This is a key event at which the country’s leadership summarizes the economic results for the past year and outlines the directions of further development, adjusts, if necessary, the economic policy. The Politburo of the CCP Central Committee also meets on this occasion in advance to consider issues to be submitted to the Central Conference. Such thorough work on determining economic policy is traditional for China and at the same time demonstrates collegiality in this matter and consideration of different opinions.
According to Chinese media, the meeting was traditionally chaired by Xi Jinping, General Secretary of the CPC Central Committee, President of the People’s Republic of China and Chairman of the Central Military Commission. He also presented a report.
«The meeting noted that China’s economy continues to recover, with significant progress in high-quality development in 2023», the China Media Group reported. — «China still has to overcome some difficulties and challenges to further revitalize the economy, including lack of effective demand, overcapacity in some sectors, weak social expectations, certain risks and hidden problems, bottlenecks in domestic circulation, and the increasing complexity, seriousness and uncertainty of the external environment».
The PRC leadership is aware that China has still not recovered from the long period of constraints associated with the new coronavirus pandemic, when the nation’s health was placed above economic interests.
The meeting also emphasized the difficulties in economic recovery and the need to adequately respond to challenges. Such reports in the Chinese press gave reason for Western observers to be skeptical about the prospects of the Chinese economy. The old-fashioned talk of «slowdown» and even collapse of the Chinese economic miracle has resumed. At the same time, it is mentioned that one of the Western rating agencies downgraded the rating of China’s economy to «negative». The English Financial Times, having made a linguistic analysis of the report at the meeting, came to the conclusion that China decided to shift the focus of attention from the economy and reforms to geopolitics and security. While the meeting was only focused on the fact that appropriate external conditions are needed to continue reform and development. It was also said that while pursuing reform and development, internal stability must be reliably ensured. In Chinese parlance, this sounds something like «emphasizing stability through development and building the new before abolishing the old». The participants at the conference recognized that the main challenges to China’s economy in 2024 will continue to be «mainly weak demand amid low confidence as well as external uncertainties». However, «there are more favorable factors for China’s development than unfavorable ones. The fundamental trend toward economic recovery and long-term development remains unchanged».
Thus a rather objective and frank conversation within the Chinese managerial class about the situation in the economy and its prospects became an occasion for further speculation. The goal is clear: to undermine the confidence of foreign, and not only foreign investors, to make the Chinese population doubt the prospects of growth and switch to a savings model of behavior, if it is possible to sow instability in the markets, because the state of the Chinese economy largely determines the global economic growth. And this was specifically mentioned at the meeting. One of the important tasks for the coming year is to restore the confidence of consumers and entrepreneurs. For this purpose, not only measures to stimulate the economy (including fiscal ones), but also strengthening of information work are proposed. The task is defined as follows: «Strengthen information work to guide public opinion and open up a bright future for the Chinese economy». Not the least role in this is assigned to the media. This is not surprising against the backdrop of the West’s information war and regular talk about the collapse of the Chinese economy.
As for stimulus measures, among them is an increase in local governments’ quotas for bond issuance. It has already been raised from 3.65 trillion yuan in 2022 to 3.8 trillion in 2023. The collected funds will be invested in infrastructure and other projects, which is generally designed to support investment activity in the country. According to Chinese President Xi Jinping, amid weakening private investment and expectations of private investors, the state should play a leading role. It was also stated at the conference that financial institutions «should be focused on expanding support for scientific and technological innovation, green transformation, inclusive financing of small and micro businesses and the digital economy».
It is planned to continue the course of reducing the tax burden, especially on high-tech and manufacturing industries. This policy has been in place for more than one year. In 2022, China reduced the tax burden on business by more than 3.5 trillion yuan, and in the first 10 months of this year — by another 1.66 trillion. What other «declining economy» can afford such fiscal easing?
The conference outlined the economic policy priorities for the coming year:
- Sci-tech innovation should lead the development of a modern industrial system;
- More should be done to expand domestic demand;
- Reforms in key areas should be deepened;
- High-standard opening up should be expanded (i.e., create conditions for foreign investment and foreign trade);
- Risks in key areas should be prevented in a continuous and effective manner;
- Sustained efforts should be made to do a good job in the work related to agriculture, rural areas and farmers;
- Efforts should be made to facilitate integrated urban-rural development and coordinated regional development;
- More should be done to advance ecological conservation and promote green and low-carbon development;
- Efforts should be made to secure and improve people’s livelihoods.
The development of strategic new industries, including biological manufacturing, commercial space industry and low-altitude drone economy, as well as the creation of new platforms for future industries such as quantum technology and life sciences, are prioritized. In addition, emphasis will be placed on the development of the digital economy and digital consumption, consumption of health services, tourism, entertainment, sports, new energy vehicles and smart home appliances.
More specifically, the tasks and measures to ensure economic development will be defined in March 2024 at the annual session of the National People’s Congress, the highest organ of state and legislative power of the PRC. Most likely, it will not specify the exact percentage that China’s GDP should add next year. It will be an approximate figure, as it has been since the country moved to qualitative development and balancing of the economy. This year, China’s GDP will add about 6% this year. Next year, the PRC GDP is expected to grow by 5–6%. And it will already be a much larger figure in yuan. And in dollars. China is growing and developing, no matter what the West says about it.
In 30 years, China’s GDP has grown 36 times. During the same time, Russia’s GDP has increased 2 times. In 2015 China overtook Russia in terms of average wages, and in 2020 it surpassed it in terms of GDP per capita.