The 2023 Central Economic Work Conference was held in Beijing on December 11 to 12, 2023. The conference reviewed China’s socio-economic situation and its problems this year, and provided the policy direction of macroeconomic regulation and control for the coming 2024. According to the conference resolution, the general theme of next year’s economic work is still about seeking progress while maintaining stability with its main focus on expanding domestic demand, promoting high-quality development, and building a modernized industrial system to alleviate the economic predicament faced by China.
The nearly 40 years of economic reform have brought positive effects on the growth of national income and the expansion of foreign trade in China. However, the rapid socio-economic changes in the process have also led to inadequate sources of economic growth and languid development in the industrial structure, which affects China’s competitiveness in international economy. The outbreak of the 2008 financial crisis had brought about a huge impact on the economy of China, and fully exposed its deficiencies. In November 2013, the Third Plenary Session of the 18th Central Committee of the Chinese Communist Party (CCP) resolved to “comprehensively deepen the reforms” in the hope of replacing the “demographic dividend” with the “institutional dividend” in order to maintain a sustainable development of the economy. However, since 2018, the US-China trade and technology wars, the COVID-19 pandemic, the Russo-Ukrainian war, and the Israel-Hamas war have triggered a crisis in the global industrial and supply chains, which in turn has accelerated global inflation and economic decline. The Biden administration’s suppression of high-tech development in China and its economic and trade blocking policies have put China’s economy at a serious geopolitical risk.
In order to cope with the impact of internal and external political and economic situations, the CCP has proposed a strategy of “developing a new development pattern promoted by a domestic and international dual cycle.” Its main policy connotations are to expand domestic demand, focus on the domestic market, enhance its own innovation capability, not rely on markets outside of China, but at the same time, maintain openness to the outside world. Under the “dual cycle” development strategy, expanding domestic demand, strengthening the country’s strategic scientific and technological strength, enhancing the capability of independent control of the supply chain of the industrial chain, and building a modernized industrial system have become the main objectives of the CCP’s present economic, trade, and scientific and technological development strategy.
In terms of macroeconomic regulation and control, it is about the general principle of “seeking progress while maintaining stability,” which continues to implement proactive fiscal policies and prudent monetary policies, and sets stable growth, employment and prices as the objectives of regulation and control, and focuses on expanding domestic demand, with priority given to restoring and expanding consumption.
Despite the measures taken by the CCP to revitalize the economy in recent years, China is still experiencing sluggish economic growth. Statistics has shown that, due to the impact of the COVID-19 pandemic, China’s annual GDP growth in 2020 is 2.3%; in 2021, with the economy stimulating measures and a lower base period, the annual GDP growth is 8.1%, and in 2022, the annual GDP growth is 3.0%. This year, the CCP has anticipated a GDP growth target of 5.0%, and the GDP growth in the first three quarters are 4.5%, 6.3% and 4.9% respectively. Based on this, the CCP is expected to achieve the 5.0% GDP growth target for the year. However, data have shown that the economic operation is still in a downturn, which is mainly manifested in the slowdown of the three propellers of the economy, namely: fixed asset investment, social consumption, and foreign trade and export. Overall speaking, new sources of economic growth in China have yet to be created, and the foundation for economy recovery is not yet solid.
This year marks the end of zero-COVID policy in the three-year COVID-19 pandemic, and China’s economy will gradually return to normal. However, the Central Economic Work Conference has a profound understanding of the current economy of China, and considers that the economy “needs to overcome some difficulties and challenges in order to further promote the recovery of the economy. The main reasons are insufficient effective demand, overcapacity in some industries, weak social expectations, hidden risks, blockages in the domestic cycle, and rising complexity, severity, and uncertainty in the external environment, so it is necessary to strengthen the sense of worry and effectively cope with and solve these problems.”
In terms of macroeconomic regulation and control, the conference stated that in 2024, China “should insist on seeking progress while maintaining stability, promoting stability through progress, establishing first and then breaking new ground, adopting more policies conducive to stabilizing expectations, growth and employment, and actively making progress in transforming mode, adjusting structure, improving quality and increasing efficiency, so as to continuously consolidate the basis for stabilizing and improving the economy.” China will also continue to implement proactive fiscal policy and prudent monetary policy, and strengthen the innovation of policy instruments as well as the coordination and matching of policies.
The conference put forward nine economic tasks for next year, namely, building a modernized industrial system led by scientific and technological innovation, expanding domestic demand, deepening reforms in key areas, expanding a high level of openness to the outside world, sustaining and effectively preventing and resolving risks in key areas, persevering in the work of the “Three Rural Areas”, promoting integration of the rural and urban areas and coordinated development in the region, promoting ecological civilization and green and low-carbon development, and safeguarding and improving people’s livelihoods.
According to the 2023 Economic Work Conference of the CCP, “stability” shall continue to mark China’s economic operation in 2024. In terms of macroeconomic regulation, “stable growth” and “stable employment” are the short-term policy objectives to be reached. As for the expansion of domestic demand, the deepening of reforms, the opening up of the country to the outside world, the prevention of financial and debt risks, the urban-rural and regional integration, the promotion of ecological civilization, and the protection and improvement of people’s livelihood, they are all social and economic tasks that have been implemented continuously for years. However, in face of the recent global crisis of supply chain disruption and the impact of intensified geopolitical risks on China’s economy, how to build a modernized industrial system through scientific and technological innovation, and to enhance the resilience and security of the supply chain is the most important task of the CCP’s economic, trade, and science and technology development strategy, and the effectiveness of which will be sorely tested.
(Wei-Ai, Director, Center of Cross-Straits Political and Economic Affairs, National Chengchi University)
(Translated to English by Chen Cheng-Yi)
