Elevating China’s Economy to New Heights

The year 2022 was a momentous year in Chinese history. The 20th National Congress of the Communist Party of China (CPC) was successfully convened, at which the grand blueprint for building China into a modern socialist country was unveiled. We faced a volatile and complex situation abroad and the challenging tasks of advancing reform and development and ensuring stability at home. Under the firm leadership of the CPC Central Committee with Xi Jinping at its core, all regions and departments consistently followed the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. We remained true to the general principle of pursuing social and economic progress while ensuring stability, fully considered both domestic and international imperatives, coordinated our response to Covid-19 with economic and social development, and placed equal emphasis on development and security. We fully and faithfully applied the new development philosophy, worked hard to create a new development dynamic, and strengthened macro regulation to respond to shocks from factors that exceeded expectations. As a result, our national economy gradually stabilized and returned to growth, the quality of our development steadily improved, and overall economic and social stability was maintained. All of this has given us a solid foundation on which to build China into a modern socialist country.

I. Economic recovery and resilient development

In 2022, we were affected by a combination of the greatest changes and the most serious pandemic in a century. There was a tumultuous international environment, with a rapid decline in global liquidity, greater risk of stagflation in the global economy, as well as the triple pressures of shrinking domestic demand, supply shocks, and weakening expectations. Due to these impacts and the repeated resurgence and continued spread of Covid-19 as well as high temperatures and droughts, among other factors, the Chinese economy shrank in the early part of the second quarter of last year. Confronted with these difficulties, the CPC Central Committee and the State Council took resolute action by promptly issuing policies and measures to stabilize the economy. Thanks to these efforts, from the third quarter, our economy gradually stabilized and returned to growth for the year as a whole, productive forces developed, and our composite national strength and international influence rose. These achievements were hard-won, making them especially valuable.

Tourists enjoy Nanjing cuisine at a local eatery in the city’s Laomendong scenic area, January 31, 2023. With China’s gross domestic product reaching 121 trillion yuan in 2022, people’s living standards have continued to improve, and the incomes of urban and rural residents have steadily increased. XINHUA / PHOTO BY FANG DONGXU

China’s economy reached new heights.

We adopted a targeted and science-based approach in our Covid-19 response, worked hard to stabilize working and living conditions, and implemented a package of policies and measures to steady the economy. Our economy continued to develop despite downward pressures, with further growth in terms of total size and per capita GDP, and it remained the largest contributor to global economic growth. First, GDP reached 121 trillion yuan last year, marking a further breakthrough after surpassing the 100 trillion yuan and 110 trillion yuan marks in 2020 and 2021, respectively. This was equivalent to US$18 trillion using the average exchange rate for the year, keeping our economy the second largest in the world. Second, in 2022, per capita GDP was 85,698 yuan, or US$12,741 using the annual average exchange rate, which meant it remained above US$12,000, higher than the global average and putting China firmly among the ranks of upper middle-income countries. Third, the economic influence of China as a major country increased. In 2022, China’s GDP grew by 3%, which was greater than major economies such as the United States at 2.1%, Germany at 1.9%, and France at 2.6%. Preliminary estimates indicate that China contributed nearly 20% of world economic growth in 2022, so our economy remains an important driver and stabilizer of global growth.

Employees of Yunxing Mechanized Farming Cooperative compact the soil to control excessive growth and preserve moisture in fields of winter wheat in Yangmiao Village, Liaocheng City, Shandong Province, February 4, 2023. China has secured bumper harvests for 19 years in a row and registered annual grain output of over 650 million metric tons for eight consecutive years. PEOPLE’S DAILY / PHOTO BY ZHANG ZHENXIANG

Industrial and agricultural development continued.

All regions and departments across the country kept the focus of economic development on the real economy, stepped up investment to develop agriculture, and increased support to manufacturing chains. They also provided relief to key industries experiencing particular difficulties, ensured smooth operations in transportation and logistics, and underpinned industrial development, thereby solidifying the foundations for greater economic and social stability. First, the role of agriculture as the foundation of the economy was strengthened. In 2022, total grain output was 687 million tons, an annual increase of 0.5% and a record high, marking the 19th year of consecutive bumper harvests in China and helping the country to withstand various risks and challenges. The livestock industry grew steadily, with production of pork, beef, mutton, and poultry totaling 92.27 million tons in 2022, up 3.8% over the previous year. Second, the role of industry as the ballast of our economy gained greater prominence. Total industrial added value in 2022 exceeded 40 trillion yuan for the first time, reaching 40.2 trillion yuan, an annual increase of 3.4%. Our industrial and supply chains became more resilient, and China remained a global frontrunner in terms of output of major industrial products. Last year, China produced 27.18 million automobiles, 324.2 billion integrated circuits, 1.56 billion mobile phones, and 1.34 billion tons of steel.

Domestic demand continued to expand.

All sectors of society faced difficulties head-on and focused on expanding investment and stabilizing consumption in key areas to further unlock the potential of domestic demand, leading to sustained results. Total domestic demand expanded throughout the year, and the principal role of domestic economic flows became more prominent, lending vital support to economic stability. First, investment grew consistently. Investment from the central government budget played its catalytic role. We also encouraged private capital to invest where it was needed. In 2022, national fixed-asset investment (excluding rural households) totaled 57.2 trillion yuan, an annual increase of 5.1%, and played an effective role in fostering steady growth and performing structural adjustments. Second, sales gradually recovered. Purchases of products with immense consumption potential such as automobiles and home appliances were encouraged, online and offline consumption became more integrated, and the gradual restoration of contact-intensive sectors such as catering and hospitality was supported. Total retail sales of consumer goods in 2022 reached 44 trillion yuan, which was largely similar to the previous year but represented an increase of 3.2 trillion yuan compared to before the pandemic in 2019.

Employment and prices were basically stable.

All regions and departments strengthened the supplies and stabilized the prices of major commodities, such as food and energy products, and stepped up assistance to enterprises and employment as well as employment support to individuals, thereby effectively ensuring the stability of jobs and prices. First, tangible results were achieved in stabilizing employment. A series of policies and measures were implemented to support enterprises by lightening their burdens and helping them to keep their payrolls stable and employ more people. In 2022, the target of 11 million new entrants to the urban workforce was exceeded, with the actual figure reaching 12.06 million, the surveyed unemployment rate in cities and towns fell to 5.5%, and the total number of rural migrant workers reached 295.62 million, an annual increase of 1.1%. Second, the trend of rising consumer prices stayed moderate. Efforts to secure supplies and stabilize market prices were intensified, and coordination of production, transportation, and sales as well as adjustments to imports, exports, and commodity reserves were strengthened, keeping prices within an appropriate range. The consumer price index (CPI) rose by 2% in 2022 compared to the year before, ensuring that our economy remained stable. This was below the target of 3% but in stark contrast to the high levels of inflation of over 7% seen among the major economies of Europe and the United States.

China’s balance of payments continued to improve.

All regions and departments focused on promoting stable and high-quality foreign trade, accelerated the development of new forms and models of foreign trade, and stepped up efforts to attract and utilize foreign investment. They continuously optimized the business environment, thereby growing foreign trade and investment, and China’s balance of payments remained stable on the whole. First, trade in goods reached new heights. The total volume of trade in goods exceeded 40 trillion yuan for the first time in 2022, reaching 42.1 trillion yuan, an annual increase of 7.7%. Our trade surplus increased 35.4% from the previous year, and total trade increased further from a high base level, cementing our status as the world’s largest trader of goods. Second, utilized foreign capital continued to increase. Positive economic development prospects and growing advantages in attracting foreign investment meant China was increasingly a global investment and business development hot spot. Actual foreign investment utilization in China was 1.23 trillion yuan in 2022, an annual increase of 6.3%, reaching a new all-time high and keeping China at the global forefront. Third, our foreign exchange reserves remained largely stable, at US$3.13 trillion at the end of 2022, maintaining China’s status as having the world’s largest foreign exchange reserves.

II. Continued economic transformation and upgrading and progress in high-quality development

In addition to promoting stability and recovery of the economy, all regions and departments devotedly implemented the new development philosophy, accelerated creation of a new development dynamic, and advanced supply-side structural reform. They also strengthened the leading role of innovation-driven development, proactively expanded high-standard opening up, and made steady progress in the transition to green development. All of this continuously improved public wellbeing and the quality of our economic development, delivering gratifying results for our people.

Innovation momentum gathered pace.

China’s innovation-driven development strategy was thoroughly implemented, breakthroughs were made in key and core technologies, and our strategic science and technology capabilities were constantly reinforced. Moreover, a series of scientific and technological innovations were produced, new industries and new business forms and models sprouted up, and vitality and internal momentum for economic development was unleashed. First, investment in innovation increased rapidly. China’s R&D investment reached 3.1 trillion yuan in 2022, the first time that it has broken through the 3 trillion mark, which represents a 10.4% annual increase and sets the second highest level of R&D investment in the world. As a percentage of GDP, China’s R&D investment in 2022 increased 0.12 percentage points over the previous year, reaching 2.55%. Second, a series of achievements were made in innovation. By the end of 2022, the number of valid Chinese invention patents reached 4.21 million, the highest number in the world, and China had risen to 11th in the Global Innovation Index. A number of major scientific and technological achievements continuously emerged. For example, two Shenzhou-series spacecrafts were launched, construction of China’s Tiangong space station was completed, China’s third aircraft carrier, Fujian, was launched, and the first Chinese-developed C919 airliner was officially delivered. Third, new drivers of growth developed rapidly. There were notable trends toward the development of digital and smart technologies. In 2022, output of mobile communications base station equipment and industrial control computers and systems increased year-on-year by 16.3% and 15%, respectively. Online sales of physical goods increased 6.2%, accounting for 27.2% of total retail sales of consumer goods, up 2.7 percentage points from the previous year.

Economic development became more coordinated.

Supply-side structural reform continued in depth, modernization of the industrial system accelerated, and domestic demand steadily expanded. New urbanization and the rural revitalization strategy were effectively carried out, and major regional development strategies and the strategy of regional coordinated development were thoroughly implemented. All of this reinforced China’s ability to compete economically and maintain sustainable development. First, China’s industrial structure improved. Notable progress was made in increasing the cultivation of soybeans and other oil crops, and the agricultural production structure was optimized. In 2022, national output of soybeans and other oil crops increased 23.7% and 1.1% over the previous year, respectively. The manufacturing sector’s value added as a proportion of GDP increased to 27.7%, an annual increase of 0.2 percentage points. High-tech industries grew rapidly. The value added of largescale high-tech manufacturing increased by 7.4% in 2022 compared to 2021, 3.8 percentage points higher than the added value of large industrial enterprises as a whole. Second, the demand structure was optimized. The share of economic growth accounted for by domestic demand reached 82.9% in 2022, an annual increase of 4.8 percentage points. Investment in high-tech industries and sales of some upgraded consumer goods grew rapidly. In 2022, investment in high-tech industries saw an annual increase of 18.9%, 13.8 percentage points higher than investment as a whole. Large retailers’ sales of books, newspapers, and magazines as well as stationery increased by 6.4% and 4.4% in 2022, respectively, compared to the previous year, 4.5 and 2.5 percentage points higher than retail sales as a whole. Third, progress was made in coordinated development between urban and rural areas and between regions. The percentage of China’s population living permanently in urban areas at the end of last year was 65.22%, an increase of 0.5 percentage points over the previous year. The per capita disposable income ratio of urban and rural residents was 2.45, a decrease of 0.05 from the previous year. Major development strategies made steady headway, such as the development of the Beijing-Tianjin-Hebei region, the Yangtze River Economic Belt, and the Guangdong-Hong Kong-Macao Greater Bay Area, as well as the integrated development of the Yangtze River Delta and ecological conservation and high-quality development in the Yellow River Basin. The regional economic layout was optimized further.

Steady progress was made in the shift toward green development.

Solid progress was achieved in advancing the Beautiful China Initiative, the transition to low-carbon development gathered pace, and the battle against pollution made notable headway. Optimization of the ecological environment continued, and eco-friendly modes of production and ways of life became increasingly popular. First, energy consumption per unit of GDP declined. In 2022, China’s energy consumption per 10,000 yuan of GDP fell by 0.1% from the previous year. Second, the share of clean energy in total energy consumption increased. Last year, the consumption of non-fossil energies, including hydro, nuclear, wind, and solar power, accounted for 17.5% of total energy consumption, up 0.8 percentage points from the year before. Third, new energy products showed good growth. In 2022, output of NEVs, vehicle charging units, solar cells, and wind turbines increased by 90.5%, 80.3%, 46.8%, and 45.5%, respectively, over the previous year. Fourth, the quality of the environment constantly improved. Last year, the annual average concentration of PM 2.5 in 339 cities at or above prefectural level decreased by 3.3%, and of the 3,641 national surface water assessment stations, the proportion of those reporting good water quality (grades I-III) was 87.9%, up 3 percentage points.

A high level of opening up was achieved.

China is committed to opening up wider to the world, proactively implementing institutional opening up, and engaging in pragmatic multilateral and bilateral economic and trade cooperation. We are deepening international cooperation on production capacity and third-market cooperation, constantly growing the circle of friends of the Belt and Road Initiative (BRI), and advancing opening up on a larger scale, across more areas, and in greater depth, giving our development new vitality. First, we made significant headway with the high-quality Belt and Road cooperation. China’s import and export volume with BRI countries increased by 19.4% in 2022, which was significantly higher than total import and export volume growth. Last year, the China-Europe Railway Express made a total of 16,000 trips, up 9%, and the New International Land-Sea Trade Corridor in the western region transported 756,000 TEUs of cargo, an increase of 18.5%. Second, initial benefits were seen from the Regional Comprehensive Economic Partnership (RCEP) agreement. China’s total import and export volume with and non-financial direct investment in RCEP trading partners rose 7.5% and 18.9%, respectively, while the direct investment China attracted from RCEP partners increased 23.1%. Third, tangible progress was made in the development of free trade zones. Last year, there was a 14.5% annual increase in the import and export volume of China’s 21 pilot free trade zones, while that of the Hainan Free Trade Port increased 36.8% to over 200 billion yuan.

The wellbeing of our people was enhanced.

All sectors of society continued to ensure and improve people’s wellbeing in the course of pursuing development, strove to increase personal income, strengthened areas of weakness in public wellbeing, and guaranteed that people’s basic requirements were met. First, personal income grew in step with economic growth. Last year, national per capita disposable income reached 36,883 yuan, an annual increase of 2.9% after adjusting for inflation, which was similar to the economic growth rate. Second, investment in our people’s wellbeing increased. Investment in the social domain increased 10.9%, which was 5.8% percentage points higher than total investment. Third, efforts were stepped up to meet basic needs. National per capita net transfer income increased by 5.5% in nominal terms in 2022 over the previous year, which was significantly higher than the growth rate of total income. Fourth, efforts were made to consolidate and build upon achievements in the battle against poverty. The per capita disposable income of rural residents in the counties removed from poverty was 15,111 yuan in 2022, an increase of 5.4% in real terms, which was 1.2 percentage points higher than the income growth for all rural residents.

Trucks departing for Central Asian countries at the Bakhtu border crossing in Tacheng City, Xinjiang Uygur Autonomous Region, February 4, 2023. With China opening wider to the world and more friends and partners committing to the Belt and Road Initiative, a broader agenda of opening up is being advanced across more areas and in greater depth. PHOTO BY XINHUA REPORTER HU HUHU

III. Implementing the plans from the 20th CPC National Congress and the Central Conference on Economic Work for a full economic recovery

In 2023, we must be mindful of evolving geopolitical turbulence, uncertainties surrounding Covid-19, and the fading momentum of global economic growth. We must be aware of the growing complexity and uncertainty in our external environment, that we still face the triple pressures of shrinking demand, supply shocks, and weakening expectations, that the foundations of our economic recovery remain fragile, and of the need to work hard to achieve stability and a gradual recovery of our economy. On the other hand, we must not forget that the Chinese economy continues to demonstrate strong resilience, potential, and dynamism, the factors underpinning its high-quality development remain unchanged, and we possess the basis, conditions, and capacity to achieve stable, healthy, and sustainable economic development. Going forward, we need to fully implement the guiding principles from the 20th CPC National Congress and the plans from the Central Conference on Economic Work, adhere to the theme of striving for growth amidst stability, and exercise more effective macro regulation. We also need to integrate our implementation of the strategy to expand domestic demand with our efforts to deepen supply-side structural reform, ensure stable growth, employment, and prices, and work toward full economic recovery, in order to embark on the new journey to achieve the Second Centenary Goal in the new era.

We will exercise more effective macro regulation.

We need to strengthen coordination of and encourage synergy between our policies, increase the intensity and effectiveness of our proactive fiscal policy, and maintain an appropriate intensity of fiscal spending. We will implement a prudent monetary policy in a targeted and effective manner, maintain a proper and adequate liquidity supply, and guide financial institutions to increase their support for key sectors and weak links. We will also strengthen coordination between policies in the industrial, scientific and technological, and social domains in order to lend powerful support to stabilizing the economy.

We will focus on expanding domestic demand.

We will prioritize reviving and expanding consumption and adopt a combination of measures to boost people’s spending power. We will improve the consumption environment, create new consumption scenarios, and foster a high-quality supply system for consumption. We will continue to elevate conventional consumption, incubate new types of consumption, and grow areas of strong consumer spending. We will increase effective investment, expedite the implementation of major projects set out in the 14th Five-Year Plan (2021-2025), and promote the construction of new types of infrastructure. We will utilize the attraction of large projects and catalytic role of government investment to encourage and solicit more private capital into major national projects.

We will continue to invigorate market entities.

We will work unswervingly both to consolidate and develop the public sector and to encourage, support, and guide development of the non-public sector. We will protect the legitimate rights and interests, including property rights, of all market entities, stimulate strong development in the private sector, and support private companies in taking part in and serving major national strategies. We will work toward building a unified national market and keep improving foundational market systems. We will also continuously optimize the business environment, fully implement the negative list-based market access system, and remove hidden barriers to access.

We will emphasize the role of the innovation-driven development strategy.

We will work toward greater self-reliance and strength in science and technology, strive to make breakthroughs in key technologies, strengthen complete industrial chains in key areas, and focus on shoring up weak links in industrial chains. We will pay close attention to the transformation and upgrading of traditional industries, encourage the manufacturing sector toward higher-end, smarter, and greener production, advance the innovative development of digital industries, and foster digital industry clusters. We will support platform enterprises in boosting technological innovation, becoming more internationalized, and playing a greater role in leading development and other areas.

We will further promote high-standard opening up.

We will advance innovative development in trade, lend strong support to new forms and models of foreign trade, and improve and upgrade trade in goods. We will redouble our efforts to attract and utilize foreign investment, ensure national treatment for foreign-funded companies, and facilitate the launch of landmark foreign-funded projects. We will make headway with joint efforts to develop Belt and Road projects, consolidate and expand pragmatic cooperation with participating countries, seek new areas of cooperation, and constantly improve the level and quality of trade and investment cooperation.

We will promote measures that deliver real benefits and avert risks.

We will adhere to the employment-first policy and promote employment among key groups, such as migrant workers and young people. We will increase inputs in areas important to people’s wellbeing, ensure adequate supply and stable prices of daily necessities, and better safeguard the people’s wellbeing. We will improve the income distribution system and make solid progress in advancing common prosperity. We will stand by the principle that housing is for living in, not for speculation, and implement long-term mechanisms for the steady and healthy development of the real estate market. We will strengthen inter-departmental coordination on oversight to avert and ameliorate fiscal and other financial risks. We will also thoroughly advance the energy revolution and increase our capacity to ensure energy security.

(Originally appeared in Qiushi Journal, Chinese edition, No. 4, 2023)