What will be China's priority in pursuing high-quality development over the next five years
"Supply-side structural reform", "strategy to expanding domestic demand", etc.
Welcome to another post about the tutorial readings on the Party's 20th National Congress. I am aware that not all of you enjoy reading articles like this, but the tutorial reading series is likely the only readily available collection of in-depth articles written by senior Chinese officials outlining the rationale for China's development strategies and how the nation intends to accomplish the goals outlined in the report to the recently held 20th CPC National Congress, so they are worth a look.
A key theme of the report is 全面建成社会主义现代化强国 building a modern socialist country in all respects. According to the report, China will adopt a two-step strategic plan to achieve this goal:
To build China into a great modern socialist country in all respects, we have adopted a two-step strategic plan:
• Basically realize socialist modernization from 2020 through 2035
• Build China into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful from 2035 through the middle of this century
In the report, it was made clear that pursuing high-quality development is positioned as the first and foremost task for building a modern socialist country in all respects and development is the Party’s top priority in governing and rejuvenating China:
To build a modern socialist country in all respects, we must, first and foremost, pursue high-quality development. Development is our Party’s top priority in governing and rejuvenating China, for without solid material and technological foundations, we cannot hope to build a great modern socialist country in all respects. We must fully and faithfully apply the new development philosophy on all fronts, continue reforms to develop the socialist market economy, promote high-standard opening up, and accelerate efforts to foster a new pattern of development that is focused on the domestic economy and features positive interplay between domestic and international economic flows.
The report continued by pointing out that, in order to achieve high-quality development, it is necessary to integrate the implementation of the strategy to expand domestic demand with efforts to deepen supply-side structural reform:
Pursuing high-quality development as our overarching task, we will make sure that our implementation of the strategy to expand domestic demand is integrated with our efforts to deepen supply-side structural reform; we will boost the dynamism and reliability of the domestic economy while engaging at a higher level in the global economy; and we will move faster to build a modernized economy. We will raise total factor productivity, make China’s industrial and supply chains more resilient and secure, and promote integrated urban-rural development and coordinated regional development, so as to effectively upgrade and appropriately expand China’s economic output.
So what will China do to combine efforts to deepen supply-side structural reform with the implementation of its strategy to increase domestic demand, particularly over the next five years, and what specific task must be completed by the nation's economic work in order to achieve high-quality development?
Today's reading -- an abridged translation of Chinese Vice Premier Liu He's article titled "Integrate the Implementation of the Strategy to Expand Domestic Demand with China’s Efforts to Deepen Supply-side Structural Reform" 把实施扩大内需战略同深化供给侧结构性改革有机结合起来 and the article titled "High-quality development is the overarching task for building a modern socialist country in all respects" 高质量发展是全面建设社会主义现代化国家的首要任务 by He Lifeng, vice chairman of the National Committee of the Chinese People's Political Consultative Conference and head of the National Development and Reform Commission, may offer some clues.
Liu He announced the award decision in the annual National Science and Technology Award Conference at the Great Hall of the People in Beijing, capital of China, November 3, 2021. (source: Xinhua)
He Lifeng attends an interview via video link after the opening meeting of the fifth session of the 13th National People's Congress (NPC) in Beijing, capital of China, March 5, 2022. (source: Xinhua)
The two articles were published in one of the recently published books bearing the name 辅导读物 Tutorial Readings. In most cases, immediately after a plenary session of a CPC Central Committee or key events such as the Party's National Congress, such tutorial readings will be published, as it is usually put, to help people learn and implement the spirit of the certain event.
The two articles each have three parts and a beginning introduction. The introduction and the third section, which discusses the goals and tasks for the following five years, were retained in the translation by GRR. The sections left out mostly deal with the context, past accomplishments, and requirements of the tasks.
Ginger River has created a page on Substack including all the essential links and documents he collected about the Party’s 20th National Congress. You could visit the page and download the documents including the English version of the Constitution of the Communist Party of China (AMENDMENT) with every single change marked by GRR and Vice Chairman of China's Central Military Xu Qiliang’s article on how China will fulfill the goals for the centenary of the People’s Liberation Army in 2027.
Please note that the selection of the articles and this post do not represent any official document or views, as this is just a personal newsletter. If you find any errors, please send us an email: firstname.lastname@example.org.
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Integrate the Implementation of the Strategy to Expand Domestic Demand with China’s Efforts to Deepen Supply-side Structural Reform
The Report to the 20th National Congress of the Communist Party of China (CPC) called for integrating the implementation of the strategy to expand domestic demand with China’s efforts to deepen supply-side structural reform. It is a major strategic measure made by the CPC Central Committee in light of the changes in domestic and international landscapes as well as the missions and tasks of the CPC on the new journey in the new era. The measure is significant for giving full play to the economic strength of a major country, accelerating the creation of a new development pattern, pursuing high-quality development, and building a modern socialist country in all respects in the period ahead. We should have a thorough understanding of the historical logic, background and practical requirement of the decision and plan, and drive China’s economy to sail steadily into the future and reach a higher level.
III. The main task of integrating the implementation of the strategy to expand domestic demand with China’s efforts to deepen supply-side structural reform
The next five years will be crucial for getting our efforts to build a modern socialist country in all respects off to a good start. We must take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as our guide, continue to pursue economic development as the central task, remain committed to reform and opening up, and find the right ways to integrate the implementation of the strategy to expand domestic demand with our efforts to deepen supply-side structural reform, implement targeted policies in a systematic and effective manner, accelerate the creation of a new development pattern, and boost the dynamism and reliability of the domestic economy while engaging at a higher level in the global economy.
(I) Focus on promoting the positive interplay between domestic and international economic flows. China has the strengths of a enormous market that not only can stabilize and expand the fundamentals of the domestic economy but also leverage and drive the international economic flows. We must effectively tap into the potential of domestic demand, build a unified national market, and remove barriers that hinder the development of the domestic economy. We must put emphasis on achieving the economic flows at an intermediate level, especially under extreme circumstances. We must promote high-standard opening up, put to good use the role of opening up in creating more room for economic flows, deeply involve ourselves in the global industrial division of labor and cooperation, endeavor to preserve the diversity and stability of the international economic landscape and economic and trade relations, and interact with the outside world positively. We must continue to expand opening up based on flows of goods and factors of production, attract global high-quality production factors and products, such as capital, technologies, and talents, and break down the external containment and suppression against China. We must give full play to China’s fairly complete industrial system and leadership in several industries in the world, actively participate in optimizing the layout of global and regional industrial and supply chains, and build closer economic ties. We will steadily expand institutional opening up with regard to rules, regulations, management, and standards. Under the premise of coordinating opening up and security, we will further align ourselves with high-standard international economic and trade rules,and foster a world-class business environment that is market-oriented, law-based, and internationalized. We will implement the strategy of upgrading pilot free trade zones, consolidate and expand multilateral and bilateral economic and trade relations, and improve the level and quality of trade and investment cooperation.
(II) Focus on maintaining the macroeconomic stability. The economy may experience cyclical fluctuations, but we must avoid violent ups and downs. In the long term, the stability and continued growth of the macro economy will play an important and fundamental role in building China into a modern socialist country in all respects. We will step up and improve macro regulation, and implement cross-cyclical and counter-cyclical adjustments of macro policies. We will strengthen expectation management, boost the transparency, credibility and professional level of macro policies, and strive to move before the market changes. We will give full play to the strategic guidance of national development plans, and enhance coordination between fiscal and monetary policies. We will work to expand domestic demand, better leverage the fundamental role of consumption in stimulating economic growth and the key role of investment in improving the supply structure, and continually unleash the massive consumption and investment potential in the modernization drive.
(III) Focus on enhancing the vitality of micro market-entities. China’s economy is going through a structural reform, which is a complex market-based experiment and a trial-and-error process. To boost the resilience and efficiency, we must encourage entrepreneurship and stimulate the vitality and creativity of enterprises. We must uphold and improve China’s basic socialist economic systems, deepen reform of state-owned capital and state-owned enterprises (SOEs), accelerate efforts to improve the layout of the state-owned sector and adjust its structure, and enhance the core competitiveness of SOEs. We will provide an enabling environment for private enterprises, and facilitate the growth of the private sector. We will put in place a high-standard market system, and refine the systems underpinning the market economy, such as those for property rights protection, market access, fair competition, and social credit. We will improve the modern corporate system with distinctive Chinese features, and move faster to help Chinese companies become world-class outfits. We will set up “traffic lights” for capital, and conduct law-based regulation and guidance to promote the healthy development of capital.
(IV)Focus on raising total factor productivity. Total factor productivity refers to the overall efficiency of factors between inputs and outputs. It determines how much of the economic development is driven by internal forces and the level of its potential growth rate. Total factor productivity essentially reflects the quality of factors such as technologies and talents as well as the efficiency of resource allocation. We will continue to give high priority to the development of education, build China’s self-reliance and strength in science and technology, and rely on talent to pioneer and to propel development. We will boost China’s strength in strategic science and technology, enhance basic scientific and technological capacity, and achieve breakthroughs in core technologies in key fields. We will enhance the quality of education and speed up the development of world-class universities and strong disciplines with Chinese features. We will improve the strategic distribution of human resources, focus on producing first-class innovators, and strive to build up our comparative strengths in global competition for talent. We will reinforce the principal role of enterprises in scientific and technological innovation, and support enterprises that use special and sophisticated technologies to produce novel and unique products. As the population exhibits new trends of change over the mid and long-term, we will improve the population development strategy, and establish a policy system to boost birth rates. In the face of a pressing need for financial restructuring, we will deepen structural reform in the financial sector, improve the functions of the capital market, and increase the proportion of direct financing.
(V) Focus on making China’s industrial and supply chains more resilient and secure. In response to some countries’ attempt to decouple China from global industrial and supply chains, we will work faster to shore up weaknesses in sectors vital to China’s development security, especially in basic software, core hardware, and basic raw materials. We will promote proprietary intellectual property rights as well as the continuation and substitution, so that we can ensure industrial and supply chains stay open and stable. In pursuing economic growth, we will continue to focus on the real economy, consolidate our leading position in industries where we excel, and move the manufacturing sector toward higher-end, smarter, and greener production. We will build a new system of efficient and high-quality services, accelerate the development of the digital economy, and cultivate new growth engines. Global industrial and supply chains are significant public goods for the international community, and we would like to safeguard their security and stability with other countries.
(VI) Focus on promoting integrated urban-rural development and coordinated regional development. The modernization drive inevitably brings about profound adjustments in the urban-rural and regional structure and tremendous changes in the territorial space layout. This is a process of unleashing massive demands and generating huge supplies. We will thoroughly implement the coordinated regional development strategy, major regional strategies, the functional zoning strategy, and the new urbanization strategy. We will improve the distribution of the major productive forces, and develop a regional economic layout and a territorial space system that complement each other’s strengths and promote high-quality development. We will leverage the role of city clusters and metropolitan areas to promote coordinated development of large, medium, and small cities, abide by the objective law of economic development, and see that all sorts of production factors gravitate toward areas with advantages. We will develop infrastructure and public services in rural areas in a well-planned and coordinated way and build a beautiful and harmonious countryside that is desirable to live and work in. We will move faster to build a housing system featuring multiple suppliers and various channels of support that encourages both housing rentals and purchases.
(VII) Focus on preventing and resolving systemic risks. In economic and financial sectors, major risks root in a serious imbalance and mismatch between supply and demand as well as an impeded flow. Preventing and resolving risks integrate the strategy to expand domestic demand with the supply-side structural reform. Preventing and resolving risks requires addressing both the symptoms and root causes. We will strengthen macro regulation, especially demand-side management. We must seize the main risk, step up in liquidity injection and expectation management, and properly deal with the relationship between preventing systemic risks and moral risks. At the same time, we will push ahead with supply-side structural reform, speed up the transformation of development model, build up governance capacity, optimize the functions of the financial system, improve the efficiency of capital and resource allocation, create a virtuous cycle for science and technology, industries, and finance, and reach a higher level of supply-demand balance so that we can prevent and resolve systemic risks on robust and healthy economic fundamentals.
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High-quality development is the overarching task for building a modern socialist country in all respects
In the Report to the 20th CPC National Congress, General Secretary Xi Jinping emphasized that “To build a modern socialist country in all respects, we must, first and foremost, pursue high-quality development. Development is our Party’s top priority in governing and rejuvenating China, for without solid material and technological foundations, we cannot hope to build a great modern socialist country in all respects.” As China’s economy has shifted to a high-quality development stage, pursuing high-quality development must become the overarching task of economic and social advances. Pursuing high-quality development is a natural requirement for complying with the law of economic development and maintaining continued and healthy economic growth. It is a natural requirement for adapting to the changes in the principal contradiction facing Chinese society and addressing the problem of unbalanced and inadequate development. It is also a natural requirement of effectively preventing and resolving all sorts of major risks and challenges and advancing the rejuvenation of the Chinese nation on all fronts through a Chinese path to modernization. On a new journey to build China into a modern socialist country in all respects and advance toward the second centenary goal, we should carefully study and understand the profound meanings and the practical requirement of high-quality development, fully implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, resolutely align our thinking and action with the decisions and plans of the CPC Central Committee with Comrade Xi Jinping at its core, and truly implement the requirements of pursuing high-quality development throughout the whole process and all sectors of economic and social development.
III. Uphold the overarching task of high-quality development in carrying out economic work
The next five years will be crucial for getting the efforts to build a modern socialist country in all respects off to a good start. The 20th CPC National Congress made strategic arrangements for accelerating the creation of a new development pattern and pursuing high-quality development. We should carefully implement these arrangements and put our emphasis on the following aspects.
(I) Focus on creating a new development pattern. We will integrate the implementation of the strategy to expand domestic demand with our efforts to deepen supply-side structural reform, and boost the dynamism and reliability of the domestic economy. We will stick to the strategic basis of expanding domestic demand, better leverage the fundamental role of consumption in stimulating economic growth and the key role of investment in improving the supply structure, and work faster to build a strong domestic market. We will deepen the supply-side structural reform, put more effort into improving the quality of the supply system and facilitating economic flows, and create a dynamic balance at a higher level where demand and supply can boost each other. While actively expanding domestic demand, we will strive to stabilize external demand and engage in the global economy at a higher level.
(II) Focus on raising total factor productivity. We will fully implement the strategy for invigorating China through science and education, the workforce development strategy, and the innovation-driven development strategy, and give high priority to the development of education, build China’s self-reliance and strength in science and technology, and rely on talent to pioneer and to propel development. We will further strengthen basic research, and application research, promote the application of scientific and technological advances, and resolutely make breakthroughs in core technologies in key fields. We will strengthen the institutional support for scientific and technological innovation, optimize the ecosystem and the stimulation and guide mechanism for innovation of enterprises, make proactive investments in major national scientific infrastructure as appropriate, accelerate the building of high-level innovation platforms, and create regional innovation hubs. We will continue to optimize the allocation of production factors, such as labor, capital, land, and resources, and keep raising total factor productivity. We will build a modern industrial system with high-quality and high efficiency and a multi-later innovation system, open up new areas and new arenas in development, and foster new growth drivers and new strengths
(III) Focus on making industrial and supply chains more resilient and secure. We will attach more importance to the resilience and competitiveness of industrial chains, and work to build industrial and supply chains that are independently controllable as well as secure and reliable. We will intensify China’s strength in product quality and upgrade foundational industrial infrastructure, move faster to develop advanced manufacturing clusters, expand strategic emerging industries, such as intelligent manufacturing, life and health, and new materials. We will make the digital economy grow bigger, get stronger, and do better. We will intensify the digital transition of traditional industries and promote the innovative development of digital industries. We will implement the strictest farmland protection system, adhere to self-reliance in agricultural science and technology, consolidate the foundation for stabilizing and increasing grain production, and safeguard national food security. We will continuously improve the new production, supply, storage, and marketing system for energy such as petroleum, natural gas, coal, and electricity, and defend energy security and strategic minerals.
(IV) Focus on promoting integrated urban-rural development and coordinated regional development. We will fully implement the rural revitalization strategy, accelerate the building of the industrial system, the production system, and the operating system in the modern agricultural sector, and speed up to modernize agriculture and rural areas. We will advance people-centered new urbanization, work faster to grant urban residency to rural people who have moved to cities, optimize the spatial layout of urbanization, and further improve the system and mechanism for integrating urban-rural development. We will thoroughly implement the coordinated regional development strategy, major regional strategies, the functional zoning strategy, and the new urbanization strategy, and develop a regional economic layout and a territorial space system that complement each other’s strengths and promote high-quality development. We will promote coordinated development in the Beijing-Tianjin-Hebei region, the development of the Yangtze Economic Belt, the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, the integrated development of the Yangtze River Delta, and ecological conservation and high-quality development in the Yellow River basin. We will provide greater support for the development of regions with special features and seek a relative balance in development.
(V) Focus on building a high-standard socialist market economy. We must unswervingly consolidate and develop the public sector and unswervingly encourage, support, and guide the development of the non-public sector. We will work to see that the market plays a decisive role in resource allocation and that the government better plays its role. We will create an enabling environment with policies and systems in place to enhance the core competitiveness of state-owned enterprises (SOEs), facilitate the growth of the private sector, and support the development of micro, small, and medium enterprises, emboldening SOEs, private enterprises and foreign investors. We will deepen reforms to streamline government administration, delegate power, improve regulation, upgrade services, and foster a world-class business environment that is market-oriented, law-based, and internationalized. We will put in place a high-standard market system, advance reforms for the market-based allocation of production factors, and move faster to build a unified national market that is standard and highly efficient, fair for competition, and fully open. We will advance market-based reforms in competitive parts of public utilities, such as energy, railways, and telecommunications. We will set up “traffic lights” for capital, intensify effective supervision of capital in accordance with the law, and conduct law-based regulation and guidance to promote the healthy development of capital.
(VI) Focus on promoting the high-standard opening up. We will continue to deepen opening up in the flow of production factors, such as goods, services, capital, and talent, steadily expand institutional opening up with regard to rules, regulations, management, and standards, leverage the strengths of China’s enormous market, and attract global resources and production factors. We will upgrade trade in goods, develop new mechanisms for trade in services, upgrade pilot free trade zones, work faster to develop the Hainan Free Trade Port, support the development of cross-border e-commerce and overseas warehouses, strengthen in attracting foreign investment, promote the implementation of major foreign investment projects, continually improve the security review mechanism on foreign investment, deepen bilateral, multilateral, and regional cooperation, promote the high-quality development of the Belt and Road Initiative, and build an open economy that is mutually beneficial, diverse, balanced, secure, and efficient.
(VII) Focus on pursuing green and low-carbon development. We will properly handle the relationship between development and carbon reduction, promote the goals of reaching peak carbon emissions in a coordinated and orderly way, implement the carbon neutrality action plan, improve the control over the amount and intensity of energy consumption, actively promote cleaner and more efficient use of coal, and speed up the planning and development of the absorption and storage system of new energy sources. We will improve the economic system featuring green, low-carbon, and circular development, enhance the all-round green transition of economic and social development, adjust and improve the industrial structure, the energy mix, and the composition of the transportation sector, implement a comprehensive conservation strategy, encourage green consumption, and promote green and low-carbon ways of production and life. We will take a holistic and systematic approach to the conservation and improvement of mountains, waters, forests, farmlands, grasslands, and deserts, and carry out major projects for preserving and restoring key ecosystems at a faster pace, as well as major biodiversity protection projects. We will intensify pollution prevention and control, and do more to modernize the environmental governance system.
(VIII) Focus on raising people’s quality of life. We will do everything within our capacity and strengthen the development of people’s wellbeing that is inclusive, fundamental and basic. We will implement the employment-first strategy, increase the employment capacity, and improve the quality of employment. We will promote common prosperity in high-quality development, increase the incomes of low-income earners, expand the size of the middle-income group, and promote equality of opportunity. We will improve the multi-tiered social security system that covers the entire population in urban and rural areas and see that it is fair, unified, reliable, well-regulated, and sustainable. We will move faster to build a high-quality educational system and a health system that provides comprehensive lifecycle services, accelerate high-quality and balanced development in compulsory education, as well as urban-rural integration, and improve the public health system. We will pursue a proactive national strategy in response to population aging and promote balanced population development in the long term. Enditem
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