ON THE NEW DEVELOPMENT STAGE, PHILOSOPHY AND DYNAMIC

ON THE NEW DEVELOPMENT STAGE, PHILOSOPHY AND DYNAMIC*

January 11, 2021

Since the conclusion of the Fifth Plenary Session of the 19th CPC Central Committee in October 2020, provincial authorities and central departments have invested real efforts in studying, publicizing, espousing and implementing the decisions of the session in line with the Central Committee’s requirements, and their hard work has borne fruit. The Party Central Committee has organized this study session for you to gain an accurate understanding of the new development stage through in-depth discussions and exchanges of experience, with a view to fully implementing the new development philosophy, accelerating our efforts to create a new development dynamic, and promoting high-quality development during the 14th Five-year Plan period (2021-2025). This will set the stage for building a modern socialist country in all respects. 

I have spoken of the importance of studying and implementing the decisions of the Fifth Plenary Session both at the session itself and on many other occasions, such as meetings of the Central Committee Political Bureau and its Standing Committee, the Central Conference on Economic Work, and the Central Conference on Rural Work. Today, I would like to focus on four topics.

I. Accurately Understand the New Development Stage

In order to define the central tasks of current development, and set the guidelines, principles and policies for our work, it is essential to have an accurate understanding of the stage that our Party and the people have reached. This is an important approach our Party has used to move from victory to victory in leading China’s revolution, construction and reform. 

At the time of the New Democratic Revolution (1919-1949), our Party learned from its arduous efforts that this was a stage that the Chinese revolution would have to traverse. On this basis, it set the tasks, strategies and tactics that enabled it to lead the people to victory in the Chinese revolution. When the PRC was founded in 1949, our Party was keenly aware that a transitional period would be required to move from new democracy to socialism. It therefore formulated a general guideline for this period, which enabled our country to complete its socialist revolution and evolve smoothly into the period of socialist construction. Following the introduction of the reform and opening-up policy in 1978, the Party reviewed the experience and lessons drawn from socialist development around the world, particularly in China, and concluded that China was in the primary stage of socialism and would remain so for a long time to come. Based on this judgment, it set the basic guideline that led to a new phase of reform, opening up, and socialist modernization. Since the 18th CPC National Congress in 2012 the Central Committee has built on the sustained efforts of our predecessors, by pursuing a holistic approach to the Five-sphere Integrated Plan and coordinated implementation of the Four-pronged Comprehensive Strategy. As a result, we have witnessed historic achievements and transformations and brought socialism with Chinese characteristics into a new era. 

The 19th CPC Central Committee determined at its Fifth Plenary Session in 2020 that having realized the First Centenary Goal of building a moderately prosperous society in all respects, China would build on this achievement and embark on a new journey towards the Second Centenary Goal of building a modern socialist country in all respects, thus signifying the beginning of a new stage of development. This strategic assessment was based on the following considerations:

From a theoretical standpoint, Marxism embraces both high ideals and practical targets, and insists on the unity between historical necessity and the stage-specific nature of development, in the belief that as human society moves ultimately towards communism, it must pass through certain historical stages along the way. While applying the basic tenets of Marxism to the practical problems of China, our Party came to realize that the development of socialism is a continuous historical process made up of different stages. Between late 1959 and early 1960, Mao Zedong said after reading the Soviet textbook Political Economy, “It is possible to divide the period of socialism into two stages: One could be called underdeveloped socialism and one comparatively developed socialism. This latter stage may take even longer than the first.” In 1987, Deng Xiaoping stated, “Socialism itself is the first stage of communism, and here in China we are still in the primary stage of socialism — that is, the underdeveloped stage. In everything we do we must proceed from this reality, and all planning must be consistent with it.” The new development stage we have now reached is just one part of the primary stage of socialism, but thanks to many decades of hard work, it is a period that marks a new starting point for us. 

From a historical standpoint, this new stage will see our Party lead the people in completing the historic transformation from standing up and becoming better off to growing in strength. After its founding in 1921, the CPC united the people and led them through a bitter, 28-year-long struggle to establish the PRC and make the historic transition from the New Democratic Revolution to socialist revolution. After the founding of the PRC, the Party led the people in creatively carrying out a socialist transformation, establishing socialism as China’s basic system, and promoting socialist economic and cultural progress on a large scale. The Chinese people stood upright and held firm as they completed the historic transition from socialist revolution to socialist construction. On entering a new historical period, it led the people in launching the great new revolution of reform and opening up, which sparked tremendous enthusiasm, initiative and creativity and opened up the path of socialism with Chinese characteristics. As China made large strides in catching up with the times, it took yet another huge leap forward in the process of socialist modernization and embraced the bright prospects of national rejuvenation. Based on the achievements of the past, we are now writing a new chapter — building China into a modern socialist country in all respects.

In terms of the present reality, we now possess solid material foundations for a new journey towards an even higher goal. Thanks to tireless efforts since the founding of the PRC and especially in the past four decades since the launch of reform and opening up, by the end of the 13th Five-year Plan period (2016-2020) China had scaled new heights in economic development, science and technology, composite national strength, and living standards. China is now the world’s second largest economy, the largest industrial nation, the largest trader of goods, and the largest holder of foreign exchange reserves. China’s GDP has exceeded RMB100 trillion and stands at over US$10,000 in per capita terms. Permanent urban residents account for over 60 percent of the population, and the middle-income group has grown to over 400 million. Particularly noteworthy are our historic successes in building a moderately prosperous society in all respects and eliminating absolute poverty — a problem that has plagued our nation for thousands of years. These are significant milestones in the process of our socialist modernization; they pave the way as we march towards the Second Centenary Goal in the new development stage. 

Shortly after the founding of the PRC, our Party put forward the goal of building a modern socialist country. Over the course of 13 five-year plans, we have laid solid foundations for achieving this goal. The next 30 years make up the development stage in which we will finally complete this great ambition. We have worked out the road map and timetable for our development. By 2035, or within three five-year plan periods, we will achieve basic socialist modernization. Then, by the middle of this century, after completing another three five-year plans, China will become a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful. 

The world today is undergoing change on a scale unseen in a century. The recent international situation could be best described by the word “disorderly”, and it appears that this trend will continue for quite some time. The response to the Covid-19 pandemic is a litmus test for the leadership capabilities and strengths of the social systems of all countries. The fact that time and momentum are on our side gives us reassurance, resolve and confidence.

That said, we must fully recognize that although China remains in an important period of strategic opportunity for development, and will remain so for some time to come, both the opportunities and challenges we face are changing. Though the two are unprecedented in their extent, the opportunities generally outweigh the challenges. The ancient Chinese philosopher Han Fei Zi once said, “We should manage the small and simple things with care so as to avoid difficulties and disasters.” All of us in the Party must remain modest, prudent and committed to hard work; we must mobilize all positive factors, unite all available forces, and focus on managing our own affairs well, as we work towards our objectives with all our resolve. 

Our task is to build China into a modern socialist country in all respects. Of course, this modernization is tailored to China’s realities and carries distinctive Chinese features. At the Fifth Plenary Session, I highlighted five points in particular: China’s modernization must cover a massive population, lead to common prosperity, deliver material, cultural and ethical progress, promote harmony between humanity and nature, and proceed along a path of peaceful development. This is the approach China must take. It must be embodied in our principles, policies, strategies, measures and work plans to enable the Party and the Chinese people to work together towards this end.

The new development stage is an important part of socialist development in our country. In 1992, Deng Xiaoping stated, “We have been building socialism for only a few decades and are still in the primary stage. It will take a very long historical period to consolidate and develop the socialist system, and it will require persistent struggle by many generations, a dozen or even several dozens. We can never rest on our oars.”

In my opinion, Deng was making this observation from a political perspective. He was pointing out that it would take a fairly long period of hard work to turn China into a modern country given the weak economic foundations of the time. But he was also emphasizing that we must persevere with China’s socialist system from one generation to the next, even after modernization is achieved. We must work continuously to find ways to consolidate and develop socialism, for no solution can last forever once in place. 

Mao Zedong once said, “All things have their boundaries. The way things develop is that one stage leads to another, advancing without interruption. But each and every stage has a boundary. To deny that boundary is to deny qualitative changes, full or partial.”

The primary stage of socialism is not a static, rigid or stagnant period, nor is it a spontaneous and passive stage that can easily and naturally be passed through. Rather, it is a stage of dynamism, action and promise, one that should always brim with vitality. It develops gradually but ceaselessly, moving from quantitative increases to qualitative leaps. Building a modern socialist China in all respects and realizing basic socialist modernization are essential for China’s development in the primary stage of socialism, and essential for China to advance from the primary stage to a higher stage of socialism.

II. Apply the New Development Philosophy in Full

To lead the people in exercising governance, we must be clear about what kind of development we want and how to achieve it. On October 29, 2015, at the Fifth Plenary Session of the 18th CPC Central Committee, I stated, “Philosophy is the precursor of action, and likewise, certain developments are led by certain philosophies. Philosophy decides, in a fundamental manner, the success of results. Practice has shown us that as development will undergo changes influenced by the prevailing environment and conditions, development philosophy will change accordingly.” 

Since the 18th CPC National Congress in 2012, based on a careful assessment of the economic situation, our Party has made timely adjustments to our development philosophy and our way of thinking, which have resulted in historic progress and transformation in the economic development of our country. Here, I would like to mention the most significant factors.

First, we have followed the people-centered philosophy of development. On November 15, 2012, when the new Standing Committee of the Political Bureau of the 18th CPC Central Committee met with Chinese and foreign journalists, I emphasized our dedication to the goal of meeting the people’s aspirations for a better life and to the path of common prosperity. On October 29, 2015, at the Fifth Plenary Session of the 18th CPC Central Committee, I presented the vision of people-centered development. On October 29, 2020, at the Fifth Plenary Session of the 19th CPC Central Committee, I further emphasized the need to make substantive progress in promoting common prosperity for all our people. 

Second, we have stopped thinking that the GDP growth rate is the sole barometer of success. On December 15, 2012, at the Central Conference on Economic Work, I emphasized that we cannot blindly pursue rapid growth with no regard for objective laws and conditions. On April 25, 2013, at a meeting of the Standing Committee of the Political Bureau, I emphasized that local governments should not take national regulatory growth targets as the baseline for local economic development, nor should they compete with each other to achieve higher growth rates. I highlighted the need to focus on improving the quality and returns of growth, so as to achieve sustained and healthy development, realize genuine rather than inflated GDP growth, and raise economic efficiency, quality and sustainability. 

Third, China’s economy has entered a period of complexity. On July 25, 2013, at a meeting of the Standing Committee of the Political Bureau, I noted that our economy was now facing a complex situation which involved a shift in the growth rate, a painful structural adjustment, and a need to absorb the fallout of previous stimulus policies. At the same time, the global economy was also in a period of profound adjustment, which made for a very complex international environment. This required us to gain a proper understanding of the characteristics of China’s current development stage and to undertake reforms and adjustments as needed. 

Fourth, China’s economy has entered a new normal. I pointed this out on December 10, 2013, at the Central Conference on Economic Work. At the same conference on December 9 the following year, I analyzed nine development trends to explain why our economic development had entered a new normal. I made it clear that understanding the new normal, adapting to it, and guiding it would constitute the main theme of China’s economic development both at that time and in the period ahead. 

Fifth, we have enabled the market to play the decisive role in resource allocation, and the government to better fulfill its functions. I said at the Third Plenary Session of the 18th CPC Central Committee in November 2013 that the market is the most efficient means of allocating resources, and that it is a general economic law that the market decides the allocation of resources, thereby redefining the role of the market in China’s economy. 

Sixth, we have committed to the idea that lucid waters and lush mountains are invaluable assets. I put forward this concept during a speech at Nazarbayev University in Kazakhstan on September 7, 2013. I explained that developing an eco-civilization and building a beautiful China is a mission of strategic importance, because we want to leave behind a beautiful homeland with blue skies, green fields, and clean waters for our future generations. I reiterated this point during the deliberation session of the Guizhou delegation to the Second Session of the 12th National People’s Congress on March 7, 2014. 

Seventh, we have applied the new development philosophy. I proposed the idea of innovative, coordinated, green, open and shared development at the Fifth Plenary Session of the 18th CPC Central Committee in October 2015. I explained that under this new philosophy, innovative development focuses on growth drivers; coordinated development aims to solve imbalances; green development highlights harmony between humanity and nature; open development prioritizes interactions between China and the international community; and shared development underpins social fairness and justice. I said at the session that the introduction of the new development philosophy marked a profound change with important implications for China’s overall development.

Eighth, we have launched supply-side structural reform. At a meeting of the Central Leading Group for Financial and Economic Affairs on November 10, 2015, I called for a greater effort to promote supply-side structural reform. I stated on December 18, 2015, at the Central Conference on Economic Work, that the five priorities in promoting supply-side structural reform were cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening areas of weakness. At the same conference on December 19, 2018, I proposed the guidelines of consolidating the gains in the five priority tasks, strengthening the dynamism of micro entities, upgrading industrial chains, and ensuring unimpeded flows in the economy. I pointed out that these guidelines constituted a general requirement for furthering supply-side structural reform and spurring high-quality economic development both at that time and in the period ahead.

Ninth, we have striven to resolve imbalances and insufficiencies in development. At the 19th CPC National Congress in October 2017, I concluded that the principal challenge facing our society had evolved into the gap between imbalanced and insufficient development and the people’s growing expectation for a better life. I noted that this represented a historic shift that could affect the whole development prospect. 

Tenth, we have worked to deliver high-quality development. At the 19th CPC National Congress, I pointed out that China’s economy was transitioning from rapid growth to high-quality development, in order to address the principal challenge now facing our society and implement the new development philosophy. 

Eleventh, we have endeavored to modernize our economy. As I said at the 19th CPC National Congress, this is both an urgent requirement for getting us smoothly through this critical transition and a strategic goal for China’s development. 

Twelfth, we have moved to create a double development dynamic with the domestic economy as the mainstay and the domestic economy and international engagement providing mutual reinforcement. I put forward this strategy on April 10, 2020 at a meeting of the Central Commission for Financial and Economic Affairs.

Thirteenth, we have adopted a holistic approach to development and security. At a group study session of the Political Bureau on May 29, 2015, I emphasized security-based development. On January 18, 2016, at a study session for principal officials at the provincial and ministerial level, I analyzed the risks and challenges we faced in four fields on the path of open development. On January 5, 2018, at a study session for members and alternate members of the newly elected CPC Central Committee and principal officials at the provincial and ministerial level, I listed 16 risks in eight fields that required our full attention. On January 21, 2019, we began a special study session for principal officials at the provincial and ministerial level on worst-case scenario thinking, to forestall and defuse major risks. At the opening ceremony of that study session, I examined major risks in the political, ideological, economic, social, and scientific and technological domains, in China-US trade friction, in foreign affairs, and within our Party. I also set out clear requirements for preventing and resolving such risks, and emphasized the need to stay keenly alert to “black swan” and “gray rhino” events.

In reviewing this course of events, I wish to underline the paramount importance of the new development philosophy among the key theories and concepts on economic and social development that we have put forward since the 18th CPC National Congress. As a systematic framework, the new development philosophy addresses a series of theoretical and practical questions regarding our development goals, drivers, methods and pathways, and defines the key political parameters, including our stance, values, and model and path of development. The whole Party must apply the new development philosophy in full, to the letter and in all fields. To this end, we should do the following in its implementation:

First, we need to understand the fundamental aim of the new development philosophy. 

As an ancient Chinese statesman observed, “In a country, the people are the most important.” The people represent the most solid foundation and the greatest source of strength for our Party in governing the country. 

Working for the wellbeing of the people and the rejuvenation of the Chinese nation is the immutable aim of our Party in leading the modernization drive. It is the ultimate goal of all our work, and also the root and essence of the new development philosophy. We will gain a sound understanding of development and modernization only if we follow a people-centered approach and adhere to the principle that development is for the people and by the people, and that its benefits are shared by the people.

The Soviet Union was the world’s first socialist country and once enjoyed spectacular success. Ultimately, however, it collapsed. One main reason for its failure was that the Communist Party of the Soviet Union became detached from the people and turned into a group of privileged bureaucrats who only served their own interests. Even in a modernized country, if the party in power turns its back on the people, it will imperil the fruits of modernization. 

Realizing common prosperity is more than an economic goal. It is a major political issue that bears on the foundations of our Party’s governance. We must not allow the gap between rich and poor to get any wider — where the poor keep getting poorer while the rich continue to grow richer. We cannot permit the wealth gap to become an unbridgeable gulf. Of course, we must pursue common prosperity in a progressive manner, giving full consideration to what is necessary and what is possible and adhering to the laws governing economic and social development. 

At the same time, however, we cannot afford to just sit around and wait. We must be proactive about narrowing the gaps between regions, between urban and rural areas, and between rich and poor. We should promote all-round social progress and well-rounded personal development, advocate social fairness and justice, and ensure that development offers greater benefits to all the people in a fair way. We should see that our people have a stronger sense of gain, fulfillment and security, and make them understand that common prosperity is not an empty slogan, but a concrete fact that they can see and feel for themselves. 

Second, we need to stay problem-oriented in implementing the new development philosophy. 

Today, China stands at a new starting point, which requires us to employ a problem-oriented approach so that we can apply the new development philosophy with greater precision.

We need to effectively address imbalances and insufficiencies in order to improve the quality of our development. For example, many obstacles are impeding our progress towards greater strength and self-reliance in science and technology, which is essential to China’s survival and development. Another problem is how to narrow the wide development gaps between urban and rural areas and between regions. The answer calls for extensive and in-depth research into many new issues. In particular, we need to intensify our research, and come up with clear ideas about how to manage disparities and restructuring in regional development, accelerated population migration across regions, and a declining desire among rural residents to settle in cities. 

There is a broad consensus about promoting a green transformation in every aspect of economic and social development. However, our energy system is still heavily reliant on coal and other fossil fuels, which puts a great strain on our efforts to realize a green and low-carbon transformation in our production models and ways of life. The targets of achieving peak carbon dioxide emissions by 2030 and carbon neutrality by 2060 are formidable. 

Given the backlash against economic globalization and the complex and volatile international environment, we need to strike a good balance between strengthening self-reliance and pursuing openness and cooperation, between participating in the international division of labor and safeguarding national security, and between introducing foreign investment and conducting security reviews, so that China can open wider to the outside world without prejudice to its national security.

In short, at the new development stage, we need to expand our understanding of the new development philosophy, so that we can take more targeted and more concrete measures that will truly deliver high-quality development. 

Third, we need to be mindful of potential risks. 

“Prior planning prevents pitfalls and proper preparation preempts perils.” As the principal challenge in our society has changed and the global balance of power is shifting, China will have to contend with more internal and external risks. We must be more aware of potential dangers, have plans in place to counter worst-case scenarios, and prepare for more complex and graver challenges.

The Central Committee prioritized issues of security in its Recommendations for Formulating the 14th Five-Year Plan. It advises that we ensure security in all areas and throughout the process of China’s development. If our security foundations are unstable, our development will be precarious. We should uphold political security, the safety of the people, and the interests of the nation as an indivisible whole. We must have the courage and capacity to meet challenges, and build up our strength to deter threats. 

We should prevent drastic fluctuations in the macro economy and avoid excessive foreign investment inflows or outflows in the capital market. We must ensure the security of food, energy, and key resources, as well as the stability and security of industrial and supply chains. We need to prevent the disorderly expansion and unchecked growth of capital, and ensure eco-security and workplace safety. We should guard against the risk of large-scale job losses, improve public health security, and effectively prevent and handle incidents of social disturbance. 

In strengthening the institutional framework for safeguarding national security, we should draw on the experience of other countries, work out how to establish appropriate safeguards where necessary, and identify effective solutions for a range of national security issues.

III. Move Faster to Create a New Development Dynamic

The Recommendations for Formulating the 14th Five-Year Plan for Economic and Social Development and Long-Range Objectives Through the Year 2035 defined the creation of a new development dynamic with the domestic economy as the mainstay and the domestic economy and international engagement providing mutual reinforcement. This major strategy concerns our country’s overall development interests and must be thoroughly understood and actively implemented.

In recent years, we have witnessed a backlash against economic globalization and profound changes affecting the international economy. The Covid-19 pandemic exacerbated opposition to globalization, and many countries have now become more inward-looking. During the epidemic, I visited several provinces to gain an in-depth understanding of their measures to contain the virus and the problems in reopening the economy. During my visit to Zhejiang Province, I found that global industrial and supply chains had been partially disrupted due to the pandemic. This had directly impacted the domestic economy. Many companies were forced to suspend operations because they could not bring in the raw materials and personnel they needed or send their goods overseas. I realized just how much things had changed; the environment and the conditions that had facilitated large-scale imports and exports were no longer in place.

Given these new circumstances, we needed to come up with new thinking to steer development. Accordingly, in April last year I proposed that we create a double development dynamic. At the Fifth Plenary Session of the 19th CPC Central Committee in October, we adopted comprehensive measures to launch this strategy. The establishment of the new development dynamic is a strategic and proactive step for taking the initiative in development, a major historic mission that must be fulfilled in the new development stage, and an important measure for applying the new development philosophy. 

As a socialist country with a large population and a vast market, China is certain to encounter various pressures and challenges in the process of modernization, the likes of which no other country has ever experienced. In 1936, Mao Zedong made an observation that still holds true for us even today. He said, “No matter how complicated, grave and harsh the circumstances, what a military leader needs most of all is the ability to function independently in organizing and employing the forces under his command. He may often be forced into a passive position by the enemy, but the important thing is to regain the initiative quickly. Failure to do so spells defeat.” “The initiative is not something imaginary but is concrete and material.”

If we can, through our own efforts, ensure that domestic economic flows remain unimpeded, we can effectively shield ourselves from harm. We will then have the vigor and vitality not only to survive but to thrive in the most volatile international situations, making it impossible for anyone to keep us down or to press us into a corner. We must speed up our efforts to create the new development dynamic, so that we will be better able to survive, compete, and maintain sustainable development, whatever challenges or difficulties we encounter, whether anticipated or not. This way, we can ensure the goal of national rejuvenation is never delayed or the course interrupted. 

In practice, there are some misunderstandings that we need to guard against. 

First, some people tend to speak only about the first part, that is, the domestic economy as the mainstay of the new development dynamic, and call for China to sharply narrow its opening to the outside world.

Second, some others speak only of the latter part, or the mutual reinforcement between the domestic economy and international engagement, and still subscribe to the old dynamic of large scale imports and exports with both ends of the economic process – markets and resources – being located abroad, despite the changes to the international landscape. 

Third, sticking to one’s own line and focusing only on one’s own sphere of interest is also a mistake. Some are neglecting the building of a unified national market with a nationwide economic flow, preferring instead to focus on their own local or regional market. 

Fourth, some have equated unimpeded economic flows with smooth logistics and focus only on this basic level of circulation. 

Fifth, in resolving technological bottlenecks, some people want to do everything themselves, which results in redundancy, or, heedless of unfavorable conditions such as a weak industrial base, they try to carry out over ambitious projects that will ultimately fail. 

Sixth, in working to boost domestic demand and expand the domestic market, some people have once again resorted to blind lending to expand investment, or overstimulating consumption, or have even reverted to energy-intensive and high-emission projects.

Seventh, some are concentrating on demand-side management at the expense of supply-side structural reform, making it impossible to achieve a higher-level, dynamic equilibrium in which supply promotes demand. 

Eighth, some think that the new development dynamic is a matter for the economic and technology departments and hardly concerns them. 

All of these mindsets are narrow or even erroneous; we must guard against them and rectify them should they arise. 

The key to building a new development dynamic is to ensure unimpeded economic flows, as is the case in traditional Chinese medicine, where one must remove blockages to stimulate the free flow of vital energy and maintain the body’s balance. Economic activity requires the integration of various production factors at all stages, from production through distribution and circulation to consumption, in order to realize a smooth economic cycle. Under normal circumstances, this will lead to greater material production, greater social wealth, greater wellbeing for the people, and greater national strength, giving rise to an upward spiral of development. When obstructions and breakdowns occur, economic flows are disrupted. From a macroeconomic perspective, the economic growth rate drops, unemployment rises, risks arise, and the balance of payments falls into disequilibrium. At the microeconomic level, it leads to problems such as overcapacity, declining enterprise returns, and falling personal incomes.

In the present stage of China’s development, the most important task in ensuring smooth economic flows is maintaining effective operations on the supply side. If we have a strong capacity for effective supply we can clear obstructions, resolve bottlenecks, create jobs, and provide incomes, which will increase our capacity to create demand. To this end, we must treat further supply-side structural reform as our main task and continue to carry out the priority tasks of cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening areas of weakness. We must comprehensively improve and upgrade the industrial structure, increase our capacity for innovation, our competitiveness, and our overall strength, boost the resilience of the supply system, and ensure that inputs produce higher-quality outputs with greater efficiency, so as to achieve a dynamic economic equilibrium at a high level. 

I have said that the essence of the new development dynamic is realizing a high level of self-reliance. The environment for our economic development is changing, particularly with respect to our comparative advantages in production factors. As labor costs rise and the carrying capacity of our resources and environment reach their limits, the production function formula of the past is no longer sustainable, and science and technology become more and more important on all fronts. In these circumstances, it is important to put more emphasis on home-grown innovation. As a result, the Recommendations for Formulating the 14th Five-Year Plan present two major measures — promoting scientific and technological innovation, and removing bottlenecks in industry.

We must understand that these issues are vital to the survival and development of our nation. We should comprehensively strengthen planning for scientific and technological innovation to bring together superior resources, and implement a competitive mechanism to award research projects in order to promote strong and steady progress in innovation. We must better align the chains of innovation and industry, and draw up road maps, timetables and systems of responsibility. Where appropriate, relevant departments and local governments should play the leading role in this effort. Where it is appropriate for enterprises to take the lead, governments should give them their full support. State-owned enterprises directly administered by the central government and other state-owned enterprises must have the courage to shoulder their responsibilities and take the lead in making themselves the source of original technologies and the leaders of the modern industrial chain. 

In today’s world, markets are the scarcest resource. China’s market is thus a huge advantage for our country. We must make full use of this factor and steadily consolidate it to make it a strong pillar of the new development dynamic. Expanding domestic demand is not a temporary policy to cope with financial risks and external shocks, nor is it about unleashing a deluge of strong stimulus policies or increasing government investment. Rather, it is about establishing an effective institutional framework to boost domestic demand based on our country’s actual economic status, moving to tap the potential of demand, working faster to build a complete demand system, strengthening demand-side management, and expanding consumer spending while also upgrading the level of consumption, so that the development of our vast domestic market becomes a sustainable process. 

To create a new development dynamic and pursue high-standard opening up, we require robust domestic economic flows and stable economic fundamentals. On this base, we can create a strong pull for global production factors and resources, increase our ability to hold our own amid intense international competition, and build powerful momentum for the allocation of global resources. We should continue to expand opening up based on the flow of production factors such as goods, services, capital and talent, and steadily expand institutional opening up with regard to rules, regulations, management and standards. We should ensure that China’s domestic economy plays a stronger role in guiding the double development dynamic, and foster new strengths for China’s participation in international economic cooperation and competition. We should work to harness international engagement as a means of raising the efficiency and level of the domestic economy and improving the quality and allocation of our production factors. Through competition in the international market we will boost the competitiveness of our export products and services, and promote industrial transformation and upgrading to increase China’s influence in global industry chains, supply chains, and innovation chains. Chinese enterprises now have interests that extend to many countries around the world. This requires that we pay more attention to understanding international affairs and carrying out thorough studies on countries that are our stakeholders, trading partners, and investment destinations, in order to establish a clear picture of potential benefits and risks.

To sum up, the requirements to enter a new development stage, apply a new development philosophy, and build a new development dynamic are determined by the historical, theoretical, and practical logic of our country’s economic and social development. These three elements are closely interrelated. Our entry into the new development stage clarifies the historic juncture that national development has reached; the new development philosophy makes clear the guiding principles behind our modernization drive; and the new development dynamic elucidates the path that will take us to economic modernization. An understanding of the new development stage will provide us with the practical basis for applying the new development philosophy and creating a new development dynamic. The new development philosophy will provide us with a guide for understanding the new development stage and creating a new development dynamic. Creating a new development dynamic is a strategic choice in terms of our response to the opportunities and challenges in the new development stage and our implementation of the new development philosophy.

IV. Strengthen Overall CPC Leadership in Socialist Modernization

CPC leadership is the defining feature of Chinese socialism, in which the combinations of theoretical and practical innovation and of confidence in the system and culture feature most prominently. Together they evolve into strengths in politics, theory, system and culture that boost development. The implementation of decisions of the Fifth Plenary Session of the 19th CPC Central Committee should operate in parallel with those of the Fourth Plenary Session. In modernizing China’s governance system and capacity, we must unify the political strengths of overall Party leadership, the institutional strengths of Chinese socialism, and the theoretical strengths of our new development philosophy. While exercising the Party’s leadership in socialist modernization, we must make its division of functions more rational, reinforce its systems and mechanisms, and render its operations and management more efficient.

Implementing the decisions of the Fifth Plenary Session of the 19th CPC Central Committee determines the overall development of the undertakings of the Party and the state in the coming five to 15 years and even longer. The Recommendations for Formulating the 14th Five-Year Plan adopted at the meeting is rich in content. It lays out guiding principles, strategic thoughts, overall plans, and specific requirements. It includes both strategies for implementation since the 18th CPC National Congress, and major new assessments and strategic measures. Without hard effort you will not gain a good grasp of this document, and without a good grasp you will miss the point and fail to enforce it effectively. Leading officials at all levels, particularly those in senior positions, must study the original text paragraph by paragraph, and have a good understanding of the key points and innovative proposals while bearing the overall picture in mind. You should carry forward the good tradition of combining theory with practice, consider both the current situation and long-term development, and increase enthusiasm, initiative and creativity in your work. 

I have emphasized on many occasions that high-ranking officials must make themselves into Marxist statesmen and stateswomen, and leading officials at all levels must take a clear political stance. Not long ago, I reiterated this at a criticism and self-criticism meeting among members of the Political Bureau. Economic work has never been abstract or isolated; it is a network of specifics. You officials at all levels, and particularly those in senior positions, must consider the overarching goal of national rejuvenation in the context of change on a scale unseen in a century. You must improve your political acumen, understanding and capacity to deliver, and bear in mind matters of national significance. You must improve your political ability, strategic vision, and professional knowledge in understanding the new development stage, acting on the new development philosophy, and creating the new development dynamic. You should readily take on responsibilities, and fully implement decisions and plans of the Central Committee. 

In leading this huge Eastern country with over one billion people towards socialist modernization, our Party must seek truth from facts, pursue progress while ensuring stability, advance our work in a coordinated manner, and strengthen forward thinking, overall planning, strategic deployment, and comprehensive progress. Thus we can achieve rapid, efficient and secure development while maintaining quality, structure and scale. No region or ethnic group will be left behind when the whole country is working hard towards the goal of realizing all-round socialist modernization. At the same time, we must understand that regional disparities and imbalanced development make concurrent modernization impossible. So we should encourage the most capable regions to take the lead and support other regions to this end.

The Spring Festival is approaching. Local Party and government officials must pay more attention to Covid-19 prevention, and ensure security, stability, people’s wellbeing, and supply of goods. You should identify problems early, attend to details, make real efforts to neutralize risks, and create a peaceful and harmonious social environment. You must make Covid-19 prevention and control regular and consistent, fully and carefully implementing the necessary measures to bring sporadic outbreaks under quick and effective control. You must undertake a full review of any social tension, increase your analytical capability, and avoid or mitigate all potential risk factors through a proactive approach. Supply of energy and other goods, and transport safety must be ensured during the Spring Festival. A sound prevention and control system must be put in place to combat all crimes endangering people’s lives and property and ensure social stability. Problems that might trigger incidents of social disturbance such as defaulting on payments to construction enterprises and delaying rural migrant workers’ wages must be settled quickly. 

Comrades, a statement made by Deng Xiaoping in 1992 often rings in my ears: “If we can make China a moderately developed country within a hundred years from the founding of the People’s Republic, that will be an extraordinary achievement. The period from now to the middle of the next century will be crucial. We must immerse ourselves in hard work: We have difficult tasks to accomplish and bear a heavy responsibility.”

Now, the tasks and responsibilities fall on us. We must step forward to take on these responsibilities, unite the people, lead them to work diligently, and deliver results that live up to the expectations of the Party, the people and history.

* Speech at a study session on implementing the decisions of the Fifth Plenary Session of the 19th CPC Central Committee, attended by principal officials at the provincial and ministerial level.

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