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A Big Step towards High-quality Development

- China’s 2017 Economic Highlights in Review

Submit Time:27-02-2018 | Zoom In | Zoom Out

Author:Hu Angang, Zhang Xin | Source:People’s Daily (January 22, 2018)

Abstract:

The report to the 19th National Congress of the Communist Party of China clearly points out that China’s economy has been transitioning from a phase of rapid growth to a stage of high-quality development. 2017 is an important year of implementing the Thirteenth Five-Year Plan and a year of deepening supply-side structural reform. It can be said that the biggest highlight of China’s economy in 2017 was that gradual stabilization of transformation and development trends and a big step towards high-quality development. 

Economic growth beyond expectations laid a solid foundation for securing a decisive victory in building a moderately prosperous society in all respects. In 2017, China’s GDP growth rate was 6.9%, ranking high among the world’s main economies, notably higher than developed economies such as the United States, the European Union, Germany, Britain and Japan and higher than emerging market countries such as India, Indonesia and Turkey. China’s 2017 GDP reached 82.7 trillion yuan. According to calculation based on the constant price, China’s 2017 GDP is 4.54 times that of 2000, far beyond the goal of quadrupling the 2000 GDP by 2020 set forth in the report to the 16th National Congress of the Communist Party of China, completing the goal of doubling the 2010 GDP by 2020 set forth in the report to the 18th National Congress of the Communist Party of China by 83.2%. As long as the annual average economic growth rates remain above 6.3% in the next three years, this goal can be reached. The 2017 per capita GDP is 4.13 times that of 2000, realizing the goal of quadrupling the 2000 per capita GDP by 2020 set forth in the report to the 17th National Congress of the Communist Party of China three years in advance and laying a solid foundation for securing a decisive victory in building a moderately prosperous society in all respects. 

Economic returns kept improving, and shifting of economic driving forces was accelerating. Enterprises’ profit kept increasing and was shifting towards quality and performance. From January to November 2017, the profit of industrial enterprises above the designated size increased by 21.9% over the same period in 2016, and the business profit growth rate of service enterprises above the designated size was as high as 30.4%; in 2017, the profit of central enterprises exceeded 1.4 trillion yuan for the first time, 15.2% more than 2016, and the increase and growth rate of economic returns were both at the best levels in five years, playing a major role in deleveraging; as of the end of November 2017, the asset-liability ratio of industrial enterprises above the designated size was 55.8%, a decrease of 0.5 percentage points on a year-to-year basis. The quality of economic development was gradually improving, while shifting of driving forces behind economic growth was accelerating. First, consumption played a main role in driving economic growth. In 2017, final consumer spending contributed to 58.8% of the GDP growth. Second, investment maintained steady growth, and the structure was further improved. In 2017, national fixed asset investment increased by 7.2%, infrastructural investment increased by 19.0% and investment in the high-tech manufacturing sector increased by 17% over 2016. From January to November, investment in social areas such as medical care, old-age care, education, culture and sport increased by 17%. Third, the export structure kept improving, and the main exporters changed from labor-intensive enterprises to technology-intensive ones. In 2017, exports of electromechanical products accounted for 58.4% of the total export volume, and high-speed railways, ocean equipment, nuclear power equipment, satellites, etc. became China’s new advantageous export sectors. In view of these statistics, consumption and the high-tech industry have become the main driving forces behind China’s economic development, playing an increasingly prominent role in stabilizing the macro economy and improving the wellbeing of the people. 

First-mover science and technology advantages were shaped, and the industrial structure shifted faster towards mid and high ends. According to the World Intellectual Property Organization’s Global Innovation Index Report, China’s global innovation index ranking rose from the 34th place in 2012 to the 22nd place in 2017. In 2017, the number of Chinese applications for patents for invention was 1.382 million, continuing to rank first in the world; the number of applications for Patent Cooperation Treaty (PCT) patents was 51,000. Director General of the World Intellectual Property Organization Francis Gurry thinks “China is gradually becoming a leader in global innovation and brand shaping.” In the cutting-edge science and technology field of artificial intelligence where various countries in the world are competing fiercely, China is already on the same footing with the United States. According to the statistics of Elsevier, one of the largest literature publishers in the world, from 2012 to 2016, the top 100 artificial intelligence research institutions included 30 from the United States, 15 from China and only 1 from Japan. The Chinese Academy of Sciences ranks third in terms of the number of cited papers in this field. Besides, in the fields of basic physics, stem cells, nano research, aeronautics and astronautics, deep sea, deep underground, supercomputers, the space-ground integrated network, quantum communication and quantum computers, brain science and brain-like intelligence research, China has built or is building first-mover advantages, and the rate of contribution by science and technology progress keeps increasing. As innovation’s role in supporting development becomes more obvious, China’s mid- and high-end sectors are growing faster. In 2017, the added value of the high-tech industry and equipment manufacturing industry grew by 13.4% and 11.3% respectively, much faster than industrial enterprises above the designated size. The implementation of the “Made in China 2025” strategy achieved notable results. Advanced railway equipment represented by “Fuxing”, third-generation nuclear power technology represented by “Hualong One” and other high-end equipment manufacturing sectors reached leading international standards and entered international high-end markets successfully; in 2017, China’s output of industrial robots exceeded 120,000, 68.1% more than 2016 and ranking first in the world; the successful first flight of the airliner C919 and other major milestone industrial innovations kept emerging, showing China’s manufacturing industry was developing towards mid and high ends of the value chain faster and building China into a manufacturer of quality faster. 

The digital economy accumulated new momentum and created new digital dividends. China has become the world leader in mobile payment with the largest number of digital users. As of June 2017, the number of Chinese Internet users reached 751 million, accounting for one fifth of the world total, the Internet penetration rate was 54.3%, and the number of mobile Internet users reached 724 million. China has built the largest 4G network in the world, the average user-experienced speed being 13.5 Mbps. In 2017, China’s global network speed ranking edged up more than 50 places to the 23rd place in the world. Accumulation of the digital economy’s new momentum created three digital dividends. The first is the dividend of consumption growth. China’s mobile payment transactions have exceeded 81 trillion yuan, the highest in the world. In 2017, China’s online retails amounted to 7.18 trillion yuan, 32.2% more than 2016 and more than 20 percentage points higher than the growth rate of total social consumer product retails, showing the digital economy had greatly boosted market consumption. The second is the dividend of the digital economy. The “Internet+” action and national big data strategy has been promoted in depth, and emerging industries driven by digital technologies such as the Internet, cloud computing and big data have become new pillar industries of the economy. The third is the dividend of digital employment and entrepreneurship. It has directly created a lot of jobs, propelled explosive growth of new consumption models such as online medical care, online education and takeout food and become a veritable new area of economic growth. 

The reforms in the business sector released institutional dividends and built the largest “entrepreneurship power” in the world. The reforms in the business sector implemented after 2014 brought notable institutional dividends to investment and entrepreneurship. As of September 2017, China had 29.0723 million enterprises in total with 274.31 trillion yuan in registered capital, 3.4 times the GDP, having become the country with the most industrial capital in the world. Among them, there were 26.0729 million private enterprises, accounting for 89.7% of the total number of enterprises, with 165.38 trillion yuan in registered capital, accounting for 60.3% of the total registered capital. China has become the largest “corporate power” in the world. The good business environment and innovation and entrepreneurship environment brought about an unprecedented surge of overseas students returning to China, with the proportion and average annual number of returned overseas students being above 80% and 400,000 respectively; an unprecedented surge of foreign students coming to China also emerged, with the average annual number of foreign students coming to China being above 400,000 and the average annual number of experts and technological talents visiting China being above 900,000. China is becoming an important country attracting talents in the world. According to a survey by the United States’ Pew Research Center, China’s global popularity is gradually catching up with that of the United States. 

People’s wellbeing was ensured and improved in the development of China, one of the countries with the most newly created jobs and fastest increase in residents’ income in the world. Employment is pivotal to people’s wellbeing. China has always been the country with the most newly created jobs in the world and one of the few countries having realized the goal of full employment (the unemployment rate is below 5%). Since the outbreak of the international financial crisis, high unemployment rates have been the biggest challenge facing the world. At present, the global unemployment rate is still around 5.8%, and more than 200 million people are unemployed. From January to October 2017, China created 11.91 million urban jobs beyond the expected employment goal of creating more than 11 million new jobs in the year set at the beginning of the year, and the registered urban unemployment rate remained below 4% in line with the expected goal of keeping it below 4.5% in the year. Income increases brought the realest sense of fulfillment to people. In 2017, Chinese residents’ per capita disposable income increased by 7.3% in real terms, and urban residents’ and rural residents’ per capita disposable income increased by 6.5% and 7.3% in real terms respectively. Residents’ income continued to grow faster than the economy, and China continued to be one of the countries with the fastest increase in residents’ income in the world. The reform of the household registration system kept deepening. On the basis of the 16 million rural residents who were registered as permanent urban residents in 2016, it is expected that 13 million more would become registered permanent urban residents in 2017. The proportion of registered permanent urban residents will keep increasing. 

Notable effect of ecological advancement propelled decrease in global carbon emissions. The goals of energy conservation and emission reduction were realized. In 2017, the energy consumption per unit of GDP dropped 3.7% over 2016, exceeding the obligatory target of a 3.4% decrease in the year; emissions of main pollutants kept decreasing. It is expected that the decreases in emissions of the four main pollutants (COD, ammonia nitrogen, sulfur dioxide and NOx) will all exceed the obligatory targets for the year. Ecological product production capacity has improved notably. In the past five years, the environmental protection equipment manufacturing sector’s output value grew by more than 20% on average. In 2017, China with a forest coverage rate of 21.66% became one of the countries with the fastest growing forest resources in the world. According to the China Special Report of the World Energy Outlook 2017 released by the International Energy Agency, China’s energy structure gradually shifted towards clean power generation and relied more and more on renewable energy, natural gas and electricity, and demand for coal kept decreasing. This means that China will enter the green energy era and boost decrease in global carbon emissions. 

China provided an important driving force for world economic development, and played a leading role in world economic and trade recovery. China’s economic highlights were also world economic highlights. In 2017, China continued to provide an important driving force for world economic development and play a leading role in world economic and trade recovery. In 2017, the world economic growth was the most robust since the outbreak of the international financial crisis thanks to the Chinese economy. It is expected that the world economic growth rate will rise from 3.1% in 2016 to 3.5% in 2017 while the proportion of China’s GDP to the world GDP will rise from 14.8% in 2016 to 15.3% in 2017 and the rate of its contribution to world economic growth will reach about 35%. In 2017, China’s total imports and exports increased 14.2% over 2016, reversing the trend of decrease for two consecutive years. It is expected that China’s share of imports and exports of goods to the world total will rise from 11.45% in 2016 to 12.71% in 2017, contributing to more than 45% of the world trade growth and boosting recovery of the global import and export market. 

China’s stability means the world’s stability, China’s progress means the world’s progress, and China’s good means the world’s good. China was never so close to the center of the world stage like today and was never such a source and anchor of world economic growth like today. The central economic work meeting held at the end of last year clearly pointed out that promoting high-quality development should be a fundamental requirement for determining thoughts on development, formulating economic policies and implementing macro control at present and in the days to come. In 2017, China’s economy took a solid step on the road to high-quality development. 

(Author’s Employer: Tsinghua University)


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