China shifts from fast growth to high-quality growth
An advanced manufacturing plant in Hefei, Anhui Province. Photo: CHINADAILY
On Oct. 22, the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee held a meeting to hear a summary and evaluation report on the implementation of the 13th Five-Year Plan (FYP).
Xi Jinping, general secretary of the CPC Central Committee, presided over the meeting and delivered an important speech.
The implementation of the 13th FYP has been smooth, as the key strategic tasks and 165 major projects have all been carried out, the major indicators will be achieved as scheduled, and all targets and tasks set in the plan will be accomplished, Xi said.
China's strength in economic, scientific and technological fields, as well as its overall national strength, have entered a new stage after its development in the 13th FYP period (2016–2020), with improvements in economic structure, rural modernization, poverty relief, ecological environment, and deepening all-round reform, according to Xi.
The year 2020 is a juncture where China will wrap up the plan for the 13th FYP and prepare for its next FYP period. Reflecting on what we have achieved in the economy helps China better map out the plans for the next five years and beyond, in a way that the country can address both domestic and global challenges more effectively and embark on a path of sustainable, coordinated, and high-quality growth.
Economic achievements
Under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at the core, China has made new progress in reform and opening up over the 13th FYP period. The period saw improvements in both the country's economy and the people's wellbeing. China's average annual contribution to global economic growth has also increased.
From 2016 to 2019, China's economic growth was steady and rapid, with an annual growth rate of over 6.5%, about twice as fast as the global average. China contributed more than 30% to world economic growth.
The outbreak of COVID-19 has taken a toll on the global economy. According to the World Economic Outlook (October) report released by the IMF, the global economy is estimated to shrink by 4.4% in 2020. Brazil and Russia's economies are projected to contract by 5.8% and 4.1% respectively, while India’s economy could see a contraction of 10.3%. China is expected to grow by 1.9%, the only major economy that could see growth this year.
Data from China's National Bureau of Statistics showed that China’s GDP saw a year-on-year increase of 0.7% in the first three quarters of 2020, with the figure reaching 4.9% in the third quarter. China has become a key stabilizer for the global economy during the pandemic.
China's economic structure has improved as the country continues to climb up the ladder of the global value chain. During the 13th FYP period, the distribution of the GDP across economic sectors changed from 8.6%, 39.8%, 51.6% in 2016 to 7.1%, 39%, 53.9% in 2019, with the service industry's increased value significantly adding further balance to the economic structure.
Economic growth drivers have become more reasonable and more balanced. As the domestic market grows, consumption has increasingly driven economic growth. In 2019, the final consumption expenditure contributed about 60% to the GDP growth. As consumer spending keeps rising steadily and the consumption structure continues to upgrade, consumption has begun to play a bigger role as an endogenous driving force for China's economy. In addition, self-development consumption, which includes purchases related to culture, tourism, health and entertainment, is growing rapidly. The expansion of consumption and service helps to enhance China's resilience against external shocks and stabilizes the global economy.
More effective investments have been made in key areas. The network of modern infrastructure has been further improved, and China's innovation capability has improved. According to the Global Innovation Index 2020 released by the UN’s World Intellectual Property Organization, China's rank moved up from the 29th in 2015 to 14th in 2019. China's innovation power has fuelled the country's booming new industries, including intelligent manufacturing, big data, AI, smart phones, 5G, and new energy vehicles. What's more, China's new service industries, including information transmission, APPs and IT, have reached an average annual growth rate of 19.4% since 2016. The added value of China's high-tech industry has started to account for more of the GDP at a fast pace. China's economic development quality and export structure are both improving. China’s position in the global industrial chain and value chain is constantly on the rise.
Improved wellbeing
People's wellbeing has significantly improved, and China's poverty alleviation endeavor has made new progress. In 2019, China's per capita disposable income stood at 30,733 yuan, up 39.9% from 2015. China' middle-income group continues to grow, while the gap between the growth rates between urban and rural residents in their per capita disposible income has narrowed. Consumption upgrades accelerate, as ICT penetration rates and car ownership have both rapidly increased.
China has basically realized universal access to basic public services, such as public-health services, and has promoted greater equality in access to public services. The construction of a multi-tiered social security system has sped up. More people are insured with pension schemes, medical insurance, unemployment insurance, work-related injury insurance, and maternity insurance, etc. Construction work is well underway on government-subsidized housing.
Chinese people's average life expectancy has reached 77.3 years old in 2019, nearly five years longer than the global average. The poverty headcount ratio has plunged, as more than 50 million rural people were lifted out of poverty from 2016 to 2019. It is estimated that based on current standards, China will complete its goal of eradicating absolute poverty by the end of 2020.
Guided by the principle of pursuing coordinated and balanced regional development, during the 13th FYP period, China has improved the policy structures for developing Western regions and central regions, revitalizing northeast China, supporting the eastern region in taking the lead in development, and advancing the coordinated Beijing-Tianjin-Hebei development. China has developed regions with unique features such as old revolutionary base areas, areas with large ethnic minority populations, border areas, and impoverished areas. Regional gaps between central and western regions and eastern regions has further narrowed. Major regional development strategies including the Yangtze River Delta the Guangdong-Hong Kong-Macao Greater Bay Area are advancing with high quality. Strategies including the rural vitalization, new countryside and modern agriculture are making headways. A pattern for coordinated development between rural and urban areas has gradually taken shape.
Accelerated opening up
China has steadily advanced comprehensive and effective reforms of its economic system, and enhanced policy regulation. Its macroeconomic regulatory mechanisms and economic governance capabilities have both improved. Reforms have been pushed forward to delegate power, streamline administration and optimize government services. In addition, reform has deepened regarding market-based allocation of factors of production. The market now plays an increasingly decisive role in resource allocation. China has sped up efforts to improve its property rights protection systems, deepen reforms in fiscal and financial systems, and further optimize the allocation of state assets with mixed-ownership reform. With more policies rolled out to cut taxes and fees, and strengthen the financial sector’s role of serving the real economy, China has improved its business environment. The World Bank's Doing Business 2020 study listed China as one of the top ten best places in the world to do business.
China has opened up wider to the world, promoting the Belt and Road, introducing the new Foreign Investment Law, and increasing the number of pilot free trade zones to 21.
During the 13th FYP period, foreign trade grew rapidly. The trade volume of goods increased from US$3.95 trillion in 2015 to US$4.58 trillion in 2019, maintaining its position as the world's top trading nation in goods for years. The service trade volume increased from US$654.2 billion in 2015 to US$785 billion in 2019, ranking second in the world. The country’s foreign trade structure has gradually optimized.
The structure for China's export destinations has been optimized. While maintaining growth in exports to developed market economies, China also kept its exports growing for emerging and developing markets. While its general trade is growing fast, China also nurtured new growth points by developing new types of trade, such as cross-border e-commerce. What’s more, while transnational investment has been low globally, China has managed to keep its actual use of FDI growing steadily, and maintained its position as the biggest FDI destination among developing countries. With a continuously improved foreign investment utilization structure, China is also the second largest foreign direct investor in the world.
New vision
Guided by a new vision for development, China has advanced supply-side structural reforms, nurtured new growth drivers, upgraded old growth drivers, maintained medium-to-high speed of growth, and marched towards medium-high growth.
As the pandemic struck the world economy, the CPC has charted a new course for China's future development based on a thorough analysis of the global and national landscape. China will nurture a strong domestic market and establish a new development pattern that smooths domestic circulation and lets domestic and international circulations reinforce each other.
The 13th FYP period is an important transition period for China's economy. Facing the complex and changeable economic landscape inside and outside China, China's visionary leaders have made timely strategic adjustments, including quickly fostering a new development pattern, which has set the direction for the formulation of the 14th FYP, and reached new heights in reform and opening up, and innovation-driven development.
Looking ahead, we need to continue reform and opening up and accelerate socialist modernization. We need to shift growth drivers, improve weak links, advance "dual circulation," pursue better quality, higher efficiency, and more robust drivers of economic growth. In the 14th FYP period, we will strive to achieve better quality, more efficient, fairer, and more sustainable development.
Lin Yueqin is a research fellow of the Chinese Academy of Social Sciences.
Edited by WENGRONG