2024 Government work report: Support, stabilize, solidify the economy

I'm Robert Lawrence Kuhn and here's what I'm watching: China's 2024 government work report, supporting and stabilizing the economy, and solidifying high-quality growth. The work report is forward looking, articulating in fine-grained detail the kinds and categories of government initiatives, evidencing concerns and prioritizing solutions.

Highlights reported for 2023 include creating over 12 million jobs in urban areas; installing more than half of the world's new renewable power generation capacity; sales of new energy vehicles accounting for more than 60 percent of the world's total; 5G penetration rate topping 50 percent; urbanization rising to 66.2 percent; and per capita disposable income of urban residents increasing by 6.1 percent, and that of rural residents in poverty-stricken areas by 8.4 percent.

Prime forecasts for 2024 must start with the target GDP growth at "around 5 percent" — the headline-grabber — and while it does signal confidence in the country's growth in the face of depressed property markets, deflationary pressures, and weak consumer demand, plus increasing geopolitical and trade tensions — the "around 5 percent" was expected, such that other measures and provisions reveal more about how Chinese leadership is thinking. Though some focus on China increasing defense spending by 7.2 percent, higher than inflation and GDP growth, the work report emphasizes the economy, proposing plans and programs to boost growth. I focus on four areas.

Macroeconomics and Finance. Ratio of deficit to GDP set at 3 percent, down from 3.8 percent last year — an important statistic to track as China's overall debt-to-GDP ratio rose to a record 287.8 percent at the end of 2023. This drives China's new financing vehicles: issuing ultra-long special treasury bonds, and special-purpose bonds for local governments at 3.9 trillion yuan. Defusing risks in property, local debt, small and medium-sized financial institutions continue.

Economic Stimulus. Expanding domestic demand and launching a year-long program to stimulate consumption; though these sound rather general, they signal that no massive stimulus is forthcoming, which is encouraging because increasing long-term debt and decreasing long-term flexibility would pay too high a price for a short-term boost. China's leadership is sufficiently confident to prioritize long term over short term. Premier Li Qiang said, "We refrained from resorting to a deluge of stimulus policies or strong short term stimulus measures…" Expect targeted stimulus measures, such as supporting trade-in of old consumer goods for new ones, and cultivating new consumption growth points such as smart homes, entertainment and tourism, sports events, and domestic "trendy products." Investment by the central government is 700 billion yuan. Encouraging private capital to participate in constructing major projects is a new mechanism for development.

New Quality Productive Forces. Artificial intelligence, AI, gets top billing, with the launch of an "AI Plus initiative". Enhancing disruptive and frontier technology research is stressed, calling out quantum computing and the life sciences. I note China's new recognition that disruption is required to achieve state-of-the-art technologies, while China's commitment to stability in politics, economics and society remains unchallenged. Advancing the energy revolution for renewables continues, reflecting China's determination, directed by President Xi Jinping, to transition to sustainable development. Meeting with the Jiangsu delegation, Xi said that "It is necessary to firmly grasp high-quality development as the primary task and develop new quality productive forces according to local conditions," stressing that developing new quality productive forces does not mean neglecting or abandoning traditional industries, nor rushing in and creating bubbles, nor adopting a one-size-fits-all approach.

Enhancing Opening-Up. Pursuing higher-standard opening up and ensuring national treatment for foreign-funded enterprises reinforce current policy. However, working toward joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership elevates a transformative economic and geopolitical strategy.

What struck me, more than at any prior National People's Congress, was the high priority of science, technology and innovation, the drivers of new quality productive forces. The Minister of Science and Technology, Yin Hejun, discussed the "new trend" accelerating China's sci-tech industries: R&D investment in 2023 exceeded 3.3 trillion yuan, an increase of 8.1 percent over the previous year. The world's first fourth-generation nuclear power plant was put into operation, and the C919 large aircraft began commercial operations. Exports of new energy vehicles, lithium batteries, and photovoltaic modules — what China calls the "new three"— increased by nearly 30 percent, in 2023, an achievement Minister Yin called "very gratifying." His overarching point is that scientific and technological innovation not only enhances the competitiveness of China's traditional industries, but also injects impetus into new quality productive forces.

I'm keeping Watch. I'm Robert Lawrence Kuhn.

Script and Presenter: Robert Lawrence Kuhn

Producer: Yang Yutong

Video Editor: Hao Xinxin

Graphic Designer: Qi Haiming

Executive Producer: Sun Lan

Chief Editor: Ge Jing

Supervisors: Xiao Jian, Adam Zhu

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