The great rejuvenation of China

2. the new normal is an accurate judgment of China’s economic development trend

Under the new normal, a series of new characteristics of economic development show that the evolution of China’s economy to a stage with high quality and more optimized structure is a natural process, which is in line with the spiraling movement law of things. In other words, economic development entering the new normal is a necessary stage of China’s economic and social development, and it is a general trend that is not transferred by human will.

The Third Plenary Session of the 11th CPC Central Committee opened a new period in the history of reform and opening up. For more than 40 years, despite all the difficulties, we have created a miracle in which a country’s rapid economic growth lasted the longest since the end of the Second World War. China’s total economic volume ranked eleventh in the world at the beginning of reform and opening up; In 2005, it surpassed France and ranked fifth; In 2006, it surpassed the United Kingdom and ranked fourth; In 2007, it surpassed Germany and ranked third; In 2010, it surpassed Japan and ranked second. In 2010, China’s manufacturing scale surpassed that of the United States, ranking first in the world. In a few decades, we have completed the development process that developed countries have gone through for hundreds of years and created a miracle of world development. However, with the continuous increase of economic aggregate, China has encountered a series of new situations and problems in the process of development. The economy is large but not strong, the quality of development is not high enough, and sustainable development is facing severe challenges.

(1) Prominent contradictions in the economic structure. International experience shows that in the initial stage of economic development, developing countries often pursue rapid economic growth, and tend to neglect technological progress and structural optimization, resulting in structural imbalances between the economy and society, urban and rural areas, regions and income distribution. Since the reform and opening up, the main goal of China’s economic development is to solve the problem of food and clothing, pursuing speed, scale and quantity, and not paying enough attention to structural problems. At present, China’s economic development is facing three major structural imbalances: First, the structural supply and demand imbalance of the real economy, although the production capacity of the supply system is very strong, but most of them can only meet the needs of low-end, low-quality and low-price, and it is difficult to meet the people’s increasingly upgraded multi-level, high-quality and diversified consumer demand. Second, the imbalance between finance and the real economy, there is a phenomenon of funds turning from real to virtual, and a large amount of funds circulate themselves in the financial system, which not only increases the risk of the financial system, but also further aggravates the financing difficulties of the real economy. The third is the imbalance between real estate and the real economy, and a large amount of money has poured into the real estate market, resulting in excessive rise in house prices, further pushing up the cost of the development of the real economy.

To solve the problem of economic structural imbalance, we must optimize the structure, use the method of deepening reform to improve the quality of the supply system, and achieve a new dynamic equilibrium between supply and demand.

(2) The endogenous driving force of growth needs to be reshaped urgently. In the past, economic growth was mainly driven by investment and exports, but this pattern of growth is unsustainable. From the perspective of investment, investment growth faces multiple constraints such as demand, finance and environment. From 2013 to 2018, the growth rate of China’s investment was 18.6%, 15, 7%, 10%, 8.1%, 7.2%, and 5.9%, respectively, and the decline trend was very obvious. From 2013 to 2018, China’s export growth rate was 7.9%, 6.1%, -2.8%, -7.7% and 7.9% respectively , 7.1%, fluctuating greatly, external demand growth is unstable. With the aging population and increasing environmental requirements, the low-cost advantage of relying on the demographic dividend in the past is disappearing, and the driving force of exports on economic growth is gradually weakening. Therefore, based on domestic demand, cultivating endogenous power, especially relying on consumption, has become an inevitable choice for China’s future economic sustainable growth.

(3) Resource and environmental constraints are increasing. China’s resource- and energy-intensive industries account for a considerable proportion of the national economy, and the demand for resources and energy is large and the consumption is high. According to World Bank statistics, China’s steel, copper, media and aluminum consumption rank first in the world, and oil consumption ranks second in the world. Under the background of increasing constraints such as resources, energy and environment and the increasingly prominent contradiction between supply and demand, it has become an inevitable choice to promote the development of green and low-carbon cycles, force industrial transformation and upgrading, and take a new path of resource-saving and environment- friendly green development.

(4) International space is increasingly being squeezed. After the international financial crisis in 2008, the world economy entered a period of economic growth based on long-term structural adjustment. With the increase of unstable and uncertain factors in the world economic recovery, the world economic pattern is undergoing major changes, and the global real economy competition has a new trend. On the other hand, the advantages of factor costs in emerging economies and developing countries are increasingly prominent. Coupled with the significant impact of the new crown pneumonia epidemic on international trade and investment, the global industrial chain and supply chain are facing deep adjustments, which correspondingly bring profound changes to the global supply structure and demand structure, import and export patterns. China’s manufacturing industry is facing the dual squeeze and double challenge of developed countries gaining momentum and emerging economies catching up and competing with each other. At the same time, after the rapid rise of China’s economy, it has become the main “variable” that the world economic power considers to deal with, especially the United States and other countries do not want to see socialist China develop and grow, and do everything possible to hinder China’s economic development.

In the face of a more complex external environment, China urgently needs to cultivate new advantages in international competition.

Therefore, to enter the new normal, we must accurately grasp the general trend of economic development, not only see the appearance of economic growth rate shifting, but also grasp the trend of development mode transformation, structural adjustment and power conversion in essence, and promote the evolution of China’s economy to a high-quality development stage.

3. the new normal has not changed the fundamentals of China’s long-term economic development

Under the new normal, although China’s economy is facing downward pressure, the fundamentals of long-term economic development have not changed, the good foundation and conditions supporting sustained economic growth have not changed, China’s development is still in a period of important strategic opportunities, with sufficient resilience, huge potential and continuous bursting of innovation vitality. As Comrade Xi Jinping pointed out at the Central Economic Work Conference held on December 19-21, 2018: “The world is facing major changes unprecedented in a century, and crises and opportunities coexist in the midst of changes, which brings great opportunities for the great rejuvenation of the Chinese nation. We must be good at turning crises into opportunities, turning crises into security, and grasping the new connotations of important strategic opportunities.” 1 This requires accurate identification, scientific response, and proactive change, analysis of the economic situation with a comprehensive, dialectical and long-term perspective, research and judgment of development opportunities from the dimension of time and space, be good at nurturing new opportunities in crises, open up new situations in changes, and grasp the new connotations of important strategic opportunities.

(1) Although the economic growth rate has slowed down, its comprehensive strength has been significantly improved. In 2019, China’s GDP increased by 6.1%, with a total volume of more than 99 trillion yuan, accounting for more than 16% of the world economy and contributing 30% to world economic growth. Today, China is the world’s second largest economy, the largest manufacturing country, the largest foreign exchange reserves, and the largest country in goods trade. Made in China, created in China, and built in China highlight China’s new comparative advantages.

(2) Changes in the international environment have brought new opportunities for China to participate in global governance. The anti-globalization of some countries has caused certain negative impacts on international trade and investment, increased global economic risks, and intensified global competition for capital and products, but it will not change the historical trend of globalization.

Globalization has entered a new stage, and the future globalization is no longer determined only by the West, and emerging economies have increasingly become an important force driving globalization. The “new globalization”, based on the principles of equal treatment, benefit sharing, inclusiveness and reciprocity, represents the future development direction of mankind. This provides a major historical opportunity for China, which advocates and actively practices the construction of a community with a shared future for mankind, to become a “leader” of new globalization, which will greatly enhance China’s voice and influence in global governance.

(3) The scientific and technological revolution brings new opportunities for technological and industrial upgrading. Science and technology have become the most important variable affecting the world economic cycle and an important factor determining the quality of the economy. A new round of scientific and technological revolution is shaping the global economic structure and political landscape. In the face of new opportunities for the integrated development of digitalization, networking and intelligence, China has a good foundation and growth potential in the fields of 5G technology, industrial Internet, Internet of Things, big data, artificial intelligence and deep integration of manufacturing, and the development prospects are very broad.

(4) China has a domestic market with huge potential, and the resilience and room for maneuver of the economy are large. In 2019, China’s per capita GDP exceeded $10,000, which is at the level of upper-middle-income countries according to the World Bank’s criteria. At present, there are more than 400 million middle-income groups in China, which is the world’s largest and most growing middle-income group, with huge consumption potential.

At the same time, we must also see that the period of strategic opportunities is also an important period of testing, and under the new normal, we must maintain determination, make good use of opportunities, adhere to the general tone of seeking progress while maintaining stability, and promote sustained and healthy economic development. The general tone of seeking progress while maintaining stability is an important principle of governing the country and is also a methodology for doing economic work well. Stability is the main tone and the overall situation. It is necessary to use “stability” to cope with “change”, adhere to stable employment, stable finance, stable foreign trade, stable foreign investment, stable investment, and stable expectations, especially in the face of the adverse impact of the new crown pneumonia epidemic. It is also necessary to fully implement the tasks of ensuring the employment of residents, ensuring the basic people’s livelihood, ensuring market entities, ensuring food and energy security, ensuring the stability of the industrial chain and supply chain, and ensuring the operation of the grassroots level, boosting market confidence, enhancing the people’s sense of gain, happiness and security, and maintaining sustained and healthy economic development and overall social stability. Under the premise of stability, it is necessary to make progress in key areas, use “progress” to achieve “stability”, take the initiative, and comprehensively deepen reform Accelerate the optimization and upgrading of the economic structure, enhance the ability of scientific and technological innovation, accelerate green development, actively participate in the reform of the global economic governance system, and accelerate the promotion of high-quality economic development, so as to fundamentally achieve stable economic and social operation.