In 2020, as the COVID-19 pandemic continued to rage globally, China emerged as the only major economy in the world to show positive growth, demonstrating to the world once again the tenacity and resilience of the Chinese economy. Against this backdrop, how China plans its economic development in the post-pandemic era is of great concern to the world.
China’s annual Central Economic Work Conference, which was held in Beijing on December 16-18, 2020, put forward overall requirements and policy orientation for economic work in 2021, and emphasized eight key tasks. Experts and scholars said that China is now at the historical point of achieving its two centenary goals, and this conference led up to a good start for the 14th Five-Year Plan (2021-25) and launched a new journey of building a modern socialist country in all respects.
Yancheng-Nantong high-speed railway finishes six-day trial operation on December 15, 2020. An important part of China’s “eight vertical and eight horizontal” high-speed railway network, the railway serves the construction of the Belt and Road and the Yangtze River Economic Belt.
First Step in Building a New Pattern of Development
The year 2020, in the face of the severe and complex international situation, as well as the arduous tasks of domestic reform, development and stability, especially given the severe impact of the pandemic, saw the CPC Central Committee, with Comrade Xi Jinping at its core, calling for accelerating the establishment of a new development paradigm featuring dual circulation, which takes the domestic market as the mainstay while letting the domestic and foreign markets boost each other. The Central Economic Work Conference called for the country to “take a solid first step in building the new development paradigm” in 2021 and achieve obvious results.
Huang Jianhui, president of China Minsheng Banking Research Institute, said that building a new development paradigm is a strategic choice to upgrade China’s economic development, responding to the call of the times we live in and has an impact on overall development. Shedding light on China’s efforts to strike a balance between economic recovery and risk prevention, Huang said the country should strengthen reform and management on both supply and demand, paying particular attention to the strategic basis of expanding domestic demand to make up for the weak links in production, distribution, circulation, and consumption. At the same time, the blocking points at all nodes should be cleared up to form “a higher-level dynamic balance of demand-driven supply and supply-creating demand.”
Jia Jinjing, director of the Macro Research Department of the Chongyang Institute for Financial Studies at Renmin University of China, believes that it is crucial to not only make good strategic arrangements, but also make wise moves in specific areas in order to build a new pattern of development. He thinks that the conference has made detailed arrangements for the first solid step to be taken in 2021 with “strengthening the country’s strategic scientific and technological ability” being given the top priority.
“In building a new development paradigm, the national strategic scientific and technological capacity determines whether the dual circulation can operate smoothly. It can be said that for shaping a new development pattern, scientific and technological innovation serves as the key driving force. If we fail to make breakthroughs in scientific and technological innovation, it will be difficult to effectively enhance the independent and controllable capacity of the industrial and supply chains, and the strategic basis of expanding domestic demand will not be able to endure,” said Jia.
The Central Economic Work Conference proposed to build a new pattern of development by paying attention to demand-side management. Zhou Xuezhi, assistant researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, said that consumption effected by the demand side is not only a very important link in the new development pattern, but also related to the clothing, food, housing, and transportation of thousands of families. The emphasis on “management” highlights the more flexible macro-policy regulation, he added.
“While consumption is recovering, it has not returned to pre-pandemic levels,” said Zhou.
“The recent State Council executive conference mentioned that consumption remains the central driver of China’s economic growth, and introduced policies to further promote consumption growth in automobile, home appliances, furniture and home renovations, catering, and rural areas. It has created favorable conditions for a sustained recovery in consumption and thus the smooth development of ‘dual circulation’.”
Seed and Farmland Challenges Get Unprecedented Attention
For a country with a population of 1.4 billion, the position of agriculture as the foundation of China’s economy should never be weakened. General Secretary of the CPC Central Committee Xi Jinping has repeatedly stressed that “the rice bowl of the Chinese people should be held firmly in our own hands at all times.”
Seeds and farmland issues received unprecedented attention at the Central Economic Work Conference as one of its top priorities for 2021. From the strategic perspective of ensuring food security, the conference stressed the need to enhance the protection and utilization of germplasm resources (living tissue from which new plants can be grown) and step up the construction of seed banks. Since the 18th CPC National Congress, it is the first time that the issue of seeds has been mentioned at the level of the Central Economic Work Conference.
Jia said that the document, the CPC Central Committee’s proposals for the formulation of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035, highlights the importance of development and security, of which food security is undoubtedly of great importance. Calling seeds the “chip” of agriculture, Jia said that it is significant to put the crucial role of seeds forward on the first year of the 14th Five-Year Plan.
On December 12, 2020, the data released by the National Bureau of Statistics showed that China’s total grain output in 2020 was 669.49 million tons, an increase of 5.65 million tons or up 0.9 percent compared with that in 2019. The output has exceeded 650 million tons for six consecutive years.
“But this does not mean that food security is completely out of danger’s way. The COVID-19 outbreak and the impact of extreme weather around the world have increased supply uncertainty in international agricultural markets, which leads to the hike in international food prices,” said Jia. “Therefore, to ensure food security, China must greatly improve the high-quality development of modern agricultural technology represented by germplasm resources.”
In recent years, China has established three national seed production bases in Hainan, Sichuan, and Gansu provinces, 52 counties for hybrid corn and rice seed production, and a national seed breeding team comprising 100 regional seed breeding bases. China’s seed base infrastructure has been greatly enhanced through the modern seed industry upgrading project.
Sun Haoqin, deputy director of the Seed Industry Management Department of the Ministry of Agriculture and Rural Affairs, said that Chinese seed industry’s independent innovation still lags behind that of developed countries, and there is an urgent need to increase innovation in core breeding technology. If China’s seed industry cannot overcome its weak points in research and development, then China’s “vegetable baskets” and “rice bags” may be controlled by others, said Sun.
Visitors take photos of hi-tech exhibits at the third China International Import Expo in Shanghai on November 10, 2020.
Reforms and Opening-up in an All-Round Way
The conference outlined “promoting reforms and opening-up in an all-round way as one of the tasks for 2021.” It also put forward specific requirements such as, “to build a new pattern of development, we must build a high-level socialist market economy system, pursuing high-level opening-up, and enabling reform and opening-up to reinforce each other.” This has charted the course for accelerating the construction of a new pattern of development.
In fact, Xi has repeatedly stressed that the new development paradigm is not a closed domestic circulation, but a more open domestic and international dual circulation. Recently, Xi spoke at a series of video international conferences, stressing that China would actively build a new paradigm of development, continue to open up, and achieve mutually beneficial results in cooperation with other countries.
As the world’s most promising market, China has a population of 1.4 billion and a middle-income group of more than 400 million. It is estimated that China’s accumulative import of goods over the next 10 years is expected to exceed US $22 trillion. An open and broad Chinese market will undoubtedly bring unlimited business opportunities to countries around the world.
According to data released by the General Administration of Customs, during the first 11 months of 2020, China’s foreign trade continued to grow, up 1.8 percent year-on-year. While global foreign direct investment was projected to fall 40 percent, China’s inflow of foreign investment grew by 6.3 percent year-on-year, injecting new impetus into world economic development.
In 2020, the foreign investment negative list was shortened to include just 33 items – down from 40; the total number of China’s FTZs increased from 18 to 21; the Overall Plan for the Construction of Hainan Free Trade Port was released; The Regional Comprehensive Economic Partnership (RCEP) was signed; and the China International Fair for Trade in Services and Third China International Import Expo were held successively. These achievements all show that China is expanding opening-up to create new growth opportunities for global economic recovery and seek opportunities for its own development. The conference also proposed that China would assume an open and positive attitude towards the idea of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), demonstrating once again its commitment to further opening-up.
Huang Jianhui said further opening up is conducive to the smooth operation of a “dual circulation” development pattern. China will reduce tariffs on certain imported goods and materials, deepen reform on streamlining administration and delegating powers, improve regulations, upgrade services, and continue to create a sound business environment so as to attract more foreign companies and promote the development of relevant industrial chains in China.
The conference also called for the continuity, stability, and sustainability of macro policies in 2021, continuing to implement a proactive fiscal policy and a prudent monetary policy.
According to Zhou Xuezhi, this will create a favorable credit environment for the building of a new growth pattern and bring stable expectations to investors and consumers. In fact, it has reassured foreign capital and foreign companies that China is unswervingly determined to open up further and that the Chinese market is also a global market.
Recently, the Customs Tariff Commission of the State Council issued a notice on the Tariff Adjustment Plan for 2021. Provisional import tariffs, which are lower than the most-favored-nation (MFN) rates, are levied on 883 commodities, including some anti-cancer drugs, hearing aids, and raw materials for infant formulas. As China continues to open up to the outside world, some conventional tariff rates and most-favored-nation tariff rates will also be reduced this year.
Zhou said that these adjustment measures will better attract global resource, meet domestic demands, upgrade industrial and technological development level, promote the formation of a smooth domestic economic cycle, better connect the domestic and international markets, and better promote the common development of the Chinese and global economies.
