Gain insights into economic resilience via plenum - 2024-08-20
Lujiazui, the financial center in Shanghai, forms a perfect backdrop to the Bund area.
The third plenary session of the 20th Central Committee of the Communist Party of China, held in July, focused on further deepening reform comprehensively to advance Chinese modernization. The third plenary session also said that measures would be taken to better balance development and security, in order to mitigate major risks, ensure high-quality development and realize the goal of transforming China into a great modern socialist country in all respects.
Some foreign commentators wrongly assume that the third plenum merely reiterated past statements without initiating substantive changes, because they have misjudged the steady progress China has made in implementing reform.
During the early stages of reform and opening-up, China adopted a gradual approach, of "crossing the river by feeling the stones", to address numerous issues, making reform relatively easy and effective.
However, reform can't always be easy, because after addressing the simpler issues, reform is implemented to address more challenging problems. Despite being the world's second-largest economy, China still needs to increase its per capita GDP. The victory in the battle against poverty was historic, yet China must consolidate these achievements and continue to overcome various challenges. Recognizing this need, the Party has decided to adopt a step-by-step approach to reform.
Since the third plenary session of the 18th CPC Central Committee, China has been taking measures to deepen economic reform across economic, political, social, cultural and ecological fields. And despite the many difficulties, the Chinese people have overcome numerous challenges, thereby raising the country's global standing.
However, China's growing strength has made it a target of criticism, especially from those who cannot accept a non-Western politico-economic system achieving such economic success. They wrongly assume that China's economic reform can't succeed, because they have never seen a country of such an economic scale undertake such a comprehensive reform. Despite their prejudice and criticisms, however, China will continue its steady pace of reform.
Some critics misinterpret China's broad and steady economic reform as being never-ending, and have even coined a term, "reform fatigue", to describe it. But China's comprehensive reform is aimed at making institutions more mature and well-defined, although reform can't achieve everything in one stroke.
The 20th CPC National Congress in 2022 proposed a two-step strategic plan to build a modern socialist country: achieving basic modernization by 2035 and becoming a strong, democratic, civilized, harmonious, and beautiful socialist country by the middle of this century. The comprehensive deepening of economic reform aligns with this strategy.
The 20th CPC Central Committee's third plenum has launched a new phase of reform, crucial for advancing Chinese modernization. And balancing development and security, and preventing and mitigating major risks, remain critical tasks, which in turn require further comprehensive reforms.
Development and security are intertwined. Reform promotes development, development fosters stability, and stability boosts security. However, further deepening reform requires more solid institutional support for development. This is where the third plenum of the 20th CPC Central Committee holds immense significance, because it has charted the course for further comprehensive reform.
The domestic and international economic landscapes are becoming increasingly complex, with many pressing global issues requiring urgent resolution. Despite economic globalization benefiting all economies, some economies are pushing for de-globalization to fulfill their own narrow goals.
In contrast, the Chinese government's goal is to help the Chinese people lead a better life, as well as promote global development. And it has been deepening reform and opening-up to realize that goal. After all, it is because of reform and opening-up that China has performed an economic miracle.
Yet some Western politicians and media wrongly assume China's economic situation is unsustainable, because their assessments are based on absurd logic. No wonder their "China collapse" predictions have proven to be a myth.
Critics of China's economy come in different forms and shades. Some outrightly declare that the Chinese economy is on a decline. Others suggest China's economic miracle is driven by investment, implying China's economic growth has been "bought". Such misconceptions are the result of gross misjudgment of China's painstaking efforts to achieve economic development against all odds.
Economic growth characteristics vary at different stages. In the early stages, capital and investment-driven growth play significant roles in economic growth. However, as growth progresses, technological advancement becomes crucial. China has long recognized this aspect, especially since the beginning of the new era and, as a result, implemented an innovation-driven development strategy to improve total factor productivity so as to realize high-quality development. Apart from economic development, China is also advancing ecological civilization and embracing green development.
No country or economy can sustain high-speed growth indefinitely. Understanding China's economic situation requires acknowledging growth patterns. Transitioning from high-speed to medium-high-speed growth is natural after a period of rapid economic expansion. As economic aggregates and per capita GDP reach certain levels, an economy is bound to experience lower rates of growth. And China is no exception.
China's large population, vast domestic market, robust infrastructure and technological advancements across fields provide immense potential for sustained medium-high-speed growth. More importantly, China remains unwavering in implementing comprehensive reform and opening-up while developing the socialist market economy.
China realizes the economic challenges it is facing, including the major economic risks — the problems faced by the real estate sector, local debt, and the risks faced by small and medium-sized financial institutions. Accordingly, it is taking effective measures to mitigate these risks. For example, it is building a new model to promote the healthy development of the real estate sector, and trying to improve local governments' fiscal health by implementing a new round of fiscal and tax reforms.
Besides, by mitigating risks while accelerating the development of new quality productive forces and fostering new economic growth drivers, China aims to promote high-quality development.
In summary, understanding the significance of the third plenum of the 20th CPC Central Committee will give people a deeper insight into China's reform and opening-up and the health of the Chinese economy. And the plenum will boost people's confidence in the economy and ensure institutional stability, thus advancing Chinese modernization.
The author is Yang Zhiyong, the director of the Center for Public Finance and Taxation Research, Chinese Academy of Social Sciences.
Source: China Daily
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