UNDERSTAND MAJOR ISSUES CONCERNING MEDIUM- AND LONG-TERM ECONOMIC AND SOCIAL DEVELOPMENT

UNDERSTAND MAJOR ISSUES CONCERNING MEDIUM- AND LONG-TERM ECONOMIC AND SOCIAL DEVELOPMENT*

August 24, 2020

One of our Party’s main approaches to governance involves guiding economic and social development through medium- and long-term plans. We have formulated and implemented 13 five year plans since 1953 – eight since we launched reform and opening up in 1978. This has promoted China’s economic and social development, increased our composite national strength, improved our people’s lives, and created a unique combination of rapid economic growth and long-term social stability. Our past experience has shown that medium- and long-term plans enable the market to play the decisive role in resource allocation, and the government to better fulfill its functions.

The 14th Five-year Plan period (2021-2025) will cover the first five years of our new journey towards the Second Centenary Goal of building a modern socialist country in all respects, after we reach the First Centenary Goal of achieving moderate prosperity. China will enter a new development stage. To be prepared ensures success, and to be unprepared spells failure. We should study new situations and draw up new plans from long-term and overall perspectives with an open attitude to all suggestions. 

First, take a dialectical view of the fresh opportunities and challenges arising in the new development stage. I have reiterated on many occasions since the 19th CPC National Congress in 2017 that the world today is undergoing change on a scale unseen in a century. The current Covid-19 pandemic is accelerating this process. Protectionism and unilateralism are on the rise; the world economy is stagnating; global industrial and supply chains are suffering the impact of non-economic factors; the international economic, scientific, technological, cultural, security and political landscape is experiencing profound shifts. The world finds itself in a period of turbulence and transformation. In the coming years, we should be well prepared to handle many new challenges and risks in more adverse external circumstances. 

The domestic environment for development is also undergoing profound change. China has entered a phase of high-quality development, and the principal challenge facing Chinese society has become the gap between imbalanced and insufficient development and the people’s growing expectation for a better life. Our per capita GDP has reached US$10,000; permanent urban residents make up more than 60 percent of our population; the middle-income population has surpassed 400 million; people’s expectations for a better life are rising. Our country boasts a number of strengths and conditions for further development, including the strengths of our socialist system, effective and efficient governance, good economic momentum in the long run, solid material foundations, abundant human resources, a huge market, remarkable resilience for growth, and social stability. At the same time, problems resulting from imbalanced and insufficient development are still prominent: Our capacity for innovation cannot satisfy the need for high-quality development; agriculture is not strong enough to fulfill its role as the foundation-stone of the country; the urban-rural divide, regional disparities and income inequality are all considerable; there is much work to do in eco-environmental protection; there are shortcomings in social governance and social security. 

In short, the profound changes in the domestic and international landscape during the new development stage will bring us fresh opportunities and challenges. There exist both crises and opportunities. Opportunities are nurtured in crises, and crises can turn into opportunities. We should develop a dialectical understanding of domestic and global trends, pursue national rejuvenation against a backdrop of unprecedented changes in the wider world, and grasp the new characteristics and requirements set out by the transformation of the principal challenge in Chinese society and the new conflicts and challenges brought about by the complex international situation. With a keener sense of opportunity and risk management, we should accurately understand the current changes we face, seize the initiative in making an effective response, and ultimately be the ones to seek change. We should be bold and set our sails for a headwind, be ready to turn crises into opportunities, and achieve higher-quality development that is more efficient, equitable, sustainable and secure.

Second, create a new development dynamic that prioritizes the smooth flow of the domestic economy. I have reiterated on several occasions this year the need to create a double development dynamic with the domestic economy as the mainstay and the domestic economy and international engagement providing mutual reinforcement. Made in the context of the current stage, environment and changing conditions of our country’s development, this strategic decision gives us a new edge in international economic cooperation and competition. Following recent changes in the external environment and in the factors and natural resources that affect our development, China’s international engagement with both sales of products and supply of resources on the global market is losing momentum; in contrast, the domestic economy is prospering with more vitality as the potential of domestic demand has been unlocked. Theorists have held extensive discussions on this trend, and I hope you will conduct further research and put forward sound and penetrating views.

Since the 2008 global financial crisis, China has been relying more on the domestic market. The proportion of the current account surplus in GDP has fallen from 9.9 percent in 2007 to less than 1 percent at present, and the contribution of domestic demand to economic growth has grown to more than 100 percent in seven years. In the coming years, the dominant position of the domestic market in our economy will become more apparent, and the potential of domestic demand will be further unleashed to drive economic growth. We should continue supply-side structural reform, increase domestic demand, rely more on the domestic market to increase production, distribution, circulation and consumption, adapt the supply system better to domestic demand, and achieve a higher-level dynamic equilibrium in which demand drives supply and supply creates demand. 

Of course, the new development dynamic is not a closed loop but an open-ended structure for both domestic and international economic flows. China will assume broader significance in the global economy, form closer connections with other economies, provide wider markets for other countries, and exert a gravitational pull on more goods, production factors, and resources from the international market. 

Third, build up fresh momentum for development through scientific and technological innovation. Innovation-driven growth is essential for higher-quality development. We should spare no effort in improving our capacity for independent innovation and quicken our pace to make breakthroughs in core technologies in key fields. This bears on China’s overall development, and is crucial to making the domestic economy the mainstay of the new development dynamic.

To achieve these breakthroughs, we should maximize the strength of our socialist system in concentrating resource on major projects. Relying on our super-large domestic market and complete industrial system, we should create a competitive advantage in rapid massive-scale application and upgrading of new technologies, accelerate the transformation of scientific and technological findings into commercialized products and services, raise the level of our industrial chains, and safeguard their security. We should enable enterprises to serve their principal role in innovation and become a vital force for integration of innovation factors and application of scientific and technological advances. We will create an innovation system that boosts synergy between science and technology, education, industry and finance.

Basic research is an inexhaustible source of innovation. We should increase investment and encourage long-term persistence and bold exploration of scientists, laying solid foundations for building China into a scientific and technological leader.

We should intensify efforts to foster and bring in world-class talent and research teams, step up reform of scientific research institutions to maximize the enthusiasm of their staff, and increase the output of scientific and technological research.

We should remain open in innovation and expand international exchanges and cooperation in science and technology.

Fourth, inspire renewed vitality for development through deeper reform. Reform is crucial to unleashing and developing productive forces, and the fundamental force propelling national development. China’s reform over the past four decades has achieved internationally recognized success. As society constantly progresses, the institutional framework for regulating social relations and activities should keep improving to meet the need of further unleashing and developing productive forces. 

Our reform tasks are changing in the new development stage. We must take more courage and introduce more measures to remove deep-rooted institutional barriers, uphold and improve the system of Chinese socialism, and modernize China’s system and capacity for governance. We should break new ground on the basis of what has worked in the past, and boldly explore new approaches to our future development. We should uphold and improve the basic socialist economic system, ensure the market serves as the determinant in allocating resources and the government better fulfills its functions, and foster an institutional environment of long-term stability and predictability. We should strengthen our efforts to protect property rights and intellectual property rights, build a high-standard market system, strengthen fair competition, and stimulate the vitality of market players, enabling all forces that are beneficiary to developing social productivity to fulfill their potential.

Fifth, foster new edges in international cooperation and competition through high-standard opening up. Currently, the international community is beset by concerns over the prospects of economic globalization. We think that economic connectivity and interactions between countries are still an objective need for international growth. A major driver of China’s rapid economic expansion is our increased engagement with the rest of the world. Opening up is a basic national policy. We must pursue high-standard opening up and establish new mechanisms for a higher-standard open economy to gain new edges in international cooperation and competition. We should take an active part in reforming the global economic governance system and make it fairer and more equitable. 

We need to pay attention to two aspects of opening up: One, we should cooperate with all countries, regions and enterprises who are willing to cooperate with us, including US states, local authorities and enterprises, so that opening up and cooperation are comprehensive, multilevel, and diverse. Two, we should give more emphasis to security as we open wider to the outside world. We should ensure both development and security, focusing on our own capabilities in competition, regulation, risk prevention and control to effectively shield ourselves from harm.

Sixth, open new prospects for social development through governance based on collaboration, participation, and common interests. Experience has shown us that the problems we face as our development progresses are no less than those we encountered when we were underdeveloped. As the internet has reshaped human interaction, and China’s social structure is undergoing profound change, social norms, attitudes and behaviors change accordingly. During the 14th Five-year Plan period we will have to thoroughly study these issues and take steps to address them: How to adapt to profound change in social structures, relationships, attitudes and behaviors; how to realize fuller and higher-quality employment; how to improve the social security system to realize full coverage and sustainability; how to strengthen public health and disease control; how to promote long-term balanced development of our population; and how to strengthen social governance, resolve social conflicts, and maintain stability. 

Modernity is built on a balance between order and dynamism. We must optimize social governance based on collaboration, participation, and common interests, synergize government efforts with public self-regulation and community-level self-governance, and build a community of social governance in which everyone fulfills their responsibilities and shares in the benefits. We must adopt new measures to improve grassroots social governance, and energize all the “cells” of society. Conflicts and disputes should be resolved when they first arise so that harmony and stability can be maintained at the grassroots. Greater emphasis should be placed on upholding social fairness and justice and promoting well-rounded individual development and comprehensive social progress. 

I hope that every one of you will carry out in-depth research into the issues I have emphasized above and other problems in medium- and long-term social and economic development, and achieve more results. 

Qiushi magazine recently published a speech I made on November 23, 2015 when presiding over the 28th group study session of the Political Bureau of the 18th CPC Central Committee on Marxist economics. Engels said that “the whole of its [a proletarian party’s] theory was derived from the study of political economy”, while Lenin believed that political economy “is the most profound, comprehensive and detailed confirmation and application of his [Marx’s] theory”. We should apply the methodology of Marxist economics to expand our understanding of the laws underlying China’s economic development and become more competent and proficient at managing it.

Theory stems from practice and is applied to guide practice. Over the past four decades and more since 1978, we have quickly reviewed our experiences in reform and opening up, made constant innovative progress in theory, and generated a number of important theses on major issues like development philosophy, ownership, distribution, government functions, market mechanisms, macro-regulation, industrial structure, corporate governance, public wellbeing and social governance. These theories cover the following subjects among others:

• the essence of socialism;
• the basic economic system for the primary stage of socialism;
• innovative, coordinated, green, open and shared development;
• the socialist market economy: making the market play the decisive role in resource allocation while ensuring that the government better fulfills its functions;
• China’s new normal of economic growth, supply-side structural reform, and high-quality development;
• coordinated development covering new industrialization, informatization, urbanization, and agricultural modernization, and between regions;
• the rights to own, contract and utilize rural land;
• the effective use of domestic and international markets and resources;
• the new development dynamic with the domestic economy as the mainstay and the domestic economy and international engagement providing mutual reinforcement;
• greater social fairness and justice to gradually achieve common prosperity for everyone;
• ensuring both development and security.

These achievements have provided firm guidance for China’s endeavors in economic development, and opened up new frontiers for Marxist economics.

Questions of the times inspire people to make innovative theories. It was by pondering and answering the questions of their times, that Marx, Engels, Lenin and others were able to break new ground in theory. On the choppy seas of the global economy today, a major test of our Party is whether or not we can steadily steer the great ship of China’s economy. In an extremely complex economic landscape both at home and abroad and with an overwhelming profusion of economic phenomena, studying the basic principles and methodology of Marxist political economics can help us master an effective means of economic analysis, understand economic processes, grasp the laws underlying economic development, and become more competent at keeping the socialist market economy on course. This will enable us to address theoretical and practical challenges more effectively. Our practical efforts in reform, opening up and socialist modernization in the new era are rich resources for theoretical and policy research, and there is much you theorists on socio-economics can contribute. Here I would like to share some of my expectations. 

First, you should base your research in China’s realities and apply research results to China’s practices. I hope that you will deliver papers that stem from China’s experiences and can satisfy the need for its future development, that your innovative theories and policies conform to China’s real situation and reflect Chinese features, and that you will continue to develop socialist political economics and sociology with Chinese characteristics. 

Second, you should conduct in-depth analysis and research. I hope that you will go out to learn the true conditions faced by the people and respond with pragmatic measures. Your innovative theories and policies should be well-grounded, rational, and based on realities. 

Third, you should master the intrinsic rules. Following a Marxist standpoint, viewpoint and methodology, I hope you can perceive the essence through the appearance, and distinguish long-term trends from short-term fluctuations, so that you will develop advanced and rational innovations in theory and policy.

Fourth, you should develop an international perspective. I hope you will probe into the challenges faced by humanity as a whole through the interactions between China and the rest of the world, and contribute your ideas and solutions to building a global community of shared future.

∗ Main part of the speech at a meeting with experts from economic and social sectors.

(Not to be republished for any commercial or other purposes.)