Breaking the deadlock: China plans for new economic growth

Editor's note: Ma Xiaobai is director and researcher of the Research Office of Multinational Enterprises, Research Institute of Enterprises, Development Research Center of the State Council, and Chen Gong is a PhD, Education and Training Center for Officials and Entrepreneurs, State-owned Assets Supervision and Administration Commission of the State Council. The article reflects the authors' opinions and not necessarily the views of CGTN.

The resolution adopted at the third plenary session of the 20th Central Committee of the Communist Party of China (CPC) clearly outlined the overall objectives of further deepening reform comprehensively. Particularly, with a focus on building a high-standard socialist market economy, it highlighted that we will see the market playing the decisive role in resource allocation and the government optimally fulfilling its role. 

The Political Bureau of the Central Committee of CPC held a meeting on Thursday to analyze and study the current economic situation and make further arrangements for economic work, once again sending powerful policy signals to the market. The meeting outlined both expansionary policy measures and key tasks aimed at ensuring stability. There are three key aspects worth noting:

First, we must have a comprehensive understanding of the favorable conditions for China's economic and social development. Although the Chinese economy now faces many real-life challenges, especially with a 4.7-percent GDP growth rate in the second quarter, which is slightly slower than in the first quarter, it is essential to recognize that the demand from China's 1.4 billion people continues to grow. 

At the same time, industries are undergoing digital, intelligent, and green transformation and upgrading, with technological innovations remaining active in fields such as artificial intelligence, cloud computing, and biomedicine. As a result, many new economic growth drivers will sprout. 

In the first half of this year, the added value of high-tech manufacturing industries above the designated size grew by 8.7 percent year-on-year, 2.7 percentage points higher than the overall growth rate of all industries above the designated size. The investments in high-tech industries rose by 10.6 percent, outpacing overall investment by 6.7 percentage points. 

The ongoing shift toward "new" and "green" industries has become increasingly evident. In particular, against the backdrop of a complex and ever-changing international environment and weak global economic momentum, China's total volume of imports and exports of goods stood at 21.17 trillion yuan in the first half of this year, up 6.1 percent year-on-year, surpassing 21 trillion yuan for the first time in history during this period. 

Therefore, the meeting confidently concluded on this issue, "China's favorable conditions such as its economic fundamentals, large market, strong economic resilience, and vast potential, remain unchanged."

Second, we must remain confident that the Chinese economy will continually change for the better. The meeting adopted a more proactive approach to incrementally strengthen efforts in areas such as fiscal policy, monetary policy, real estate, capital markets, supporting enterprises, and improving people's livelihoods. 

Notably, it explicitly called for "stabilizing the real estate market", enhancing counter-cyclical adjustments, and boosting the capital market. Measures such as vigorous efforts to encourage mid- and long-term capital inflows are concrete policy measures and reform actions designed to further stabilize expectations and reinforce confidence. 

In conjunction with a package of financial policies released on September 24, the market was sent a strong signal of driving economic growth. More incremental measures and positive signals are expected in the future, and the goal of achieving approximately 5 percent GDP growth this year is likely to remain unchanged.

Third, we will continue to foster a first-rate business environment that is market-oriented, law-based, and internationalized. The private economy has played an irreplaceable role in creating jobs, facilitating innovation, and increasing tax revenue. The rule of law constitutes the best business environment. 

The meeting emphasized that "we must introduce laws to promote the private economy and foster a favorable environment for the development of the non-public sector." This is a positive signal of solidifying measures that expedite the development of the private economy through legal means. It is expected that this will strongly invigorate the private sector and stimulate its innovative potential, thus propelling high-quality economic growth. 

Regarding the standardization of law-based government administration, the meeting made it clear that "we need to help businesses overcome difficulties and further standardize law enforcement and regulatory actions involving enterprises." 

Recent data from the Ministry of Finance shows that from January to August this year, tax revenue dropped by 5.3 percent year-on-year, but non-tax revenue saw a notable increase. Excessive non-tax income imposes a burden on small and medium-sized enterprises. This meeting reiterated the necessity to standardize law enforcement involving enterprises, aiming to provide support and instill confidence for all market entities to operate legally and pull through difficult times. 

Furthermore, in terms of continuously optimizing the international business environment, the National Development and Reform Commission announced in early September this year that restrictions on foreign investment in the manufacturing sector had been fully lifted. This meeting again stressed that intensifying efforts to attract foreign investment and continuously reforming the foreign investment access system are rigorous measures to advance institutional opening up. 

These measures send strong signals of China's unwavering commitment to high-standard opening up and demonstrate our determination to promote the liberalization and facilitation of investment, as well as our responsibility to foster open cooperation worldwide.