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A Solid Foundation for the General Trend of Chinese Economy of Maintaining Stability with Improvement

Submit Time:19-09-2018 | Zoom In | Zoom Out

Author:Guo Wei | Source:Guangming Daily (August 08, 2018)


  Recently, the Political Bureau of the Central Committee of CPC called a meeting, to analyze and study the current economic situation, and arrange the economic work for the second half of the year. The communiqué of this meeting continued the consistent style of recent years, with short length and rich content. It pointed out the epistemology and methodology for the current problems from the perspective of the unification of strategy and tactics and the combination of short and long terms. The meeting pointed out: “this year, all regions and departments followed the deployment of the CPC Central Committee, adhered to the general tone of work to seek improvement in stability and speeded up the pace of reform and opening up”, this indicated that in the first half of the year, the economic achievements were made in seeking improvement in stability, and the statement “in the first half of the year, the economy maintained a good momentum of the overall stability with improvement” is the overall judgment and summary of the economic development situation for the past six months, and there is a solid foundation for the overall trend of the Chinese economy of “stability with improvement”.  

  From the perspective of economic growth rate, the foundation of China's steady economic growth has been further consolidated, and the characteristics of steady growth are becoming increasingly prominent. According to data from the National Bureau of Statistics, in the first half of 2018, the GDP grew by 6.8% year-on-year, the GDP growth rate has been kept in the range of 6.7% to 6.9% for 12 consecutive quarters, and the characteristics of stable growth are increasingly obvious.  

  From the point of view of economic structure optimization, consumption upgrade is advancing constantly, and investment structure is continuously optimized. In the first half of this year, the per capita consumption expenditure of all residents in China increased by 6.7% year-on-year. It is particularly worth noting that the sales of consumption-upgrading goods have been growing rapidly, while the service-oriented consumption has been growing rapidly, with its proportion of residents’ consumption keeping on rising, indicating continual consumption upgrading. Manufacturing investment increased by 6.8%, significantly better than the same period in 2016 and 2017, especially investment in high-tech manufacturing increased by 13.1% year-on-year, 7.1 percentage points faster than that of the total investment. Private investment increased by 8.4% year-on-year, 1.2 percentage points faster than that of the same period last year. The sustained recovery of private investment confidence is of long-term significance to the sustained and healthy development of the economy.  

  In terms of the effect of economic development, the national surveyed urban unemployment rate was 4.8% in June, down 0.1 percentage point from the same period last year. The surveyed unemployment rate in 31 big cities was 4.7%, down 0.2 percentage points from the same period last year. In the first half of the year, the per capita nominal disposable income of residents in the whole country rose by 8.7% year-on-year. The stable employment situation and the steady growth of residents’ income have strengthened the resilience of the national economy and laid a good foundation for advancing supply-side structural reform and adapting to changes of the domestic and overseas environment.  

  It can be seen that in the economic development in the first half of the year, major macro-control indicators were within a reasonable range, the economic structure continued to be optimized, initial results were achieved in preventing and resolving financial risks, and people's sense of gain, happiness and security were enhanced. Moreover, it was achieved under the conditions of deleveraging, strict supervision, risk control and structural adjustment, so it was really not easy. Therefore, the economic development in the first half of the year fully shows that the general tone of work to seek improvement in stability is scientific, the overall trend and foundation of China's economy of “stability with improvement” is solid, and the general tone of work to seek improvement in stability, as an important principle of governance, must be adhered to for a long time.  

  At the same time, the current economic operation is also changing in stability, facing new problems and challenges, and the external environment has changed significantly. The road ahead will not be plain sailing. New problems and challenges will come in different forms at different stages of development. It was pointed out in the report at the 19th National Congress of the CPC that: “Achieving national rejuvenation will be no walk in the park; it will take more than drum beating and gong clanging to get there. Every one of us in the Party must be prepared to work even harder toward this goal.” As for the current changes we face in stability, besides the domestic factors such as adjustment of new and old growth drivers is in a critical period, the traditional growth model is gradually declining, the supply and demand structural contradictions in the real estate market are prominent, and the real estate regulation faces a dilemma; the problems of tightening market liquidity and structure and financing difficulty and high cost for small and medium-sized enterprises has yet to be effectively solved; there has been an increase in enterprise credit default incidents, potential risks of local government debt in some regions have increased, and illegal disguised borrowing, all as problems in the economic fundamentals, the meeting emphasized more on the obvious change in the external environment, i.e. the China-US trade friction. To achieve the goal of “making America great again” and “America first”, the United States has regarded China as its biggest competitor. The previous Sino-US joint statement has clearly indicated the true intent of the United States to focus on competition in the manufacturing sector, and try to curb the development of China's manufacturing industry through trade protectionism, increasing tariffs and strengthening intellectual property protection, so as to restrict the medium and long-term economic growth motive force of China. The evolution of Sino-US relations and the resulting global economic and political situation will be more complicated, and become the decision-making basis and strategic focus of future policy formulation and implementation.  

  Stability does not mean inaction or irresponsibility, instead, we must strive to achieve something by properly maintaining stability, and by advancing, it means we must make efforts in critical areas and make progress in critical sectors. In the face of new problems and challenges at present, all areas and sectors should unify their thoughts and actions with the analysis and judgment of the CPC Central Committee on the current economic situation. In the second half of the year, the general tone of work to seek improvement in stability will be more firmly adhered to in stability with changes, to keep the economic operation within a reasonable range. We should strengthened overall planning and coordination, to form a joint force of policies, implement policies accurately and work in a steadfast and sophisticated manner. In the face of the complex situation in which the economy is stable with changes, it is necessary for China to maintain its strategic steadiness and remain committed for a long time to respond to all kinds of international challenges, and tightly grasp the initiative in the international competition.  

  First, the macro-control policy should be stable. In dealing with the complex situation of changes in stability, we must grasp the principal contradiction and take targeted measures to resolve it. New problems and challenges are more structural rather than cyclical. Therefore, our policies should be more forward-looking, flexible and effective. Stability is the keynote and the overall situation. Only under the premise of stability can we make progress in key areas. We will ensure to stabilize employment, finance, foreign trade, foreign capital, investment and expectations. The lawful rights and interests of foreign-invested enterprises in China should be well protected. We will continue to implement a proactive fiscal policy and a prudent monetary policy, and the fiscal policy will play a greater role in expanding domestic demand and structural adjustment. We should ensure that the total money supply is maintained in a reasonable and ample manner. We will take bolstering weak links as a key task in deepening the supply-side structural reform at present, make greater efforts to bolster weak links in infrastructure sector, strengthen innovation power, develop new driving forces, remove institutional obstacles to cutting overcapacity, and reduce enterprise costs.  

  Second, the financial system needs to be stable. We should better combine guarding against and resolving financial risks with serving the real economy, do a good job in deleveraging, manage the intensity and pace of the work, and coordinate the timing to issue various policies. We should improve the capacity and willingness of finance to serve the real economy through institutional innovation. In the difficult situation that the current development of the real economy faces difficult and expensive financing and low profits, we should well combine preventing and defusing financial risks with the work to serve the real economy, make progress with overall planning, raise the ability and willingness of the finance to serve the real economy through the mechanism innovation, so that the two will cooperate with each other and rely on each other, to upgrade the finance while making the real economy big and strong.  

  Third, we need to maintain steady opening up. Opening wider to the outside world will demonstrate our determination to reform and open up, and better stabilize the confidence and expectations of all sectors of society at home and abroad. We will press ahead with reform and opening up and continue to study and introduce a number of major reform measures that are working and effective. Implementing the important actions to open more widely and significantly relaxing market access, further pushing forward the construction of Belt and Road, and elaborately preparing for the first China International Import Expo, all these are demonstrating the attitude and determination of China, as a beneficiary of and contributor to globalization, to further push forward global economy to realize inclusive development and enhance the welfare of people of all countries.  

  Fourth, the real estate market should be stable. Real estate plays an important role in China's economic development and is an important sector of national economic development. Even in developed countries, real estate is also crucial to their economic development. Therefore, we must focus on the long-term development of the real estate industry. We should be determined to solve problems of the real estate market, implement different policies for different cities, promote the balance of supply and demand, reasonably direct expectations, rectify market order and resolutely curb the rise in housing prices. We will accelerate the establishment of a long-term mechanism to promote steady and sound development of the real estate market.  

  Fifth, we should ensure stability in people's wellbeing and social development. We should do a good job in people's livelihood and social stability, place stabilizing employment at a more prominent position, ensure the basic livelihood expenditures such as wages, education and social security, intensify efforts to lift people out of poverty in deep poverty-stricken areas and do more practical work to ensure social stability.  

  It needs to be particularly emphasized that upholding the leadership of the Communist Party of China, as the most essential feature of socialism with Chinese characteristics, has demonstrated great advantages. The Party leads everything in all areas and sectors, the economic work, as the central work of the whole Party, must inevitably embody the firm leadership of the Party. The whole Party should well enhance the “four consciousness” and the confidence in the path, theory, system, and culture of socialism with Chinese characteristics, resolutely carry out the strategic deployment of the 19th National Congress of the CPC, make our best efforts to do a good job in all aspects, deeply push forward the supply-side structural reform, win the three major battles to forestall and defuse major risks, carry out targeted poverty alleviation, and prevent and control pollution, speed up the building of a modernized economic system, promote high-quality development, and ensure the realization of the goals and tasks of economic and social development.  

   (Author: Guo Wei, associate research fellow of the Research Center of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era of the Party School of Central Committee of CPC) 

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