Vigorously Advancing High-Quality Development

At the Central Economic Work Conference held from December 11 to 12, 2023, President Xi Jinping comprehensively reviewed economic work in the year of 2023, conducted a thorough analysis of the current domestic and international landscapes, and systemically laid out the main objectives and tasks for economic and social development in 2024. His insights have charted the course and established the fundamental principles for our next steps in economic work.

I. Progress and achievements in China’s economic and social development

In 2023, China was confronted with an external environment in which turbulence and change were interwoven, with challenges and complexities in economic work that were unprecedented in many years. Under the resolute leadership of the Central Committee of the Communist Party of China (CPC) with Xi Jinping at its core, China stood firm against external pressures and surmounted internal difficulties. Our country’s economy showed signs of recovery and improvement. We made solid progress in advancing high-quality development, taking a significant step forward in building a modern socialist country.

A stable performance in macroeconomic indicators

In the first three-quarters of the year, China’s GDP grew at a rate of 5.2% year-on-year, with a growth pattern characterized by a slow start, a mid-year surge, and a stable increase toward the end of the year. This rate of growth notably outpaced the 3% annual increase of 2022, as well as the average annual growth rate of 4.5% during the three years of the Covid-19 pandemic. China’s performance was one of the best among the world’s major economies and accounted for 30% of global economic growth in real terms. Indeed, China continues to serve as the largest engine of global growth.

Employment and price levels remained generally stable. The average surveyed urban unemployment rate over the first 11 months was 5.2%, a decrease of 0.4 percentage points from the previous year. Consumer prices rose by just 0.3%, presenting a significant contrast to the steep inflation in some other major economies around the world. A basic equilibrium was maintained in the balance of payments, with foreign exchange reserves remaining above the US$3 trillion threshold. The role of domestic demand in driving economic growth was further reinforced, with final consumer expenditure contributing 83.2% of the growth.

Major progress in developing a modern industrial system

The industrial system was distinguished by stability in the primary sector, growth in the secondary sector, and rapid expansion in the tertiary sector. This has spurred structural improvements and positive trends. Agricultural production remained on a favorable footing, with total grain output reaching 695.41 million metric tons, reaching another new high and remaining above 650 million metric tons for the ninth consecutive year.

Industrial production recovered steadily. In the first 11 months, the value added of large-scale industrial enterprises recorded a year-on-year increase of 4.3%, with the manufacturing sector growing by 4.7%. Notably, the electrical machinery and automobile industries posted value-added growth in the double digits. It is estimated that for the entire year, the production and sales volume of alternative energy vehicles was around 9.4 million units, and automobile exports were expected to surpass the 5 million mark, making China the world’s leading automobile exporter.

The service sector has provided robust support for economic growth. In the first three quarters, its value added increased by 6% year-on-year, accounting for 63% of economic growth.

New breakthroughs in scientific and technological innovation

There has been a flurry of major advancements in this sphere. The manned spacecraft Shenzhou-16 successfully returned to earth after completing a five-month space station mission, five days after the smooth launch of the spacecraft Shenzhou-17. The C919 airliner commenced commercial operations and entered the industrial development phase. The world’s first 16-megawatt offshore wind turbine was connected to the grid, and the world’s first fourth-generation nuclear power plant also went into commercial operation.

New growth engines grew at a rapid pace. Solid progress was made in developing core technologies in key sectors such as integrated circuits, high-end chips, and instrumentation. Furthermore, emerging sectors such as alternative energy, artificial intelligence, and biopharmaceuticals developed swiftly.

Greater extensive progress in reform and opening up

We continued the reforms in key sectors and at critical links. The quality and efficiency of the development of state-owned enterprises were steadily enhanced, and the vitality of the private economy was effectively boosted. We moved faster in establishing a nationwide unified market and continued to ease market access. The structure of foreign investment and trade was improved. While the total annual volume of exports and imports held steady in RMB terms, there was a surge in exports of new products where China holds an advantage. In the first 11 months, exports in the “new trio”—electric passenger vehicles, lithium-ion batteries, and solar cells—jumped by 41.7%. A series of major foreign-funded projects were implemented, and the scale of utilized foreign investment remained largely stable, building on the historic high of 2022. Within that scope, utilized foreign investment in high-tech manufacturing grew by 9.5%.

The high-quality development of the Belt and Road Initiative was solidly advanced. The Jakarta-Bandung High-Speed Railway officially commenced operations. In the first 11 months of the year, China Railway Express (CR Express) completed a total of 16,000 trips and transported 1.75 million twenty-foot equivalent units of goods, registering year-on-year increases of 6% and 17%, respectively. The Hainan Free Trade Port quickened its pace of institutional opening up, with the introduction and implementation of negative lists for foreign investment access and cross-border trade in services. 

The naming and delivery ceremony for the Adora Magic City, China’s first domestically produced large cruise ship, November 4, 2023. In 2023, China made important advancements in developing a modern industrial system and secured steady progress in the industrial sector. PHOTO BY XINHUA REPORTER DING TING

More coordinated development of urban and rural areas

The implementation of major regional development strategies was advanced. The three major regional engines of Beijing-Tianjin-Hebei, the Yangtze River Delta, and the Guangdong-Hong Kong-Macao Greater Bay Area played an even stronger role in driving growth, setting the pace in generating economies of scale, aggregating factors of innovation, training talent, and pursuing open development.

Key functional areas such as the Yangtze Economic Belt and the Yellow River Basin further leveraged their critical roles, resulting in a notable improvement in the quality of the environment. The Xiong’an New Area entered a phase featuring a dual focus on pursuing large-scale development and absorbing functions nonessential to Beijing’s role as the capital of China.

Development between regions became more balanced. We continued to refine the policy frameworks that support large-scale development of the west, revitalization of the northeast, the rise of the central region, and trailblazing development in the eastern region. The comparative advantages of each region were better harnessed, resulting in an optimized regional economic layout.

We continued the work of granting permanent urban residency to eligible people moving from rural to urban areas and further implemented the new urbanization strategy. We both consolidated and built on our achievements in poverty alleviation to boost the revitalization of rural areas, and made faster strides in developing a beautiful and harmonious countryside that is desirable to live and work in.

Effective efforts to ensure the people’s wellbeing

Personal income steadily increased, with per capita disposable income nationwide growing by 5.9% in the first three quarters of the year. The basic public service system continued to improve; coverage of social security programs was steadily expanded, and social security benefits were further raised.

Environmental governance was strengthened. In the first 11 months of the year, the average concentration of fine particulate matter (PM2.5) was less than 30 µg/m³ in cities at the prefecture level and above. The proportion of surface water meeting good or excellent water quality standards (Grade I–III) was 87.8%, an increase of 0.6 percentage points from the previous year. We also made systematic progress toward the goals of carbon peaking and carbon neutrality, with the installed capacity for power generated from renewable energy exceeding 50% and surpassing coal-based power for the first time.

A more solid foundation for development and security

We worked to prevent and defuse risks and challenges in key areas, striving to maintain a healthy interaction between high-quality development and high-level security. Thanks to increased protection for cultivated land, we ensured a sufficient supply of grain and other essential commodities at stable prices. Primary commodities such as energy and minerals were well-supplied, and the energy supply remained generally stable during peak periods. We steadily advanced research projects on major technologies and equipment and strengthened the capacity of our industrial and supply chains to withstand shocks. Putting in place an initial framework for basic data systems, we have continued to improve our data security capabilities.

Overall, in 2023, China’s economy withstood external risks and challenges as well as domestic downward pressure. The main projected targets for economic and social development were achieved. Notably, we have steadily advanced economic transformation and upgrading, with breakthroughs in transforming the growth model, adjusting structures, and strengthening growth drivers.

II. China’s economic development: the context and trends

On the whole, the favorable conditions for China’s development outweigh the unfavorable factors, and the overall trend of economic recovery and long-term growth remains unchanged.

From an international perspective, external risks and challenges have increased. The rise in geopolitical risks has added to external uncertainties and could precipitate a further tightening of international supplies of crude oil and natural gas. This could lead to further fluctuations in the prices of bulk commodities, adversely affecting the global economy and inflationary trends, and exerting further pressure on China’s efforts to ensure its energy and resource security. The momentum for global economic growth is flagging, with the International Monetary Fund forecasting a growth of 3% in 2023 and 2.9% in 2024, considerably below the average annual growth rate of 3.8% in the pre-pandemic period from 2000 to 2019.

Risks in global financial markets are mounting, with government debt in certain advanced economies reaching record levels. As interest rates continue to climb, benchmark rates have reached historic peaks. Some developing countries are facing further currency devaluations, sustained capital outflows, and mounting challenges in debt repayment, all of which could potentially trigger balance-of-payment crises and sovereign debt emergencies. Global industrial and supply chains are being overhauled and reorganized at a rapid pace, with a discernible trend of localization and regionalization. With regional value chain systems rapidly taking shape, there is a risk of China’s position within global industrial and supply chains being diminished.

At home, our economy is affected by both cyclical and structural challenges. There is a shortfall in effective demand, and significant uncertainties surround the recovery of external demand, which is placing considerable pressure on our efforts to maintain stability in exports. Expectations for employment growth and income increases among residents are muted, which in turn is suppressing consumer spending. Investment growth is constrained, with real estate development investment exhibiting a downward trend. Pressure on investment is expected to persist. Certain industries are suffering from overcapacity, and redundant construction is evident in some sectors. Businesses are experiencing a lack of orders, elevated inventory levels, and sustained high costs, all of which are squeezing their ability to secure their survival and development.

In some sectors, many hidden risks exist, and the hidden debts of local governments are posing latent risks in some regions. The possibility of financial risks in individual industries spreading across borders, markets, and sectors has significantly increased, creating the possibility of greater volatility in domestic stock, bond, foreign exchange, futures, and real estate markets. Bottlenecks are affecting the domestic economy, and further efforts are needed to promote institutional opening up. Invisible barriers to the development of a unified national market remain to be dismantled, and the orderly flow of factors of production remains constrained.

At the same time, it is important to recognize that the problems and worries China faces are all part of the development process. China’s development is still underpinned by a good foundation and many favorable conditions.

Strong and effective political guarantees

Moving forward, as long as we follow the leadership of the CPC Central Committee led by Xi Jinping and the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will no doubt amass a mighty force to rally our people and see us through all adversity. Nothing can hold back China’s advance toward national rejuvenation.

Increasingly evident institutional strengths

Since the 18th CPC National Congress in 2012, China has continued to sustain the two miracles of rapid economic development and long-term social stability, while steadily modernizing its system and capacity for governance. Amid a grave and complex external environment, the socialist system’s strength of being able to mobilize resources to accomplish major endeavors has become more apparent. With our high-standard socialist market economy improving continuously, the Chinese economy has demonstrated formidable resilience against risks and challenges and is well-placed to keep generating powerful momentum for high-quality development.

More solid material foundations

China possesses the world’s most complete industrial system, with the value-added in the manufacturing sector accounting for approximately 30% of the global total, maintaining the largest scale in the world for several years in a row. China has steadily enhanced its ability to ensure the security of food, energy, and other resources, as well as critical industrial and supply chains. It has established the world’s largest high-speed railway network, expressway network, and cluster of world-class ports, along with the world’s largest and most advanced 5G network. Additionally, with its extensive data resources and diverse application environments, China is poised to drive forward the digitalization of traditional industries and the rapid development of emerging ones.

Rice harvesters dump grain into a trailer in Dongguchengzi Village, Dengta City, Liaoning Province, October 12, 2023. In 2023, China’s total grain production reached a record high, exceeding the threshold of 650 million metric tons for the ninth consecutive year. PHOTO BY XINHUA REPORTER YANG QING

Growing development vitality

With a population of over 1.4 billion and a middle-income group of over 400 million, China stands as a vast market with the greatest potential for growth in the world. The potential offered by people’s needs in clothing, food, housing, transportation, and cultural pursuits is immense. There remains substantial room for investment in areas with shortcomings, at weak links, and in opening up new industrial areas and arenas. Coordinated development between new industrialization and new urbanization will push demand to expand. Through the application of reform-driven thinking and innovative approaches, and by harnessing the sheer scale of our market and our complete industrial system, we can undoubtedly continue to unlock the potential and vitality of China’s economic growth.

Considerable space for regulatory policies

Since the 18th CPC National Congress of 2012, through the process of effectively confronting a range of difficulties and challenges, China has gained rich experience in macroeconomic regulation, and has refined regulatory systems and augmented its regulatory toolkit. China’s government debt levels are notably lower than those of other major world economies, and inflation has remained low in recent years. This has created ample room for implementing a proactive fiscal policy and a prudent monetary policy. In addition, China’s savings rate is much higher than the global average, providing a solid foundation for further investment expansion.

In summary, China faces both strategic opportunities and risks and challenges in its development. Yet the opportunities generally outweigh the challenges. Under the strong leadership of the CPC Central Committee with Xi Jinping at its core, China possesses the confidence, capability, conditions, and assurance to steadily improve economic structures, bolster growth drivers, and sustain a favorable development trajectory.

III. Grasping the underlying laws of economic work in the new era

At the Central Economic Work Conference in 2023, President Xi Jinping put forward “five essentials” for economic work. These essentials reflect our efforts to break new ground and uphold fundamental principles in our understanding of the underlying laws of development. They have further enriched and developed Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and especially Xi Jinping’s thinking on the economy.

It is essential to uphold high-quality development as the paramount principle in the new era, fully and faithfully implement the new development philosophy on all fronts, and effectively improve the quality of our economy and promote its growth within a reasonable range

Development is the key to solving all problems in China, and it is also the CPC’s priority in governing and rejuvenating the country. China is currently in a critical stage of transforming its growth model. New missions and tasks, as well as the development environment, have raised higher and more urgent demands for economic growth. Only by continuously enhancing economic development and boosting economic strength can we continue to meet the people’s ever-growing needs for a better life, fully demonstrate the strengths of the socialist system with Chinese characteristics, and firmly grasp the strategic initiative amid accelerating once-in-a-century changes across the world.

It is essential to further supply-side structural reform and focus on coordinated efforts to expand effective demand, leveraging the advantages of our vast market and robust production capacity, ensuring the domestic economy is underpinned by domestic demand as the main growth driver, and improving the quality and level of international economic flows

As the two sides of economic development, supply and demand are an important focus in our efforts to effectively improve the quality of our economy and promote its growth within a reasonable range. The greater the complexity and uncertainty we face, the more we must rely on a systems approach to better coordinate supply and demand. We must keep working to foster and develop new productive forces, continuously expand and tap into new consumption potential, and ensure smooth economic flows in the process of upgrading both supply and demand.

It is essential to bolster the endogenous drivers of development through reform and opening up, ensure the advancement of both in-depth reform and high-standard opening up, continuously liberate and develop social productive forces, and stimulate social vitality

Reform and opening up have been pivotal in making China what it is today and instrumental in helping it make great strides in catching up with the times. Our efforts to further reform and improve the socialist market economy are a powerful force driving high-quality development and faster progress in Chinese modernization. Higher-standard opening up, especially in institutional terms, is crucial not only for China to create new advantages in international economic cooperation and competition, but also to actively fulfill its responsibilities as a major country by contributing to global economic governance.

It is essential to maintain a healthy interaction between high-quality development and high-level security, achieving a dynamic balance where the former promotes the latter and the latter serves to guarantee the former

Development is the foundation of security, and security is the prerequisite for development. The two function like the wings of a bird or the wheels of a chariot. Balancing security and development imperatives and remaining mindful of potential dangers are major CPC governance principles. In the face of various risks and challenges, we must continue to strengthen material and technological foundations through high-quality development, enhance our ability to maintain national security and create a favorable environment for achieving high-quality development based on a high level of security, thereby enhancing both the security and stability of our development.

It is essential that we regard Chinese modernization as the foremost political priority, ensuring that under the CPC’s unified leadership, we unite the people and, with a focus on the central task of economic development and the primary mission of high-quality development, gradually turn the magnificent blueprint of Chinese modernization into a reality

Chinese modernization is endowed with distinctly Chinese features and conforms with the realities of our country. Developing China into a strong country and realizing national rejuvenation through Chinese modernization is the most concentrated, specific expression of what it means to pursue happiness for the Chinese people. This is the core mission for the entire Party and all Chinese people and our foremost political priority.

IV. Taking effective steps to implement the decisions and plans of the CPC Central Committee

The overall requirements and policy orientations for economic work in 2024 were set forth at the Central Economic Work Conference, with key tasks systematically laid out in nine areas. It was emphasized that we must adhere to the general principle of seeking growth while maintaining economic stability, promoting stability through making progress, and adopting new policies before abolishing the old.

Strengthening economic analysis and policy research to boost the positive momentum of economic recovery

We will improve economic monitoring, forecasting, and early warning and strengthen preparatory research to maintain policy options for different eventualities. We will make innovations to our policy toolkit, ensure it is deployed in a coordinated way, and ramp up macroeconomic regulation, taking steps to enhance counter-cyclical and cross-cyclical adjustment of macroeconomic policies.

Tourists at the Huangguoshu Waterfall Scenic Area, Anshun City, Guizhou Province, October 3, 2023. To drive high-quality development, it is important to expand domestic demand and unleash untapped potential for consumption. XINHUA / PHOTO BY CHEN XI

We will maintain a more consistent orientation in macro policies, better coordinating fiscal, monetary, employment, industrial, investment, consumption, pricing, regional, technological, and environmental protection policies. Non-economic policies will also be included in the evaluation of the consistency of macroeconomic policy orientation to ensure all initiatives are well-aligned and synergy is generated. We will strengthen the evaluation and supervision of major strategic plans, policies, reforms, and projects, and give full play to their effective functions.

Leveraging the guiding role of medium- and long-term planning and annual plans to advance implementation of major national strategies

We will use the mid-term evaluations for the 14th Five-Year Plan (2021-2025) to further spur its implementation and work out the basic approach for the 15th Five-Year Plan (2026-2030) for Economic and Social Development. We will develop and implement annual plans to actively advance key strategies for coordinated regional development, new urbanization, and rural revitalization. A strong emphasis will be placed on granting permanent urban residency to eligible people who move from rural to urban areas. We will take coordinated steps to reform the household registration system and promote equitable access to basic public services in cities. These steps will help people moving from rural areas to fully integrate into city life.

We will take integrated steps in advancing new urbanization and rural revitalization, so as to facilitate the two-way flow of various production factors and give shape to a new pattern of integrated development between urban and rural areas. We will also ensure coordination between new industrialization and new urbanization, leveraging the role of city clusters and metropolitan areas to promote coordinated development of cities of all sizes. We will push forward with the renovation of old urban residential communities and accelerate the renewal of urban villages, the construction of government-subsidized housing, and dual-use infrastructure adapted for normal conditions and emergencies. We will continue working to build resilient and smart cities that are more comfortable to live in.

Using funds to step up project construction and better leverage the critical role of effective investment

We will work to more effectively utilize government investments such as the additional one trillion yuan of government bonds issued in 2023, central budgetary investment, and local government special-purpose bonds. Support will be provided for areas such as transportation infrastructure, energy, agriculture, forestry, water conservancy, coordinated regional development, modern industry, breakthroughs in core technologies in key fields, new infrastructure, energy conservation, carbon reduction, post-disaster recovery and reconstruction, and disaster prevention, mitigation, and rescue capacities. Under the principle that funding should follow specific projects, we will tighten supervision over how funds are used and further improve the precision and effectiveness of investments.

We will intensify efforts to stimulate private investment by establishing a regular project promotion mechanism for key industries. We will implement new mechanisms to foster cooperation between government and private investment, encouraging more private investment in major national projects and initiatives designed to address weak areas. We will enhance both our project planning and reserves by continuing to stockpile high-quality projects that will meet current needs and long-term interests at different levels and in different fields. We will strengthen guarantees for factors such as land use, sea use, and environmental impact assessments for projects, in order to see real work begin on more key projects at an early date.

At the same time, we will ensure that investment and consumption are well-coordinated. To promote the sustained expansion of consumption, we will encourage green and smart consumption and create new scenarios, formats, and trends in consumption. We will boost effective supply in areas such as education and healthcare and improve the quality of supply in eldercare and childcare.

Conducting comprehensive reform and bolstering opening up to make development more innovation-driven, and to inject new vitality into economic development

We will work unswervingly to consolidate and develop the public sector and encourage, support, and guide the development of the non-public sector. We will further the reform of state-owned assets and state-owned enterprises and promote the development and expansion of the private sector. We will ensure equal treatment for both state-owned and private enterprises through institutional and legal means, implement high standards for national treatment of foreign-funded enterprises, and see that state-owned enterprises are determined to take action, private enterprises are eager to pioneer, and foreign enterprises are keen to invest in China.

To bring about a unified national market, we will strive to eliminate various forms of local protectionism and market segmentation, and effectively cut total logistics costs across society. Initiatives will be implemented to improve the business environment, and actions will be taken to address prominent issues in the area of attracting foreign investment. We will establish new systems for a higher-standard open economy. Efforts will be made to ensure that China’s eight major steps for supporting the high-quality development of the Belt and Road Initiative are implemented and that both major signature projects and small yet effective wellbeing projects are carried out. We will further enhance the development of the CR Express.

We will consolidate the fundamentals of foreign trade and investment, promote high-quality development of pilot free trade zones, and accelerate the development of the Hainan Free Trade Port. We will implement measures to remove all restrictions on foreign investment in the manufacturing sector and keep working to promote greater openness in the services sector. Moving faster to replace old growth drivers, we will take robust steps to promote new industrialization, develop the digital economy, and fully implement the national program to foster clusters of strategic emerging industries. We will promote the growth of industries of the future, promote the transformation and upgrading of traditional industries, and guide the development of a modern industrial system through scientific and technological innovation.

Strengthening overall coordination to strike a balance between promoting economic development and improving people’s wellbeing, between seeking development and ensuring security, and between reducing carbon emissions and pollution, and pursuing green development and economic growth

While pursuing high-quality development, we will work to improve people’s wellbeing, placing a stronger emphasis on our employment-first orientation to promote employment for key groups such as college graduates, veterans, and migrant workers.

We will vigorously increase people’s incomes and provide more social assistance to meet the needs of those in difficulty. We will improve the social security and the basic public service systems. We will move faster to improve our policy system for boosting the birthrate and develop the silver economy. This will help ensure high-quality population development.

We will continue to consolidate and build on our achievements in poverty alleviation and resolutely ensure that no large number of rural residents become poverty-stricken again. We will strengthen security guarantees in areas such as food, energy resources, industrial and supply chains, and data, so that risks are prevented and resolved in key areas.

We will make sustained efforts to keep our skies blue, waters clear, and lands clean and make strides in building a beautiful China. We will take stronger steps to conserve resources and encourage resource recycling. We will advance carbon peaking and carbon neutrality with proactive and prudent measures, accelerate energy-saving retrofits, and expand renewable energy consumption. We will gradually transition away from controlling the total amount and intensity of energy consumption toward controlling both the amount and intensity of carbon emissions. These efforts will see us driving a comprehensive green transformation in economic and social development.

(Originally appeared in Qiushi Journal, Chinese edition, No. 1, 2024)