With China's 20th National Congress of the Communist Party still underway, the focus of the world, especially market institutions, is on the changes that it might bring, in terms of the country's future direction, as well as its development strategy.
Based on Chinese President Xi Jinping's report and the information revealed at the congress, researchers at ANBOUND believe that the theme for China, for both its politics and economy in the post-20th National Congress period, remains to be "development", as determined by its strategy.
In the report of the 20th National Congress, it is mentioned that "to build China into a great modern socialist country in all respects", China has adopted a two-step strategic plan, the first step being to "realize socialist modernization from 2020 through 2035", and the second step is set "from 2035 through the middle of this century". This would mean that the next five years are a critical period to achieve this strategic goal and to attain such a goal, China must develop.
As things stand, focusing on development is still inevitable for China as it is under the pressure of the international environment. With the United States pushing its allies to sanction and suppress China in multiple ways, this has become the "new normal" China that will face in the future. On October 7, the Bureau of Industry and Security (BIS) at the U.S. Department of Commerce announced new restrictions limiting China's ability to both purchase and manufacture certain high-end chips. Meanwhile, the latest 2023 National Defense Authorization Act sees China as the only country in the world with economic and technological capabilities that pose a continuing challenge to the U.S. interests, thus identifying it as a major potential threat to American national security. Therefore, for a long time to come, China will face the pressure of near-containment moves by the West. To meet these external challenges, China will need to accelerate its development.
The focus on development reflects China's priority policy options in a complex environment. This also means that China will have to maintain an open stance that is more conducive to its development, instead of opting to become a closed-door country that hampers development.
There are a lot of concerns whether China will continue its reform and opening up. As China implements the "domestic-international dual circulation", some public opinions worry that this will be solely focusing on domestic consumption, thereby could possibly and increasingly shrink the country's degree of opening to the outside world. In regard to this, the spokesperson of the 20th National Congress noted that as the name implies, "dual circulation" is about both domestic and international markets, and is also linking the Chinese market to the international one through the domestic demand's potential. Some Chinese officials stressed that opening up is China's basic state policy, and this will not waver regardless of how the outside world changes.
The report stated that what China wants to achieve is "high-quality development". This would involve certain "strategy pairs" or "concept groups". An example of this is the new development pattern with domestic circulation as the main component, while both domestic and international dual circulation would be supporting each other. To this end, it would be necessary for China to adopt the strategy of expanding domestic demand, and at the same time, deepen its supply-side structural reform. In addition, there are other aspects of focus, including improving total factor productivity, enhancing the resilience and security of industrial and supply chains, urban-rural integration, coordinated regional development, as well as green development among others.
As the center of attention is development, the core of it is naturally the economy. With this in mind, the report noted several crucial points. First of all, China's economy has shifted from a stage of high-speed growth to a stage of high-quality development, and the GDP can no longer be used as the main focal point of this. Instead, the focus needs to be on solving the problem of long-term economic development. Next, the report also noted that in the following stage, China will concentrate on promoting high-quality development and keep the economy operating within a reasonable range. At the same time, it also stated that "economic security as our foundation", this would signify the importance of economic development. Finally, it mentions the essentiality of the real economy. To build a modern industrial system, according to the report, it would be necessary to boost the country's "strength in manufacturing, product quality, aerospace, transportation, cyberspace, and digital development.
When the focus is on development, it would indispensable to have proper system arrangement. In the words of the report, to build "a high-standard socialist market economy", it would be necessary to "uphold and improve China's basic socialist economic system" and "unswervingly consolidate and develop the public sector and unswervingly encourage, support, and guide the development of the non-public sector", in addition to working "to see that the market plays the decisive role in resource allocation and that the government better plays its role". This is, in fact, an economic institutional arrangement that the Chinese central government has repeatedly stated since the 18th National Congress.
In the recent years, China's development has been interfered by multiple internal and external factors. Externally, there are waves of anti-globalization, trade wars, geopolitical games, and climate change. Internally, there are the impacts of the COVID-19 outbreaks, the accumulation of various risk factors, the consolidation of structural problems, and the aging of the population with a low birthrate. The 20th National Congress attempts to address these factors to seek economic development at its core.
Final analysis conclusion:
In the post-20th National Congress period, the most crucial matter facing China is still the development issue with the economy as its core. After eliminating some uncertain factors, the country's future policies and resources will be centered around development.
