Beijing News: if we take strict isolation measures for most countries, what will be the impact on Chinas economy?

Liang Jianzhang: if so, it is not only a problem of infectious diseases, but also a comprehensive economic and social problem. If only in the short term, the direct negative impact on the economy of restricting the entry of foreigners in a special period seems to be relatively limited, at most, it is the loss of some output value related to inbound travel. But in the long run, its negative effects may become very huge. For example, after decades of development, China has not easily occupied an important part of the world supply chain, but if in the next year and a half, entrepreneurs and marketing managers from all countries can not come to China, then the connection between China and the world will be weaker and weaker. In many areas of innovation, cooperation between China and the world has already formed the pattern of you have me, I have you.

Beijing News: what are you most worried about?

Liang Jianzhang: we must also be alert to the risk of decoupling from the world, especially considering the risk of decoupling caused by different anti epidemic strategies. Against the background of Sino US trade frictions, the U.S. government is trying its best to decouple from China in order to suppress Chinas innovation. The U.S. also continues to use diplomatic means to persuade other developed countries to decouple from China. After the outbreak, the United States was also the first country to ban Chinese. In the future, it is likely that, on the one hand, China has done a good job in controlling the epidemic itself; on the other hand, the epidemic continues to spread due to the influenza measures taken abroad. In this case, China is likely to block the exchange of personnel from countries and regions with severe epidemic situation for the sake of epidemic prevention. This is certainly conducive to the prevention and control of the epidemic, but it may be unconsciously decoupled from the world, including the United States, which just reached the goal that the United States could not achieve through diplomatic means.

Beijing News: what are the risks of decoupling from the world?

Liang Jianzhang: I think its very important that the foreign exchange is seriously affected. This is a chronic disease. If the foreign exchange is affected, especially the exchange of science and technology, the economic innovation of many countries and the future economic vitality will be negatively affected. I still hope that we can pay attention to it, and hope that we can rationally choose how to prevent foreign imports and achieve a balance between opening up.


Strictly distinguish and avoid all-out isolation

The outbreak will not cause the Chinese supply chain to shift within a month or two

Beijing News: how to avoid the risk of decoupling between China and the world?

Liang Jianzhang: to avoid this kind of risk, we must strengthen all-round exchanges with the world, including commodity exchanges, information exchanges, capital exchanges and personnel exchanges. Keeping information and money open becomes even more important when people are temporarily blocked from communicating. Now there are many overseas students and researchers who cant make normal international travel. Some teaching and scientific research activities can be carried out remotely through the Internet. Unfortunately, many scientific research teaching contents cant be accessed in China. We should use the latest high-tech intelligent filtering means to control overseas Internet content more accurately and try to avoid blocking the smooth communication of non sensitive information. In terms of opening up investment, we can further increase the opening up of high-tech, financial services, medical education and other industries, so that more high-tech enterprises like Tesla can invest and run factories in China. Of course, face-to-face communication is irreplaceable in many cases. Therefore, in terms of personnel exchanges, we need to make a strict distinction and avoid cutting off all-out exchanges with foreign countries. How to find the best balance between prevention and control of the epidemic and personnel exchanges will become a difficult problem for the Chinese government.

Beijing News: will the epidemic affect the status of Chinas global supply chain?

Liang Jianzhang: it will have an impact, but there will be no transfer within one or two months. Just imagine, if Chinas foreign exchange returns to the level before reform and opening up, what will be the state of the whole society and the level of economic decline? After decades of development, China has not easily occupied an important part of the world supply chain, but if in the future, entrepreneurs and marketing managers from all countries can not come to China, the connection between China and the world will be weaker and weaker. For example, if musk couldnt come to China at the beginning, or had to be quarantined for 14 days after he arrived in China, at the same time, his management team couldnt come, would there be a subsequent Tesla Shanghai Super factory? No country can afford to be isolated from the world. When other countries outside China China novel coronavirus pneumonia as a pandemic, China can not be alone. How to adapt to this possible prospect is a major challenge for China and a topic worth pondering.


If the measures are right, Chinas GDP can grow by 6%

It is suggested to introduce stimulus policies such as investment, encouraging and liberalizing childbearing

Beijing News: academician Zhong Nanshan recently judged that the epidemic could be basically controlled by the end of April. In this way, will the consumption of tourism, catering, etc., which has been severely damaged, have a retaliatory growth?

Liang Jianzhang: China is optimistic, but the world is not optimistic.

Beijing News: Although the domestic epidemic has been gradually effectively controlled, the domestic economy is still under pressure. At the end of last year, you are still discussing how to maintain the growth of 6% of GDP. Do you think that 6% can still be maintained this year?

Liang Jianzhang: Chinas GDP still needs to maintain a certain speed of growth. Because our per capita income is only one sixth of that of the United States, it is impossible to grow 2% - 3% like that of the United States, which is unacceptable. If we grow at this rate, we will never catch up with the United States. However, if measures are in place, a 6% growth rate is entirely possible.

Beijing News: what measures do you think should be taken?

Liang Jianzhang: the Chinese government can introduce some policies to stimulate the economy, such as restoring normal economic and social order in areas outside Hubei as soon as possible, launching various policies to support enterprises to tide over difficulties, increasing land supply and infrastructure construction in large cities, and encouraging the opening of childbearing and other measures. These policies can help Chinas economy recover as soon as possible, and reduce the risk of social instability such as enterprise bankruptcy and employee unemployment.

Beijing News: at present, the government has launched a number of measures to reduce taxes and fees for resumption of production. Is this what you call a stimulus policy?

Liang Jianzhang: This is a short-term measure for the epidemic period, not a stimulus policy.

Beijing News: what do you mean by stimulus policy?

Liang Jianzhang: the policies that need to spend money on investment and encourage the liberalization of childbearing are stimulus policies.

Beijing News: where to invest money?

Liang Jianzhang: spend money to invest in the expansion of large cities, which is the only measure that can get better returns and will not form bad debts. Chinas urbanization process is still going on. In the past, small towns were built in many small cities, resulting in a large number of bad debts, proving that it is still more effective in large cities.

Beijing News: how large cities do you mean?

Liang Jianzhang: thats what we often call the first and second tier cities. Although Beijing, Shanghai and other cities have many restrictions on housing prices, increasing land supply and building more houses can alleviate the high housing prices. If the newly built houses can be preferential for families with multiple children, many housing problems such as Beipiao and hupiao will be solved.

Beijing News: so, why do you suggest that we encourage birth control?

Liang Jianzhang: population is a long-term problem. With the continuous decline of birth rate, it will reach a more dangerous level in the future. In the past, the biggest advantage of Chinas economic development was the advantage of population scale, but now this advantage is being lost. Therefore, as a long-term problem, the population problem must be solved now, and it is impossible to generate a large number of young people at once when they want to solve it. At present, in order to improve the fertility rate, the government is also making some active supporting policies.

Its hard to say that the impact of this epidemic on fertility rate is positive or negative. On the one hand, many people are isolated at home, on the other hand, we are facing great economic pressure, so its difficult to judge in the short term.

Beijing News: what supporting measures need to be introduced?

Liang Jianzhang: first of all, we should encourage the liberalization of childbearing, and then we should introduce some encouraging policies. The investment in human resources needs some investment, which can be made in the form of tax reduction, or in the form of increasing the development of infant and child industries, etc., as well as in the expansion of large cities to provide preferential housing for families with multiple children.


The recovery of tourism industry in China is faster than that in the world

Continue to support HNA and hope it can survive

Beijing News: on the evening of February 29, HNA Group suddenly announced that it was taken over by the government and elected a new board of directors. What is the status of cooperation between Ctrip and HNA? Will it be affected?

Liang Jianzhang: Although HNA is faced with liquidity risk, Ctrip keeps close cooperation with HNA, because it involves many links such as how customers continue to use HNA. It has to be said that HNA is an excellent airline, especially making great contributions to international exchanges. We believe that HNAs current operation is more focused on the main business of aviation and is developing in a good direction. However, the epidemic has affected HNAs cash flow. We hope that HNA can survive with the help of the government. We will continue to maintain cooperation with HNA and continue to support HNA.

Beijing News: what is the impact of the epidemic on Ctrip?

Liang Jianzhang: if the epidemic is well controlled, the domestic market will gradually recover, but the international business may be hit due to the uncertainty of the epidemic. At present, other countries have relatively strict restrictions on the entry and exit of Chinese people, and the whole industry will be greatly impacted.

Beijing News: which countries or regions are the most intensive among the cancelled Ctrip international orders?

Liang Jianzhang: at present, with the development of the epidemic, orders have been cancelled in Asia, Japan, South Korea, the United States, Europe, etc., so the overall situation is now a complete cancellation. Beijing News: if there is no new order, how does Ctrip deal with it? Liang Jianzhang: Ctrips cash flow is still abundant, and there is no problem at present, but the whole industry will encounter great problems. We will launch a recovery plan for the whole industry in March, and formulate detailed response measures at each stage to meet the challenges.

Beijing News: you wrote an internal letter to all employees of the company during the SARS period in 2003, mentioning that Ctrip will be better after SARS. So, will you still think of this new outbreak?

Liang Jianzhang: when SARS happened, we were confident that we could control it and the market would recover quickly. I still think this epidemic situation can be controlled, but the market recovery may not be as fast as the SARS period. The market share of Ctrip in SARS is still relatively small. After the recovery of the epidemic, it has gained a higher growth. At present, Ctrip has occupied a large share of the market and relies more on the recovery of the whole industry. Therefore, we still need to be clear that it is impossible for the market to soar as much as it did after the end of SARS. We still need to be prepared for a period of hard fighting.

Beijing News: how long do you expect the tourism industry to recover?

Liang Jianzhang: in the long term, it will recover, but this epidemic will be more difficult than SARS, and there will be some resistance in the short term. This is a global epidemic, which has a huge impact on the global tourism industry. In particular, different measures taken by different countries will hinder international tourism. For China, under the background of Sino US trade frictions, if China is decoupled from the world economy, the risk will further increase. We should work together to avoid extreme situations.