Liu He, Vice Premier of China's State Council and Director of the Office of the Central Financial and Economic Commission, has recently written an article in People's Daily on November 24 that elaborates the connotation of high-quality development. High-quality development is an important concept put forward by the 19th National Congress, and the Chinese central government has repeatedly emphasized on it. Liu said in the article that high-quality development is the development that reflects the new development concept and the unity of innovation, coordination, green, open and shared development should be adhered to this end. Researchers from ANBOUND believe that as China's development enters a new stage and faces a new context, an accurate understanding of high-quality development is important for future policy formulation and strategy selection. Liu's in-depth analysis of high-quality development at this time is clearly meant to further deepen understanding, so that China's future development can truly shift to the guidance of the new development concept.
The following key points worthy of attention:
(1) High-quality development is people-centered development: Satisfying people's needs is the fundamental purpose of socialist production, and it is also the force that drives high-quality development. The new growth points and new impetus of China's economy are embedded in solving the outstanding issues of general concern to the people and arise from the process of improving the quality of human capital. High-quality development is to return to the origin of development and maximize the social utility of the greatest number of people. China should insist on promoting common prosperity through promoting high-quality development and common hard work, and effectively improve the quality of human capital and professional skills of the whole society, and expand the middle-income group. Liu noted that China does not fall into the trap of welfarism. He said that taking the wealth of the rich to aid the poor will not only negate the achievements of previous reforms - allowing some people to get rich first - but also may bring poverty back. This will create an equality poor society, instead of common prosperity.
(2) High-quality development is development with enhanced macroeconomic stability: Economic growth often shows cyclical fluctuations, though major ups and downs can destroy factors of production and social wealth. Some economies with high growth rates have seen such occurrence and often stumble. Under the conditions where the world is facing a major change not seen in a century and the global economy is full of uncertainties, macro stability has become a scarce resource. High-quality development should focus more on the supply-side efforts to enhance economic stability by optimizing the economic structure. Macroeconomics is a continuous process that cannot be interrupted, therefore China should always adhere to the general keynote of seeking progress in a stable manner and do well in its cross-cycle design and counter-cyclical adjustment of macroeconomic policies. The shift from high-speed growth to high-quality development is a period of risk-prone and high-risk, so it should adhere to the bottom-line thinking and achieve a long-term balance between stable growth and risk prevention. Liu emphasized several relationships here. (i) The relationship between high-quality development and stability: China's economy has shifted from high-speed growth to medium-speed growth, and the criteria for measuring the quality of economic development have changed, with "macro stability becoming a scarce resource". The emphasis on "stability" here is fully consistent with what is advocated and emphasized by ANBOUND for many years. It should be noted that in order to achieve sound growth, macro policies need to consider "cross-cycle design" and "counter-cyclical adjustment". (ii) The relationship between high-quality development and risk prevention: When China's economy is developing at a reduced pace, it is also a period of high risk, hence it is necessary for it to balance the objectives of stable growth and risk prevention.
(3) Competitive enterprises are the micro-foundation of high-quality development: High-quality development must cultivate excellent enterprises with core competitiveness, as an important starting point for all kinds of economic policies, and lay a solid micro foundation for a high-standard market system. If the enterprise can perform well, the economy will be in good shape, and the people can enjoy employment. With this, the government will be able to obtain tax revenue, financial support, and social security. While number of Chinese enterprises listed in the world's Top 500 continuously ranked as the first in the world, they mostly rely on the scale, whereas their innovative leadership, international competitiveness and world-class level are still wanting. There is a large number of smaller enterprises with strong vitality, yet they face weak market competitiveness and insufficient upgrading capacity. State-owned enterprises should continue to deepen reform and participate in market competition more efficiently and fairly. Private enterprises too, should unify the entrepreneurial spirit of risk-taking and the standardization of corporate governance. Meanwhile, foreign-invested enterprises are crucial in achieving high-quality development. Entrepreneurs are factor integrators, market explorers and innovation promoters. Therefore, China should create a good market environment for entrepreneurs. In this section, Liu emphasizes the importance of enterprises and entrepreneurs to high-quality development, which is very informative. (i) The basis of high-quality development is quality enterprises, which is an important goal of all kinds of economic policies. (ii) The article analyzes the problems and roles of various types of enterprises, and the shortcomings of both large and small enterprises in China in terms of competitiveness and innovation capacity. (iii) The problems of state-owned enterprises are their monopolistic feature and inefficiency, and they should participate in competition in a market-oriented way in the future. (iv) Entrepreneurs are the driving force of innovation, and it is extremely important to create a suitable market environment for them.
(4) High-quality development is innovation-driven development: China should adhere to the concept that innovation is the core position in the overall situation of its modernization. Due to the profound changes both outside of China and within the country, science and technology innovation is not only a development issue for the country, but also one that ties to its survival. The key to successfully crossing the middle-income trap lies in whether China can realize the leap from factor input-driven to technology innovation-driven. Improving total factor productivity, labor productivity, scientific and technological contribution rate, and human capital accumulation are all directly related to innovation. There are several points worth noting: (i) The fundamental feature of high-quality development is innovation. (2) Science and technology innovation is not only a matter of development for China, but also a matter of survival. The demand for innovation for high-quality development will be reflected in all aspects of science and technology innovation (from basic research to applied research), institutional innovation (institutional and mechanism reform), and innovation evaluation system. The goal of China's future innovation and reform is to truly forming an innovation system with enterprises as the mainstay.
(5) High-quality development should adhere to market-oriented rule of law and internationalization: High-quality development requires strengthening the market mechanism, forming healthy competition, reducing systemic transaction costs, and establishing a unified, open, competitive and orderly market system of high standards. Socialist market economy is essentially an economy of the rule of law. It needs to protect the property rights, as well as paying attention to the maintenance of contracts, unified market, equal exchange, fair competition, and effective supervision. At the same time, it needs to improve the legal system to provide a fair, stable and predictable rule of law environment for the activities of market players. High-quality development should be dynamically enhanced in a high level of international competition, and through promoting rules, regulation, standards and other system-based openness. Marketization, rule of law and internationalization complement each other, and are fundamental institutional requirements for fostering the attraction of first-class global factors and high-quality micro-entities, which must be promoted in a holistic manner. The international community had feared that China's market system would become a distorted market economy with high levels of state intervention and direct involvement. In this regard, Liu's article emphasizes that marketization, rule of law and internationalization are the characteristics of China's socialist market economy system and the important principles to be adhered to for high-quality development. Whether China's market system can become more mature and established, this depends on whether it can progress in terms of the three aspects of marketization, rule of law and internationalization. Counter-globalization and intensified geopolitical situation will test China's determination to adhere to the development of market economy even more.
(6) High-quality development gives priority to ecological green development. To achieve high-quality development, it is necessary to gradually and orderly achieve a comprehensive green and low-carbon transformation of China's production and lifestyle under the framework of carbon peaking and carbon neutral, which is a broad and profound economic and social systemic change. In fact, green development is an important feature that distinguishes high-quality development from the crude development of the past. As a developing country still in the upward stage of economic development, China is under great pressure to shift to green development. This not merely concerns environmental and ecological protection, but also poses a profound economic and social systemic change, which will involve all aspects of economy and society, such as energy structure, industrial structure, consumption structure, technological progress and application, green low-carbon policy, green market system construction, etc.
Final analysis conclusion:
Overall, high-quality development will become the strategic goal as well as the basic criterion for China's development in the next three decades. Its science and technology innovation, market building, opening up, green development, and achieving common wealth will all be placed under the overall framework of high-quality development.
