Methodologies for Economic Governance

The success of economic governance hinges not only on sound theories, well-defined goals, and practical strategies, but also on the guidance of proper and effective methodologies. Since the 18th CPC National Congress in 2012, in the face of a complex international landscape and the challenging tasks of reform, development, and stability, President Xi Jinping has put forward a series of new ideas, viewpoints, and propositions. Grounded in the Marxist worldview and methodology, and informed by a deep understanding of the laws governing economic performance and the CPC’s practical experience in leading economic development, these contributions systematically address how economic work should be conducted and provide guidance for development in the new era. This systematic methodology is primarily reflected in the following aspects.

First, following the general principle of pursuing growth while ensuring economic stability

Stability is a prerequisite for development. As a super-large economy, China’s annual growth is equivalent to the total annual economic output of a medium-sized country. Given the size of China’s economy, it is clear that only by maintaining overall economic and social stability and avoiding sharp fluctuations can a favorable environment for economic growth be created. Thus, striking a balance between stability and progress is crucial to effectively carrying out economic governance. President Xi has emphasized that the general principle of pursuing growth while ensuring stability constitutes both an important framework guiding the governance of China and a methodology for effectively managing the economy. Stability is of the utmost importance, constituting the foundation of a steadily functioning economy that enables us to achieve our goals for economic progress. In practice, ensuring stability means maintaining stable economic performance to prevent drastic fluctuations in growth, employment, and prices and to guard against regional and systemic financial risks. Meanwhile, priority should also be given to advancing reform and opening up and making further adjustments to the structure of the economy. This will help secure achievements in transforming the growth model and driving development through innovation. To follow this general principle, we should therefore adopt a holistic approach to stability and progress. This requires us to assess the situation carefully and follow objective laws, while firmly opposing inaction and passivity on the one hand, and rashness and haste on the other.

Workers are processing magnetoelectric products in Zhenhai District, Ningbo City, Zhejiang Province, August 22, 2025. In recent years, a number of regions have developed new quality productive forces in line with local conditions, promoting the rapid growth of enterprises engaged in the production of novel and unique products through the use of specialized and sophisticated technologies. PEOPLE’S DAILY / PHOTO BY HU XUEJUN

To ensure stability while advancing progress, it is essential to manage the relationship between abolishing the old and establishing the new. These two processes are central to making progress while maintaining stability. To this end, we must uphold the dialectical unity of the two, establishing the new before abolishing the old while giving due weight to both. That is to say, we should actively establish necessary policies and practices, and on that basis, promptly abolish those that are no longer appropriate.

The underground waiting hall of Beijing Tongzhou Railway Station, pictured on December 30, 2025. The station officially began operation that day, bolstering regional connectivity between Beijing, Tianjin, and Hebei, which will help relieve the capital city of functions non-essential to its core role. PHOTO BY CNS REPORTER JIA TIANYONG

For example, to achieve peak carbon emissions and carbon neutrality, we must take into account China’s resource endowment—abundant in coal but poor in oil and gas—and proceed in a steady and gradual manner. We should follow the principle of establishing the new before abolishing the old, building up new energy systems before phasing out the old. In particular, we must avoid rushing for quick results or resorting to campaign-style carbon reduction drives.

Second, applying systems thinking

The economic system is a sophisticated, multidimensional network of interconnected elements. As such, economic activity is affected by a wide range of factors, such as politics, society, culture, resources, the environment, and international relations, where a single change can affect the whole of the system. In order to manage various relationships and balance diverse interests involved, we must adopt systems thinking, so as to observe and address issues with the understanding that they are universally connected, part of a complete system, and constantly evolving.

President Xi has underscored the importance of systems thinking for work in many key areas, describing it as a fundamental way of thinking and working. For instance, with respect to further comprehensive reforms, he has stressed the need to take a systemic, holistic, strategic, and dialectical approach and prioritize tasks based on their importance and urgency, as well as the need to place greater emphasis on systematic integration in planning and advancing reform. With respect to applying the new development philosophy, he has reiterated the need to take a holistic approach and make systematic arrangements by considering how its various components are interconnected and form an integrated whole. Regarding work on agriculture, rural areas, and rural residents, he has emphasized the need to strengthen systems thinking to coordinate efforts to navigate dilemmas and complex challenges, so as to avoid solving one problem only to run into another.

Currently, China faces profound and intricate changes in its development environment. Development imbalances and inadequacies remain prominent, and complicated challenges in economic and social development persist. It is therefore essential to adopt systems thinking in both planning and addressing these issues. In doing so, we should take into consideration multiple factors, including political and economic, immediate and long-term, material and cultural, development and people’s wellbeing, resources and ecology, and domestic and international dimensions. It is also important to include economic and non-economic policies in evaluations to ensure that they are consistent with China’s macro policy orientation. These efforts will help us realize a dynamic balance among multiple objectives.

Third, working in line with local conditions

China is a country with a vast territory and a large population, and its different regions vary substantially in terms of their resource endowments, stages of development, and industrial structures. Moreover, the situation is also dynamic and ever-changing. These unique conditions therefore mean that in China there is no, nor can there be, a one-size-fits-all development model. The only way to effectively carry out our economic tasks and forge a path to high-quality development suited to each region is to ground our efforts in practical realities and adopt measures in light of local conditions.

President Xi has pointed out that, in essence, working in line with local conditions means seeking truth from facts. Since the 18th CPC National Congress, President Xi has stressed the importance of working in line with local conditions on multiple occasions, noting that “Every lock requires its own key, so we cannot simply apply rigid solutions or one-size-fits-all approaches.”

He has stressed that poverty alleviation measures must be based in reality and tailored to local conditions; that rural revitalization must be adapted to the distinctive features of each village so that all of them can flourish in their own unique way; that ecological conservation efforts should be carried out according to the natural characteristics of different ecosystems, including forests, grasslands, arid regions, and deserts; and that coordinated regional development must be guided by the natural endowments and advantages of each locality in terms of water resources, terrain, grain production, agriculture, industry, and commerce.

This approach has also been repeatedly stressed by President Xi over the past two years, particularly when it comes to developing new quality productive forces. He has noted that only when different regions carefully assess their unique development strengths and potential, while also taking into account their specific economic, political, social, historical, cultural, and geographical conditions, can they pursue a path of differentiated development that is tailored to their capabilities and within their means.

Fourth, staying focused on both goals and problems

Taking goals as the guide, focusing efforts on solving specific issues and driving overall progress through breakthroughs in key areas is an important method for continuously achieving China’s strategic goals of economic development in the new era. President Xi has pointed out that it is essential to stay oriented toward both goals and problems. To do so, we must focus on goals by strengthening overall planning and top-level design to ensure our efforts are better planned and have a clear direction. Simultaneously, we must also focus on problems by addressing shortcomings and shoring up weaknesses to ensure our efforts are more targeted and effective.

Since its 18th National Congress, the CPC has stayed focused on both goals and problems. With the strategic goal of building a moderately prosperous society in all respects in mind, it has worked backward to clarify the tasks that must be completed at each stage. It has also proceeded from pressing problems to identify the paths and methods for resolving them. This has enabled the steady fulfillment of each objective by turning small victories into major ones. The First Centenary Goal was successfully realized, laying a more robust foundation for advancing Chinese modernization.

Fifth, keeping in mind worst-case scenarios

Adopting a worst-case scenario mindset means staying vigilant against potential dangers, preparing for the worst, and taking proactive measures. This approach enables us to face challenges with composure and foresight, while also allowing us to take the initiative and pursue the best possible outcome.

Economic activities are inherently subject to uncertainty. Conditions are complex and ever-changing, and fraught with risks. In a sense, modern economic management is a systematic activity of identifying, assessing, and responding to risks amidst uncertainties. As such, risk management has become a core competence needed for economic governance. It is therefore all the more important to enhance our awareness of risks, keep in mind worst-case scenarios, and bolster our risk control capabilities in economic work.

Since 2012, President Xi has repeatedly stressed the need to stay alert to potential dangers, prepare for the worst possible outcomes, and adeptly apply this mindset to specific situations. At present, China is in a critical phase for reinforcing the foundations and pushing ahead on all fronts toward basically realizing socialist modernization. The combination of structural, cyclical, and institutional issues, coupled with an increasingly complex external environment, presents considerable risks and challenges to economic development. In order to address these new developments, problems, and challenges, we must remain sober-minded and keep in mind adverse scenarios. We must also fully assess difficulties and challenges ahead, make thorough preparations, and further improve our risk prevention and control capabilities so that we can ensure long-term economic stability.

Zhu Andong is Professor at the School of Marxism, Tsinghua University.

(Originally appeared in Qiushi Journal, Chinese edition, No. 2, 2026)