The reform and open door policy has brought about rapid economic growth to China and created the “China Miracle” that is envied by the world. However, in its development, due to the dramatic social and economic changes and the impact of the ever-changing external environment, China’s economy can no longer maintain rapid growth in the second decade of the 21st century, and has even lowered its growth target from 8% to 5%. Moreover, in recent years, China has faced geopolitical risks posed by the US-China trade and technology war, the COVID-19 pandemic, the Russo-Ukrainian war, and the Israel-Hamas war, all of which have a profound impact on its economic growth.
The Central Economic Work Conference of the Communist Party of China (CPC) held on December 11-12, 2023, concluded that “to further revive the economy, China still has to overcome some difficulties and challenges, including a lack of effective demand, overcapacity in some sectors, lackluster social expectations, certain risks and hidden problems, the existence of a blockage in the domestic macrocycle, and the rising complexity, severity and uncertainty of the external environment. It is important to be more mindful of potential dangers and to effectively respond to and solve these problems.” In terms of macroeconomic regulation and control in 2024, the meeting called for “efforts to pursue progress while ensuring stability, consolidate stability through progress, and establish the new before abolishing the old” and “urged the introduction of more policies that will help stabilize expectations, growth and employment, as well as active endeavors to promote the transition of growth models, structural adjustment, and quality and efficiency improvement, so as to consolidate the foundation of stable economic development with positive outlook.” At the same time, the country should continue to implement a proactive fiscal policy and a prudent monetary policy with strengthened innovation and coordination of policy tools. In addition, the meeting listed economic priorities in nine aspects, including to lead the construction of a modern industrial system with scientific and technological innovation, focus on expanding domestic demand, deepening reforms in key areas, expand high-level opening up to the outside world, continuously and effectively prevent and resolve risks in key areas, persistently and diligently work on agriculture, rural areas, and farmers (‘three rural issues’), promote the integrated development of urban and rural areas and regional coordination, deeply promote the construction of ecological civilization and green, low-carbon development, and lastly to effectively guarantee and improve people’s livelihoods.
During the “Two Sessions” this March, Premier Li Qiang’s Work Report disclosed China’s main economic goals for 2024, which includes: GDP growth of around 5%, over 12 million new urban jobs, CPI increase of around 3%, grain output of over 650 million metric tons, and a drop of around 2.5% in energy consumption per unit of GDP.
As for macroeconomic regulation and control, the main ones are: 1. Fiscal policy: setting the deficit-to-GDP ratio for this year at 3 percent and an increase of 1.1 trillion yuan in general public expenditures in the government budget over last year; 2. Government investment: 3.9 trillion yuan of special-purpose bonds for local governments will be issued and 700 billion yuan will be earmarked in the central government budget for investment; 3. Special national bonds: ultra-long special treasury bonds will be issued to be used to implement major national strategies and build up security capacity in key areas, and 1 trillion yuan of such bonds will be issued; 4. Consumption: encourage and promote consumer goods trade-in programs and boost spending on intelligent connected new-energy vehicles, electronic products, and other big-ticket items; 5. Housing: scale up the building and supply of government-subsidized housing and improve the basic systems for commodity housing; 6. Employment: do more to promote employment for young people and provide better guidance and services; 7. Attract foreign investment: All market access restrictions on foreign investment in manufacturing will be abolished, and market access restrictions in services sectors, such as telecommunications and healthcare, will be reduced, and make it easier for foreign nationals to work, study, and travel in China. In addition, the CPC will implement policies and measures on rural revitalization, urbanization, education, healthcare, social security, and environmental protection to further boost the economy.
Under the policy direction disclosed at the Central Economic Work Conference last December, Li Qiang’s Work Report also put forward ten major tasks for this year, namely: 1. Striving to modernize the industrial system and developing new quality productive forces at a faster pace; 2. Invigorating China through science and education and consolidating the foundations for high-quality development; 3. Expanding domestic demand and promoting sound economic flows; 4. Continuing to deepen reform and boosting internal momentum for development; 5. Pursuing higher-standard opening up and promoting mutual benefits; 6. Ensuring both development and security and effectively preventing and defusing risks in key areas; 7. Making sustained efforts to deliver in work relating to agriculture, rural areas, and rural residents and taking solid steps to advance rural revitalization; 8. Promoting integrated development between urban and rural areas, advancing coordinated development between regions, and optimizing regional economic layout; 9. Enhancing ecological conservation and promoting green and low-carbon development; and 10. Ensuring and improving the people’s wellbeing and promoting better and new ways of conducting social governance.
In the face of the global crisis of supply chain disruption and the impact of intensified geopolitical risks on China’s economy in recent years, leading a modernized industrial system through technological innovation and to enhance the resilience and security of the supply chain is indeed the top priority of the CPC’s economic, trade, and science and technology development strategy, but its effectiveness is going to be put to a severe test. As for the short-term macro-control policy of expanding domestic demand, there are deep-rooted structural conflicts in investment, consumption, and export that need to be resolved internally, and externally, the three major risks the world economy is facing after the pandemic, like recession due to high inflation, debt default due to high debt, and business operation due to high costs, will all affect policy implementation and effectiveness.
(Wei Ai, Director, Center of Cross-Straits Political and Economic Affairs, National Chengchi University)
（Translated to English by Chen Cheng-Yi）
