China’s Third Plenum: domestic consumption is the key to stimulating domestic demand

Jun 24, 2024
BEIJING, Nov. 12, 2021 -- Han Wenxiu, an official with the Central Committee for Financial and Economic Affairs, speaks at a press conference in Beijing, capital of China, Nov. 12, 2021. A press conference was held by the CPC Central Committee on the sixth plenary session of the 19th CPC Central Committee here on Friday. CHINA-BEIJING-CPC-PRESS CONFERENCE CN LixXin PUBLICATIONxNOTxINxCHN credit: Imago / Alamy Stock Photo

The Communist Party of China (CPC) has said the upcoming Third Plenary Session of its current 20th Central Committee will focus on “deepening comprehensive reform to advance Chinese modernisation.” Officially, the reform agenda will only be unveiled at the Third Plenum. But that doesn’t mean there are zero signals in public before it happens.

Today, I’m focusing on an article by Han Wenxiu, the ministerial-level official whose title is executive deputy director of the Office of the Central Financial and Economic Affairs, available today (Sunday, June 16) in the latest Qiushi/Seek Truth, the flagship journal of the CPC Central Committee.

The reason is simple: a minister whose job is to help craft China’s economic and financial policies laying out six areas of potential reforms one month ahead of the Third Plenum, which will focus on reforms, in the most authoritative journal of the governing party.

It is also positioned at a prominent position in this issue of Qiushi/Seek Truth, as it follows an article by the General Secretary and an editorial by Qiushi/Seek Truth, and above other ministers’ contribution.

In the last newsletter, I shared Tsinghua Professor David Daokui Li’s public claim that Beijing has finally come around to the conclusion that domestic consumption is the key to stimulating domestic demand.

In the telling Han Wenxiu, who is apparently closer to decision-making, potential policy moves on the demand side flagged by Li, did feature as the fifth point out of six. However, the supply side still features prominently as the first point.

Han’s article employs a lot of Beijing’s official language that is broad and difficult to digest without significant background knowledge of China’s policy-making. More effectively, the six areas may be used as a framework to gauge which specific policy move could fit into each of the six areas.

Below are excerpts from:

Promoting High-Quality Development via Deepening Reforms

Adhering to the Main Tasks of Promoting High-Quality Development through Deepening Reform

In the new era and on the new journey, promoting high-quality development is a profound transformation that concerns the overall development of our country. It is necessary to fully, accurately, and comprehensively implement the new development concept, accelerate the construction of a new development pattern, and make good use of the crucial move of reform and opening up to effectively enhance the quality and achieve reasonable growth in quantity in the economy.

(1) Deepening Reform in the Systems and Mechanisms for Education, Science, Technology, and Talent, Promoting Innovative Development, and Accelerating the Construction of a Modern Industrial System

…We must accelerate the construction of a high-quality education system, strengthen the independent cultivation of high-quality talent, and actively attract, retain, and make good use of top overseas talent. Deepen the reform of the scientific and technological system, improve the new system for mobilising resources nationwide to make key technological breakthroughs, strengthen the national strategic scientific and technological force, and optimise the allocation of innovation resources. Strengthen the position of enterprises as the main body of scientific and technological innovation, and promote deep integration of industry, academia, and research. Deepen the reform of the talent system and mechanism, and cultivate a large number of high-quality talents with both moral integrity and professional competence.

…It is necessary to further comprehensively deepen reform, focus on removing obstacles that hinder the development of new quality productive forces, and form new types of production relations that are compatible with it. We must accelerate the development of new quality productive forces according to local conditions, nurture and expand emerging industries, advance the layout and construction of future industries, and accelerate the construction of a modern industrial system. Our traditional industries are large in scale and extensive in scope, and they are the main sources of employment, income, and livelihood security. Developing new quality productive forces should not neglect or abandon traditional industries, but must use advanced and applicable technologies to transform and upgrade traditional industries. The development of new quality productive forces in various regions should be based on actual conditions, avoiding blind conformity and bubbles, and selectively promote the development of new industries, new models, and new drivers based on local resource endowments, industrial foundations, scientific research conditions, and ecological environment.

(2) Deepening the Implementation of the Main Functional Area System and Comprehensive Reform in Agriculture and Rural Areas, Promoting Coordinated Development, and Accelerating the Formation of a New Pattern of Urban-Rural Integration and Regional Coordinated Development

…We must strive to narrow the urban-rural development gap, deeply advance people-centred new-type urbanisation, accelerate the urbanisation of citizens transferred from agriculture, deepen the reform of the household registration system, and promote the comprehensive coverage of basic public services for permanent residents in urban areas. Promote comprehensive rural revitalisation, consolidate and expand the achievements of poverty alleviation, consolidate and improve the basic rural management system, accelerate the construction of a strong agricultural country, and build beautiful, liveable, and workable villages.

Our country is vast and populous, and coordinating regional development is a major task. We must deeply implement the regional coordinated development strategy, effectively implement the national territorial spatial planning, and promote the regions to follow a path of reasonable division of labor and optimised development according to their conditions, so that the comparative advantages and main functions of each region can be effectively utilised. Promote the new developments in the western development, the revitalisation of the northeast, the rise of the central region, and the leading development of the eastern region. Promote the coordinated development of the Beijing-Tianjin-Hebei region, the development of the Yangtze River Economic Belt, the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, the integrated development of the Yangtze River Delta, and the ecological protection and high-quality development of the Yellow River Basin, continuously improving the balance, coordination, and sustainability of development.

(3) Deepening the Reform of the Ecological Civilisation System, Promoting Green Development, and Making Green and Low-Carbon the Basic Colour and Future Advantage of Chinese-Style Modernisation

…We must firmly establish and practice the concept that “lucid waters and lush mountains are invaluable assets,” adhere to the integrated protection and systematic management of mountains, rivers, forests, farmlands, lakes, grasslands, and deserts, improve policies and standards that support green development in finance, investment, and pricing, improve the ecological protection compensation system, and establish a mechanism for realising the value of ecological products. Continue to fight the battles for blue skies, clear waters, and clean lands, and accelerate the construction of a beautiful China. Actively and steadily promote carbon peaking and carbon neutrality, accelerate the creation of green and low-carbon industrial and supply chains, and form green and low-carbon production and lifestyles.

We must both stand on the basic national condition of coal-dominated energy and insist on establishing the new before abolishing the old, making good use of coal and coal-fired power as a bottom-line guarantee, while also deeply advancing the energy revolution, planning and constructing a new type of energy system, and accelerating the green and low-carbon transformation of the energy structure. We must continue to vigorously develop new energy sources such as photovoltaic and wind power, strengthen the research and application of frontier technologies in energy storage and hydrogen energy, accelerate the construction of a new type of power system, and ensure the clean and efficient use of traditional energy to contribute to achieving the “dual carbon” goals [China would achieve carbon peaking before 2030 and reach carbon neutrality before 2060, the so-called ‘Dual Carbon Goals’ (DCGs)]. Improve the regulation of total energy consumption and intensity, focusing on controlling fossil energy consumption, and gradually transition to a “dual control” system of total carbon emissions and intensity.

(4) Improving the System and Mechanism of High-Level Opening-Up, Promoting Open Development, and Facilitating Domestic and International Dual Circulation

…We must enhance the endogenous power and reliability of the domestic circulation and, through this, form a strong attraction for global factor resources, a strong competitiveness in intense international competition, and a strong driving force in global resource allocation. From the perspective of China as a whole, construct the domestic circulation, break down administrative barriers and artificial obstacles, eliminate local protectionism andinvolutionaryvicious competition, and accelerate the construction of a unified national market.

We must organically combine the domestic circulation and international circulation, leverage the domestic circulation to drive the international circulation, and use the international circulation to promote the domestic circulation, forming a new development pattern with the domestic circulation as the main body and mutual promotion of domestic and international circulations. Adhere to the basic national policy of opening-up, continue to expand high-level opening-up, especially steadily expand institutional opening-up in rules, regulations, management, and standards, and improve the quality and level of international circulation to broaden the development space for Chinese-style modernisation. Practice the global governance concept of consultation, contribution, and shared benefits, adhere to true multilateralism, actively participate in the reform of the World Trade Organisation, and promote the improvement of a more just and reasonable global economic governance system.

(5) Deepening Reforms in the Field of People’s Livelihood, Promoting Shared Development, and Continuously Enhancing People’s Sense of Gain, Happiness, and Security

…We must adhere to development for the people, rely on the people for development, and let the people share the fruits of development, improve the distribution system, and enable people to lead high-quality lives.

We must adhere to the principle of distribution according to labor as the mainstay, with multiple distribution methods coexisting, and construct a system of primary distribution, redistribution, and tertiary distribution that are coordinated and supportive. Fully implement the policy of people finding their own employment, market-based employment, government-promoted employment, and entrepreneurship encouragement, improve the employment support policies for key groups, deepen the reform of the employment system and mechanism, strengthen the protection of workers’ rights and interests, and continuously promote effective qualitative improvement and reasonable quantitative growth in employment. Continuously improve a multi-level social security system that covers the entire population, balances urban and rural areas, is fair and unified, and is sustainable, improve standards, and effectively secures the bottom line of people’s livelihood. Establish and improve the fertility support policy system, reduce the cost of childbirth, upbringing, and education, strive to achieve a moderate fertility level, and strive to achieve high-quality population development.

(6) Improving the System and Mechanism for Secure Development, Effectively Coordinating Development and Security, and Achieving Positive Interaction between High-Quality Development and High-Level Security

…Since the 18th National Congress of the Communist Party of China, our national security has been comprehensively strengthened, and we have withstood the tests of risks and challenges from politics, economy, ideology, and nature. At the same time, we must also see that our country currently faces a more severe national security situation, and the mechanism for overall coordination of national security needs to be improved urgently to better coordinate development and security.

Development is the foundation, and we must continue to deepen reform, constantly liberate and develop social productivity, and provide more solid material and technical support for national security with sustained and growing economic strength, scientific and technological strength, and comprehensive national strength. Security is the bottom line, and we must improve the system and mechanism for safe development, implement the overall national security concept, improve the legal, strategic, policy, and risk monitoring and early warning systems for national security, and enhance the capacity for disaster prevention, mitigation, relief, and major emergency response. Effectively maintain economic security, ensure the security of food, energy resources, and important industrial and supply chains, and enhance the supply guarantee capacity of strategic resources. Improve the risk prevention and control mechanism, enhance the ability to resolve risks, and consolidate the results of the battle to prevent and resolve major risks.

Promoting high-quality development requires both effective qualitative improvement and reasonable quantitative growth, focusing on achieving reasonable economic growth, full employment, stable prices, and a basic balance in international payments. We must strive to keep major economic indicators within a reasonable range, and continue the new chapter of the “two miracles” of rapid economic development and long-term social stability.


Republished from Pekingnology, Substack June 16, 2024

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