The leading theoretical journal for the Communist Party of China (CPC) has published an essay by President Xi Jinping that further elaborates upon his vision for the creation of new economic development conditions, in which he places heavy emphasis upon further reform and opening up the financial system.
In April 2020, Xi first proposed the concept of “building new development conditions in which domestic circulation is the mainstay and domestic and international circulations reinforce each other” during a meeting of the Central Committee for Financial and Economic Affairs
In an essay entitled “Accelerating the Establishment of New Development Conditions, Seizing the Initiative for Future Growth” (加快构建新发展格局, 把握未来发展主动权) published by Qiushi on 15 April, Xi provides further details and reflection on the policy theme following two years of implementation.
“Over the past two years, solid progress has been made in building new development conditions,” Xi writes. We have obtained certain results, ideological consensus has continuously consolidated, the foundations for work have continuously strengthened, and policies and systems have continuously improved,” Xi writes.
“However, there are still some outstanding problems for the work of establishing new development conditions which warrant attention as well as earnest research and resolution.”
Xi highlighted two areas for consideration in particular:
- Accelerating targeted efforts to fill the gaps and weaknesses in China’s industrial and supply chains, to ensure smooth circulation within the national economy.
- Enhancing the endogenous dynamics and reliability of domestic circulation, improving international competitiveness, and strengthening the attractiveness and driving force of China’s international circulation.
“To achieve [these goals], we must comprehensively deepen reform, promote practical innovation and institutional innovation, constantly enhance advantages, overcome shortcomings, and strengthen weak areas,” Xi wrote.
To this end, Xi outlined a total of five proposals in relation to the Chinese central government’s efforts to create new development conditions for the national economy.
- Improving overall coordination of expansions in domestic demand and the deepening of supply-side structural reforms, in order to enhance the reliability and dynamism of domestic economic circulation. “The key to building a new development pattern lies in achieving smooth and unobstructed economic circulation. This mainly depends on whether the supply and demand sides are strong, well-matched, dynamically balanced, and interact positively. Therefore, it is necessary to organically combine the strategy of expanding domestic demand with the deepening of supply-side structural reforms, so that both the supply and demand sides can work together in a coordinated manner, forming a higher level of dynamic balance where demand drives supply and supply creates demand, thus achieving a virtuous cycle for the national economy.”
- Accelerating the pace of technological self-reliance and self-strengthening to solve the problem of foreign restrictions. “Today, science and technology are the primary productive forces and the primary competitive force in the world. We need to improve the system of centralized leadership by the Party Central Committee for scientific and technological work, establish a new-model national system, strengthen national strategic scientific and technological strength, optimize the allocation of innovation resources, and make China a global leader in key scientific and technological fields, and a pioneer in cutting-edge cross-disciplinary fields. We must effectively link the strategies of developing the country through science and education, strengthening the country through talent, and driving development through innovation.”
- Accelerating the development of a modern industrial system to consolidate the industrial foundations for new development conditions. “The new development conditions have their foundations in the modern industrial system, which requires orderly and efficient links among various industries for smooth economic circulation. At present, the global industrial system and supply chains are undergoing a trend of diversification, regional cooperation, green transformation, and digital acceleration. This is a law of economic development and a historical trend that cannot be changed by human volition. Consequently, we must continue to focus on the real economy for economic development, solidly promote new industrialization, accelerate the development of a manufacturing superpower, quality superpower, and brand superpower; promote the high-quality development of the services sector, and cultivate new growth points for strategic emerging industries.”
- Comprehensively promoting coordinated development between urban and rural areas and between regions, and increasing the scope of domestic circulation. “Only by achieving coordinated development between urban and rural areas and regions can the scope of domestic circulation expanded and quality improved. The rural countryside is not just a huge consumer market, it’s also a huge market for factors of production, and is an important component of domestic circulation. We should fully tap the vital role of the rural countryside as a consumer market and a market for factors of production; comprehensively promote rural revitalization, promote urbanization with county towns as key units, promote integrated urban-rural development, enhance the economic ties between urban and rural areas, and facilitate economic circulation between urban and rural areas.”
- Further deepening of reform and opening up, and enhancing the dynamism and vitality of domestic and international circulation. “We should deepen market reforms for factors of production, build a high-benchmark market system, and accelerate the development of a unified national market. We will improve the foundational systems for markets such protection of property rights, market access, fair competition, and social credit. We will strengthen anti-monopoly and anti-unfair competition measures; regulate and guide capital development in accordance with the law, and create a favorable environment for various types of business entities to invest and start businesses, stimulating their vitality. We will deepen fiscal and financial system reform, improve the modern financial and taxation system, establish a modern budget system, optimize the tax structure, improve the fiscal transfer payment system, build a modern central bank system, strengthen modern financial supervision, and establish a robust system to ensure financial stability We will improve the functioning of the capital market and promote the active role of a modernised capital market. We will promote high-level opening-up, adopt high-level international trade and investment rules as benchmarks, steadily expand institutional opening-up, and enhance the sway of our opinion in international circulation. We will promote the internationalization of the renminbi, protect the legitimate rights and interests of foreign investors in accordance with the law, build new advantages for participating in international economic cooperation and competition, promote the high-quality development of the Belt and Road Initiative, actively participate in international economic and trade rule negotiations, promote the formation of an open, diverse, and stable world economic order, and create conditions for the linkage and circulation of domestic and international markets and resources.”