The annual Central Economic Work Conference was held in Beijing from Tuesday to Thursday, as Chinese leaders were trying to chart course for China’s economy in 2020.
China’s economy is facing internal and external challenges. Steven Bannon, the former White House Chief Strategist, said that this meeting could be the most important one in the history of the Chinese Communist Party (CCP) during his CNBC interview on Dec 12. A collapsed economy will end CCP’s 70-year reign in China.
Some CCP insiders revealed CCP’s secret long-term plan to decouple from the democratic world by creating a new world order with some less-democratic countries, even though the official announcement of this meeting may not show many traces of that ambition. Some described the mood of the meeting as gloomy. The US-China trade war may have cornered the CCP.
Next year marks the end of China’s 13th “Five-Year Plan” with the goal of establishing a “well-off society” by ending poverty.
The conference pointed out that “to achieve the expected goals next year, we must adhere to the word stability”, “be proactive” and “ensure that the economy achieves reasonable growth and qualitative steady improvement.” The meeting also emphasized the need to improve and strengthen the “six stability” measures, improve fiscal, monetary, employment and other policy coordination and transmission implementation mechanisms to ensure that economic operations in a reasonable range.
In a speech at the conference, Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, Chinese president and chairman of the Central Military Commission, reviewed the country’s economic work in 2019, analyzed the current situation and announced economic goals for 2020.
Facing the complicated situation of mounting risks and challenges at home and abroad in 2019, China has maintained sustained and sound economic and social development and made key breakthroughs in the “three tough battles,” seeing notable progress in targeted poverty reduction, effective prevention and control of financial risks, and general improvement in the environment, according to a statement released after the conference.
Meanwhile, the country’s progress in achieving the major tasks of the 13th Five-Year Plan met expectations, and new major steps have been made toward finishing the building of a moderately prosperous society in all respects.
“The root cause is that we have upheld the centralized and unified leadership of the CPC Central Committee, maintained strategic resolve, kept pursuing progress while ensuring stability, deepened reform and opening-up, and given full play to the enthusiasm of central and local governments,” the statement said.
“While fully acknowledging our achievements, we must see that China is at a pivotal stage of transforming its growth model, improving its economic structure, and fostering new drivers of growth,” the statement said.
The country faces rising downward economic pressure amid intertwined structural, institutional and cyclical problems, according to the statement.
The global economy continues to slow down, the world is still undergoing in-depth adjustments due to the global financial crisis, profound changes are accelerating, and sources of turbulence have substantially increased, the statement said. “We need to be well prepared with contingency plans.”
Given this situation, the conference pointed out that the basic trend of the Chinese economy maintaining steady growth toward long-term sound development remains unchanged.
“We can overcome all risks and challenges,” the statement said.
To achieve the expected targets for 2020, China will make ensuring stability a top priority, and uphold the policy framework of stable macro policies, flexible micro policies, and social policies that ensure basic needs are met.
The conference underscored sustained vigorous efforts in deepening supply-side structural reform and ensuring reasonable growth and steady improvement of the economy.
Goals for next year
The top priory is to maintain stability
- Party committees and governments at all levels must adapt to the inevitable requirements of China’s development entering a new stage and changes in major social contradictions, and focus their attention on solving various imbalances and insufficiency.
- It is necessary to establish a comprehensive and holistic concept, to follow the laws of economic and social development, and for major policies to be introduced and adjusted, a comprehensive impact assessment must be conducted to effectively implement the policies.
- Adhere to the implementation of the new development concept as an important criterion for testing leading cadres at all levels.
- Allocate resources to eradicate poverty, set up policies and funds on “three districts and three states” to implement poverty alleviation measures such as industrial poverty alleviation and ex-situ relocation.
- It is necessary to establish a mechanism to do a good job of monitoring and assisting the population falling below the poverty line again and newly-emerged poor in a timely manner.
- We must fight the battle of pollution prevention, adhere to the same direction, continue to strengthen, highlight the precise pollution control, scientific pollution control, pollution control according to law, and promote the continuous improvement of the quality of the ecological environment.
- We must focus on the defense of the blue sky, clear water, and pure land, improve relevant governance mechanisms, and do a good job at preventing and controlling at source.
- It is necessary to keep the macro-leverage ratio basically stable and solidify the accountabilities of all responsible parties.
- Government should play its role to ensure the basic living standards, pay attention to inclusiveness, basic living standards, safety net setup. Provide basic livelihood guarantees for poor populations at difficult times.
- It is necessary to stabilize the employment number, improve the employment structure, improve the quality of employment, focus on the employment of key groups, and ensure that zero-employment families are dynamically cleared.
- It is necessary to speed up the leveling of people’s livelihood and effectively solve the schooling problems faced by children of migrant workers.
- Hold the bottom line of basic living, ensure that pensions are paid in full and on time, and accelerate the nationwide coordination of pension insurance.
- It is necessary to take the advantages of market supply flexibility, deepen market-oriented reforms in medical and elderly care and other areas of people’s livelihood services and open them to the outside world, strengthen multi-level and diverse supply capabilities, and better achieve the unification of social and economic benefits.
- It is necessary to secure housing for urban residents in need, strengthen urban renewal and upgrading of existing housing, renovate urban old quarters, and vigorously develop rental housing.
- Adhere to the positioning of houses for living, not for speculation, comprehensively implement the long-term management and regulation mechanism that implements policies based on the city, stabilizes land prices, housing prices, and expectations, and promotes the stable and healthy development of the real estate market.
- Active fiscal policy must vigorously improve quality and efficiency, pay more attention to structural adjustment, resolutely reduce general expenditures, ensure protection in key areas, and support grass-roots wages, operations and basic livelihoods.
- A sound monetary policy should be flexible and appropriate, maintain reasonable and adequate liquidity, and increase the scale of monetary credit and social financing in line with economic development and reduce social financing costs.
- We must deepen financial supply-side structural reforms, unblock the monetary policy transmission mechanism, increase manufacturing medium- and long-term financing. Reduce the cost and better alleviate the difficulty of financing for private and small and medium-sized enterprises.
- Fiscal and monetary policies should work together with consumption, investment, employment, industry, and regional policies to guide investment in areas such as advanced manufacturing, livelihood construction, and infrastructure shortcomings that benefit from both supply and demand, with multiplier effects, to promote industries and consumption “double upgrade”.
- Fully explore the advantages of ultra-large-scale markets, give play to the basic role of consumption and the key role of investment.
- Adhere to the principles of consolidation, enhancement, promotion, and unblocking. Take innovation-driving and reform-and-opening-up as the two wheels to comprehensively improve the overall competitiveness of the economy and accelerate the construction of a modern economic system.
- We must pay close attention to agricultural production to ensure supply, accelerate structural reforms on the supply side of agriculture, and increase farmers’ income and rural rejuvenation.
- It is necessary to speed up the restoration of pig production and ensure a stable supply and price.
- It is necessary to deepen the reform of the scientific and technological system, accelerate the transformation and application of scientific and technological achievements, accelerate the enhancement of technological innovation capabilities of enterprises, let state-owned enterprises play an active role in technological innovation, improve the system and mechanism that encourage fundamental research and cutting-edge innovations, and perfect the mechanism to discover, cultivate and motivate scientific and technological talents.
- It is necessary to support the development of strategic industries, increase investment in equipment upgrades and technological transformation, and promote the optimization and upgrading of traditional manufacturing industries.
- It is necessary to implement tax and fee reduction policies, reduce the cost of electricity, gas and logistics for enterprises, and promote the disposal of “zombie enterprises” in an orderly manner.
- It is necessary to improve the system and mechanism, build a group of advanced manufacturing clusters with international competitiveness, and improve the basic capabilities of the industry and the modernization of the industrial production chain.
- Vigorously develop the digital economy.
- It is necessary to rely more on market mechanisms and modern scientific and technological innovation to promote the development of the service industry, promote the production service industry to specialization and the high-end extension of the value chain, and upgrade and diversify the every-day-living service industry.
- We must pay attention to solving the problem of “old-and-small”, speed up the construction of an elderly care system, support social forces to develop inclusive daycare services, promote the high-quality development of the tourism industry, and promote the market-oriented development of the sports fitness industry.
- Focus on the country’s long-term development, strengthen the construction of strategic and network infrastructure, promote the construction of major projects such as the Sichuan-Tibet Railway, steadily advance the construction of communication networks, accelerate the implementation of major natural disaster prevention projects, and strengthen municipal pipe networks, urban parking lots, Construction of cold-chain logistics and other facilities will accelerate the construction of rural roads, information, and water conservancy facilities.
- It is necessary to accelerate the implementation of regional development strategies, improve regional policies and spatial layouts, give full play to the comparative advantages of various regions, build a new source of high-quality development nationwide, and promote the coordinated development of Beijing, Tianjin, and Hebei, the integrated development of the Yangtze River Delta, and the construction of the Guangdong-Hong Kong-Macao Greater Bay Area. To build a world-class innovation platform and growth pole.
- It is necessary to solidly promote the construction of the Xiong’an New District, implement measures to protect the Yangtze River Economic Belt, and promote ecological protection and high-quality development in the Yellow River Basin. It is necessary to improve the comprehensive carrying capacity of central cities and urban agglomerations.
- Speed up the construction of a high-standard market system.
- It is necessary to accelerate the reform of state-funded and state-owned enterprises and promote the optimization and adjustment of the layout of state-owned capital. It is necessary to formulate and implement a three-year action plan for the reform of state-owned enterprises, improve the comprehensive effectiveness of state-owned and state-owned enterprise reform, and optimize the environment for the development of the private sector.
- It is necessary to promote the development of the real economy, improve the level of manufacturing, develop emerging industries, and promote mass entrepreneurship and innovation.
- It is necessary to improve the property rights system and the market-oriented allocation of factors, improve the legal environment to support the development of the private sector, and improve the policy system for the development of small and medium enterprise (SME) sector.
- It is necessary to reform the management of land plans and deepen the reform of fiscal and taxation systems.
- It is necessary to accelerate the reform of the financial system, improve the basic system of the capital market, improve the quality of listed companies, improve the delisting mechanism, steadily promote the reform of the GEM and the New Third Board, lower the center of gravity of the service focus of large banks, and promote the focus of small and medium-sized banks on their main responsibilities. The reform of rural credit cooperatives has guided insurance companies to return to the security function.
- Opening up to the outside world should continue in a bigger, broader and deeper direction, strengthen the promotion and protection of foreign investment, and continue to reduce the negative list of foreign investment.
- Promote the steady improvement of foreign trade and guide enterprises to develop diversified export markets.
- It is necessary to reduce the overall level of tariffs.
- Fully explore the reform-and-opening-up of the Free Trade Zone Pilot Program, and promote the construction of Hainan Free Trade Port.
- Improve the “Belt and Road” investment policy and service system.
- It is necessary to take an active part in the transformation of global economic governance, actively participate in the reform of the World Trade Organization, and accelerate the negotiation of multilateral and bilateral free trade agreements.