Accelerating the Formation of a New Development Dynamic

At the seventh meeting of the 19th Central Commission for Financial and Economic Affairs in April 2020, President Xi Jinping introduced his strategic vision for fostering a new development dynamic. Over the past five years, President Xi has, based on our reform and opening up needs in this era, put forward a series of important conclusions on fostering a new development dynamic. These insights have charted the right course forward for this endeavor, providing fundamental guidance on reinforcing the foundations of China’s economic development while also enhancing development security and stability.

I. The rich dimensions of the new development dynamic

President Xi’s strategic vision for fostering a new development dynamic captures the distinctive features of our times and stands as an original and defining concept within the framework of Xi Jinping thought on the economy. To understand and accurately grasp the rich dimensions of this vision, we must ground ourselves in the domestic economic context. We must properly handle the relationship between the domestic and international economies, focus on resolving economic chokepoints and obstructions, and strive to achieve greater self-reliance and strength in development. We must harness the new development dynamic to respond to new changes, cultivate new strengths, and secure new breakthroughs. The new development dynamic is primarily defined by the following features.

It is focused on the domestic economy

China is now the world’s second-largest economy, largest manufacturer, and largest trader of goods. It is thus no longer feasible for China to continue participating in the international economy based on a model where the two ends of the economic process—markets and resources—are located abroad. Adjusting the relationship between the domestic and international economies has thus been an imperative for some time now. From an international perspective, the general laws of economic development dictate that major nations and powers have inherent drive and reliable domestic economic factors. Major developed countries generally possess large domestic markets, with final consumption rates remaining as high as 70% to 80%. In the case of China, we are now working toward modernization for more than 1.4 billion people, a population larger than that of all existing developed countries combined. The difficulty and complexity of the task are unprecedented. The instability and uncertainty of the external environment mean that China must have a robust domestic market and a free-flowing economy. Only on this basis will it have the resilience to maintain normal economic operations and social stability in even the most extreme scenarios. This will ensure that the future and initiative of national development and progress remain firmly in our own hands.

The AI robot Xingqi No. 8 is pictured on the opening day of the Project X: Interstellar Friendship Initiative at the China Science and Technology Museum, Beijing, June 28, 2025. The museum co-hosted the large-scale aerospace sci-fi exhibition with Tianshu Huanyu (Beijing) Aerospace Technology Co., Ltd., taking visitors on an immersive journey through space using extended reality technology. In recent years, China’s AI industry has experienced vigorous growth, with AI rapidly becoming an integral part of daily work and life. PHOTO BY XINHUA REPORTER JIN LIWANG

It features open flows between the domestic and international economies 

Focusing on the growth of the domestic economy is by no means about pursuing closed-door development. Rather, it entails making better use of both domestic and international markets and resources. China is now deeply embedded within the fabric of the global economy. It has realized high levels of industrial connectivity and interdependence with many countries, and demand in its market and the international market is interdependent and mutually reinforcing. It is fair to say that China must be open to the world to achieve development, while the world needs China’s engagement to realize prosperity. In recent years, the international environment has become increasingly complex. However, regardless of how international circumstances may shift, China will not close its doors to the world; instead, it will only become even more open. To foster a new development dynamic, we must pursue a broader agenda of opening up across more areas and in greater depth. By promoting openness and cooperation with the international economy, we can raise the efficiency and quality of domestic economic flows while strengthening connectivity and synergy between domestic and international markets and resources. 

It hinges on ensuring unimpeded economic flows 

By and large, unimpeded economic flows are only achievable when there is robust momentum on both the supply and demand sides and when there is overall alignment, dynamic balance, and positive interactions between the two. At present, China’s economic flows are still hampered by certain problems and constraints, because the supply system has yet to fully adapt to structural changes in demand. Our efforts to foster a new development dynamic should, therefore, start with realizing unfettered economic flows. To achieve this, we must coordinate the strategy to expand domestic demand with deepened supply-side structural reform, driving progress on both sides and aligning the two in a way that delivers higher-quality and more efficient economic flows. It should also be recognized that a new development dynamic focused on domestic economic flows needs to be underpinned by a unified national market. It must not and cannot be premised on “small and complete” economic systems within individual provinces, cities, or counties. 

Its distinguishing feature is a high level of self-reliance and strength

In modern history, the strongest and most competitive countries at any given stage all possessed an outstanding capacity for homegrown technological innovation. In this period of unprecedented intensity for innovation, the new wave of technological revolution and industrial transformation stands as the greatest factor of uncertainty, but one that is unavoidable nonetheless. Opportunities beckon for those who catch this wave, while challenges await those who do not. Those who lack core technologies in key fields and cede control of vital supply chains to others will essentially be building their house on borrowed foundations—no matter how grand or impressive, it could topple or be torn down at any time. We must, therefore, work to secure breakthroughs in core technologies in key fields and make sure our industrial and supply chains are self-supporting, controllable, secure, and reliable. Only then will we be able to realize greater self-reliance and strength in science and technology and have a firm technological foundation for the new development dynamic. 

II. The increasing advantages for a new development dynamic in China

The Central Committee of the Communist Party of China (CPC) with Xi Jinping at its core made the major strategic decision to foster a new development dynamic based on the need to accomplish the Second Centenary Goal and achieve a balance between development and security imperatives. It is the result of President Xi’s profound and long-term strategic thinking and planning for China's overall economic and social development. Since this concept was introduced, it has had a transformative impact on China’s reform and development and has proven remarkably effective in practice.

Enhancing internal economic momentum through the strategy to expand domestic demand

We have continued to unlock consumption potential by promoting income growth and reducing burdens on residents, refining the systems and mechanisms for encouraging consumption, and coordinating efforts to promote consumption and improve public wellbeing. We have also enhanced the consumer environment and created new consumption scenarios. Between 2021 and 2024, final consumption accounted for 56.2% of economic growth on average. We have realized a steady expansion in effective investment by improving the institutional frameworks that enable government investment to drive private investment, while also enhancing and refining investment management. Between 2021 and 2024, capital formation through investment accounted for 30.2% of economic growth on average. 

The dynamic balance between supply and demand has shifted to a higher level, thanks to our efforts to both deepen supply-side structural reform and expand domestic demand. A steady stream of new industries and new forms and models of business have emerged, helping to unlock investment potential and boost consumer vitality. In 2024, China led the world alternative energy vehicle market for the tenth consecutive year, with annual production and sales of vehicles both topping the 10 million-unit threshold. Furthermore, the value added of core digital economy industries rose to around 10% of GDP.

Achieving greater self-reliance and strength in science and technology thanks to the new system for mobilizing resources nationwide

With the full implementation of the innovation-driven development strategy, China has quickly developed new quality productive forces, boosted its strength in science and technology with strategic dimensions, and realized greater integration across chains of innovation, industry, capital, and talent. All this has bolstered its competitiveness in the sphere of technological innovation.

There has been a striking increase in our overall capacity for innovation. Nationwide R&D investment reached 3.61 trillion yuan in 2024, the second-highest in the world, while China rose to the 11th place in the Global Innovation Index. We have made faster strides in enhancing scientific and technological self-reliance by improving the systems and mechanisms for original and cutting-edge scientific research. This has led to continuous breakthroughs in clearing bottlenecks in key areas and at critical links, and given rise to a host of new advances in integrated circuits, artificial intelligence, quantum technology, and other fields. Moreover, these achievements are rapidly being turned into industrial applications. Amid an intense race in the artificial intelligence arena, Chinese large-language models have swiftly risen to prominence. Industrial robot density has improved significantly, and embodied intelligence is moving rapidly toward practical application. These developments are propelling China toward the frontiers of global technological innovation and industrial application. 

Advancing the development of a unified national market by dismantling institutional and structural barriers

With a focus on breaking down barriers to factor mobility, the government has issued and implemented a number of key documents: the Interim Guidance on Building a Unified National Market, Guidelines on Improving the Market Access System, and Measures for Implementing Fair Competition Review Regulations. All this has facilitated the smooth flow of goods, factors, and resources across broader areas. We have also continued to improve the underlying institutions and rules of the market economy. The negative list for market access has been reduced from 123 items in the 2020 version to 106 in the 2025 version, and the systems underpinning the market economy, such as those for property rights protection, market access, fair competition, and social credit, have been refined. 

The reforms for market-based allocation of production factors have picked up speed, and the development of a unified, regulated human resources market is proceeding smoothly. In 2024, the total volume of national technology contract transactions reached 6.8 trillion yuan, registering double-digit growth for the eighth consecutive year. The modern logistics system has also been refined. The national integrated, multi-dimensional transportation network now exceeds six million kilometers in length. The network’s core framework—consisting of six axes, seven corridors, and eight channels—is essentially in place. In 2024, the ratio of total national logistics costs to GDP dropped to 14.1%, the lowest level ever since the introduction of related statistical indicators in 2006.

Enhancing the spatial layout of the domestic economy to promote coordinated development between urban and rural areas and between regions

We have implemented the new people-centered urbanization strategy, the rural revitalization strategy, and the coordinated regional development strategy. This has allowed us to promote the rational flow and efficient clustering of various production factors, and to drive broader economic flows throughout the country. People-centered urbanization is unfolding at a faster pace, with the share of permanent urban residents in the total population rising from 63.9% in 2020 to 67% in 2024. Notable progress has been made in granting permanent urban residency to people who have moved to cities from rural areas, with over 170 million obtaining permanent residency since household registration reforms were launched in 2014. We have fully implemented the rural revitalization strategy, accelerating the integrated development of the primary, secondary, and tertiary industries in rural areas, thus creating wider avenues for rural income growth. The disparity between urban and rural incomes has continued to shrink, with the urban-rural income ratio declining from 2.56:1 in 2020 to 2.34:1 in 2024. 

Development between regions is more coordinated than ever. The three major economic engines of the Beijing-Tianjin-Hebei region, Guangdong-Hong Kong-Macao Greater Bay Area, and Yangtze River Delta continue to power development, and their guiding and exemplary role has become more evident. The eastern, western, central, and northeastern regions have all delivered impressive results in high-quality development. The two green development belts along the Yangtze and Yellow rivers are also displaying strong development vitality, while the development of a strong maritime country continues to go from strength to strength.

Improving the quality of domestic and international economic flows by steadily advancing high-standard opening up

We have moved faster to put in place new institutions for a higher-standard open economy and pushed forward with institutional opening in terms of rules, regulations, management, and standards. These efforts have contributed to the reshaping and revitalization of the global economic system. Trade in goods has grown, and its quality has improved. China has further consolidated its position as the world’s largest trader of goods, with trade volumes expanding from 32.2 trillion yuan in 2020 to 43.9 trillion yuan in 2024. We are now seeing Chinese high-tech products, such as electric vehicles, 3D printers, and industrial robots, rapidly enter global markets. 

The quality of foreign investment has continued to improve as a result of efforts to both reduce investment restrictions and improve the business environment. In 2024, 59,000 new foreign-invested enterprises were established nationwide, representing a 9.9% increase from the previous year. High-quality Belt and Road cooperation has delivered further tangible progress. Physical infrastructure connectivity has been enhanced, while regulatory and standards alignment has been streamlined. Steady progress has been made on major flagship projects under the Belt and Road, and “small yet effective” wellbeing projects have won widespread support and appreciation. 

Creating a stronger foundation for the new development dynamic by strengthening safeguards for economic security 

We have improved the long-term mechanisms for guarding against and defusing risks and worked quickly to build up security capacity in key areas. This has opened the way for stronger positive interactions between high-quality development and greater security. China’s food security is underpinned by robust safeguards. Total grain output exceeded 650 million metric tons for ten consecutive years before topping 700 million metric tons in 2024. We have achieved basic self-sufficiency in grain and absolute security in our food supply. Domestically developed crop varieties now cover over 95% of cultivated areas, with improved crop varieties accounting for more than 96%.

A new energy system is also rapidly taking shape. China’s total installed power generation capacity reached 3.35 billion kilowatts at the end of 2024, with the installed capacity of renewable power surpassing that of thermal power for the first time. We have continued to boost our ability to self-support and control industrial and supply chains, with key industrial chains becoming more self-sufficient. We have made steady headway in building our capacity for data security, improving the security mechanisms governing data circulation, and reinforcing safeguards for major hubs in China’s national integrated computing power network. 

III. Implementing strategic plans to foster a new development dynamic

China’s development environment has become increasingly complex and challenging. It is vital that we grasp the major strategic plans for building a new development dynamic, in order to expand and strengthen domestic economic flows and ensure smooth flows between the domestic and international economies. This will enable us to effectively respond to profound changes in both the domestic and international environments, achieve greater self-reliance and strength, and promote high-quality economic development.

Expanding domestic demand with a firm strategic focus on the new development dynamic 

We will increase effective investment to support major national strategies and security capacity-building in key sectors; we will expand our project reserve pipeline and strengthen guarantees for production factors. We will coordinate the use of various government investment tools, refining the sectoral allocation of central budget investments and local government special bonds, and intensifying support for public service investments. We will support and encourage private sector investment. This will see us rolling out a series of attractive major projects and supporting private enterprises in investing in emerging and future industries. We will also provide greater support to address development gaps, shore up weak areas, and cultivate new growth drivers, and better leverage the key role of investment in improving the supply structure.

To vigorously boost consumption, we will implement programs supporting large-scale equipment renewal and consumer goods trade-ins with a view to promoting more effective consumption on a broader scale. We will drive implementation of the Plan on Special Initiatives to Boost Consumption with a series of concrete, actionable policies that deliver tangible benefits to the public. Our focus will be on enhancing income growth and consumption capacity for both urban and rural residents, promoting the upgrade of major consumer goods, establishing childcare subsidy programs, creating specialized refinancing tools, giving more support to key service consumption sectors and the eldercare industry, and amplifying the spillover effects of emerging forms of consumption. 

Promoting the integrated advancement of technological innovation and industrial innovation to quickly realize greater self-reliance and strength

Setting our sights on strategically critical areas of international technological and industrial competition, we will strengthen strategic planning and policy support to rapidly build up China’s capacity for innovation. To boost the supply of high-quality technologies, we will push for faster breakthroughs on bottlenecks in fields such as integrated circuits, industrial machine tools, foundational software, and core seed resources; accelerate technological innovation in areas such as next-generation information technology, artificial intelligence, and quantum technology; and implement AI Plus initiatives to drive quality upgrades across key industries. 

We will reinforce the primary role of enterprises in technological innovation, supporting them in spearheading or participating in major national science and technology programs. A national venture capital guidance fund has been established to support the high-quality development of venture capital investment. We must harness technological innovation to generate new drivers for industrial development and cultivate industrial standouts. To this end, we will move quickly to introduce guidelines for fostering new quality productive forces, launch industrial innovation projects in key areas such as humanoid robots and future energy resources, and strive to transform technological advances into real productive capacity. 

Furthering comprehensive reform with a focus on bottlenecks and weak links that hamper economic flows

We will improve the fundamental framework of the unified national market by advancing “five unifications and one opening up,” namely, the unification of underlying market institutions, market infrastructure, government conduct, regulatory enforcement, and markets for production factors and resources, as well as the continuous expansion of the opening up both internally and externally. We will also further regulate local investment promotion practices and resolutely eliminate local protectionism and market fragmentation. We will carry out integrated pilot reforms on the market-based allocation of production factors and continue to develop factor markets for land, capital, labor, technology, and data to enhance the efficiency of resource allocation. 

We will honor the commitments to both the public and non-public sectors. We will optimize the layout of the state-owned sector and adjust its structure, increase the effective supply of public services in areas concerning people’s wellbeing, and reinforce the basic supporting role of critical energy and resources. Our efforts to improve the institutional framework for promoting the private economy will continue. We will ensure full implementation of the Private Sector Promotion Law of the People's Republic of China and support the growth and expansion of the private sector and private enterprises. Extensive initiatives will be launched to drive further improvements in the business environment. We will move forward with revising the Law on Bid Invitation and Bidding and strengthen the protection of the legitimate rights and interests of all types of market entities.

Tourists visit Taoyuan Scenic Area in Taizhou City, Jiangsu Province, June 28, 2025. Taizhou has leveraged the popularity of the Jiangsu Football City League, dubbed the “Suchao,” to launch a “Tour Taizhou with the Suchao” campaign for home match days, boosting local cultural and tourism consumption. Consumption is an important engine driving China's economic growth. XINHUA / PHOTO BY TANG DEHONG

Facilitating smoother economic flows by creating a high-quality economic layout that features complementarity between urban and rural areas and between regions 

We will continue to advance both new urbanization and rural revitalization, and promote the implementation of regional strategies while also pursuing coordinated and interconnected development between regions. We will carry out a five-year action plan for implementing the new people-centered urbanization strategy, move faster to grant urban residency to people from rural areas, and promote coordinated development of cities of all sizes, while developing county-level economies into new growth poles. To advance all-around rural revitalization, we will implement the Comprehensive Rural Revitalization Plan (2024–2027). As part of this, we will strengthen county-level industries that support local prosperity and launch projects to develop a beautiful and harmonious countryside. 

Stronger efforts will be made to implement regional strategies. We will push ahead with the development of the Beijing-Tianjin-Hebei region, the Yangtze River Economic Belt, the Guangdong-Hong Kong-Macao Greater Bay Area, as well as the integrated development of the Yangtze River Delta and ecological conservation and high-quality development in the Yellow River Basin. Steps will also be taken to deepen industrial collaboration between the eastern, central, and western regions, based on encouraging localities to leverage their comparative advantages and strengths while addressing weaknesses and compensating for shortcomings. In addition, we will support localities in creating more development highlights and provide backing for major economic provinces to shoulder greater responsibilities in areas such as factor supply, technological innovation, and pioneering and piloting reform and opening up initiatives.

Letting the domestic economy better drive international economic flows through high-standard opening up

We will expand institutional opening and show greater initiative in pursuing opening up. We will refine the mechanisms for promoting high-quality Belt and Road cooperation, taking coordinated steps to advance flagship projects and “small yet effective” wellbeing initiatives. We will also focus on growing the influence of connectivity brands like China Railway Express, Silk Road Maritime shipping, and the Air Silk Road. We will actively expand international trade and economic cooperation by leveraging multilateral platforms, including BRICS, the Shanghai Cooperation Organization, and China-ASEAN cooperation. To ensure the best use of multilateral trade frameworks such as the World Trade Organization, we will actively take part in global economic governance reforms. We will work with the international community to defend multilateralism and oppose unilateralism and hegemonic practices. 

To ensure the stability of foreign trade, we will continue to host national exhibitions like the China International Import Expo, China International Fair for Trade in Services, and Global Digital Trade Expo. We will support the rapid growth of cross-border e-commerce, vigorously expand green trade initiatives, and develop both trade in services and digital trade while promoting greater integration between domestic and international trade. In addition, we will raise the quality of China’s utilized foreign investment and Chinese investment overseas. We will introduce a new suite of measures to open up the telecommunications, education, culture, healthcare, and finance sectors, strengthen the pilot policies for opening in the service sector, and enhance our support services for companies going global. The policy and institutional framework for the Hainan Free Trade Port will be further refined to secure faster progress in developing a distinctively Chinese free trade port with global influence.

Ensuring both security and development to strengthen the foundational safeguards for the new development dynamic

Grounding our efforts in the domestic context, we will put a strong focus on building security capacity in key areas, thereby ensuring we firmly maintain the initiative in addressing risks and challenges. We will take holistic measures to consolidate the foundations for food security and step up implementation of the strategy to boost grain production through farmland management and the application of technology. The redline of 120 million hectares for total farmland area will be resolutely protected, and further efforts will be made to develop high-standard farmland. We will also launch a new drive to increase China’s grain production capacity by 50 million tons and invigorate the seed industry.

Our ability to ensure energy and resource security will be advanced. We will accelerate the planning and development of a new type of energy system, advance renewable energy substitution in key areas, and conduct pragmatic international energy cooperation. Further headway will be made in a new round of strategic mineral exploration initiatives. We will work diligently to ensure the security of critical industrial and supply chains and establish comprehensive risk assessment and response mechanisms in these areas. We will coordinate research on major technologies and equipment with industrial foundation reengineering projects. We will also strengthen the system of safeguards for ensuring national data security.

(Originally appeared in Qiushi Journal, Chinese edition, No. 14, 2025)