Congress to give a much-needed shot in arm to floundering global economy
The 20th National Congress of the Communist Party of China (CPC) opened on October 16, after China had accomplished its first centenary goal of building a moderately prosperous society in all respects by 2021.
During the opening session, Xi Jinping, for the first time, outlined the connotation of Chinese modernization, laying out guiding principles for China’s march toward its second centenary goal of building a modern socialist country by 2049. Against the backdrop of “high winds, choppy waters, and even dangerous storms,” it is important to decipher what China’s economic blueprint looks like when anchoring the overarching goal, how it will shape Chinese policymaking and what opportunities it will bring to development both at home and abroad.
This is the third installment of the Global Times’ special coverage of the special event. Here is the first instalment and second instalment.
For a world that is navigating its way through the fogs of escalating geopolitical tensions, runaway inflation, a raging COVID-19 pandemic, and potentially ruinous recession, the monumental convening of the 20th National Congress of the Communist Party of China (CPC), a twice-in-a-decade political gathering that opened in Beijing on Sunday, is set to disperse these mists and light up the road ahead.
The world has been keenly observing the week-long event – which is seen as the axis of the development of socialism with Chinese characteristics in the new era – gauging how the triumphant gathering will spearhead the world’s second-largest economy in the coming five years and longer vision, with earnest entrepreneurs, economists and politicians hoping that the Party Congress will be able to channel stability and give a much-needed shot in the arm to a floundering global economy.
In his two-hour opening speech on Sunday, Xi Jinping, for the first time, expounded on the connotation of Chinese modernization, a unique path that will guide China’s policymaking in its march toward the second centennial goal of building the country into a great modern socialist country by 2049.
Xi articulated a clear long-term blueprint to steer the economy, based on which the high-quality development was listed as the primary mission for achieving Chinese modernization. Emphasis was also placed on innovation and security of development, aiming to address concurrent downward pressures at home and abroad ranging from sluggish demand, a complex and turbulent international situation, US-led tech blocks against China and a growing “decoupling” push from the West.
After making the historic achievement in 2021 of building a moderately prosperous society in all aspects －the first centennial milestone development goal of the CPC － the new economic plan has been lavishly praised as a monumental culmination of China’s startling economic miracle. It also marks the opening of a new milestone in the next five years, which Xi said will be “crucial for getting the efforts to build a modern socialist country in all respects off to a good start.”
There has been no shortage of predictions on how the Chinese economy will sail through these waters, with doomsayers peddling bearish views and hyping an economy on the brink of collapse. But the 20th CPC National Congress has sent a clear signal that China, flexing its institutional advantages and whole-of-nation approach, is destined to embark on a relentless battle to defy headwinds and create another miracle.
The next five years will see the country climb up the value chain to center stage and embark on a firm trajectory to dethrone the US as the world’s No.1 economy at around 2030.Its economic volume is forecast to be twice large as that of the US by 2050, with per capita GDP, at least, rising explosively to only second to that of the US.
More importantly, China’s contribution to the world will expand beyond a one-third share of global economic growth. It will continue acting as the ballast of the global economy, and its role in globalization will evolve from a mere participant to a leader – a stark contrast to the unilateralism trumpeted by the US and Western countries – carrying broader implications for the global landscape.
Focus on high-quality development
The tone-setting report laid out the direction where the Chinese economy is heading, under the strong leadership of CPC, in both the coming five years and the longer-term vision through 2035 and 2049.
“From this day forward, the central task of the CPC will be to lead the Chinese people of all ethnic groups in a concerted effort to realize the Second Centenary Goal of building China into a great modern socialist country in all respects and to advance the rejuvenation of the Chinese nation on all fronts through a Chinese path to modernization,” Xi said on Sunday in the report at the opening session of the 20th CPC National Congress.
A Chinese path to modernization is laid out in the report and its interpretation has been expounded for the first time. Xi said to build a modern socialist country in all respects, “we must, first and foremost, pursue high-quality development.”
Tian Yun, former vice director of the Beijing Economic Operation Association, told the Global Times that the economic focal points of the report are both a continuation and extension of the report delivered at the 19th CPC National Congress in 2017. But some details have been adjusted based on the Chinese leadership’s “sober assessment” of the situation, taking into account the perilous external environment and multiple internal headwinds.
The report released in 2017 identified that China’s economy had been transitioning from a phase of rapid growth to a stage of high-quality development.
“In the next five years, China will conspicuously inherit the high-quality development model. But the global situation has changed drastically from 2017, with Cold War mentality and geopolitical wrestling intensifying. So one of the key highlights of the latest Party Congress report is the central government’s evaluation of the external environment and how it affects China’s access to strategic opportunities and corresponding policymaking in strategic industries,” Tian said.
Warning of various “black swan” and “gray rhino” events that may occur at any time, the report urged the CPC members to “be more mindful of potential dangers, be prepared to deal with worst-case scenarios, and be ready to withstand high winds, choppy waters, and even dangerous storms.”
An affirmation of the high-quality growth model in Sunday’s report also shows that the Chinese economy is not likely to pursue lofty numerical targets in the coming years, but the development target could instead be interpreted through pragmatic and strategic economic indicators, observers said.
“The current and the next five-year plans will be of great significance, not only for China but for the world as well. Therefore, the world… [will] follow the gathering and more operational activities in the coming years with great interest,” Danilo Türk, former president of Slovenia, told the Global Times.
For the first time in the country’s history of drawing up its five-year plans, China’s 14th Five-Year Plan (2021-25) – widely regarded as a complete embodiment of the guiding principles of the 19th CPC National Congress – did not set a specific GDP growth target.
Graphic: GT
Innovation-driven
Among the report’s highlights was also a renewed focus on domestic innovation, technological self-sufficiency and supply chain security, and their expanding role in China’s modernization drive.
“We must regard science and technology as our primary productive force, talent as our primary resource, and innovation as our primary driver of growth,” he said.
Innovation will remain at the heart of China’s modernization drive, according to the report, which also identifies the importance of food, energy, industrial and supply chain security.
The elevation of innovation to an unprecedented position this year comes as the US continues to go on the offensive in waging an all-out economic war against China, ranging from the recent “hardest” ban on chip exports to China and legislation aimed at curbing the rise of China’s new-energy vehicles to pressuring Western allies to form small cliques and excluding China from global supply chains.
For the first time, development security was listed in a special section in China’s 14th Five-Year Plan (2021-25), and industrial and supply chain resilience was mentioned and prioritized in the plan for the first time.
“In the past, China pursued high-speed growth to ensure people’s basic living needs. Now, the economic model leans toward high-quality development and an indigenous requirement is innovation-driven, and that will be the anchor of economic development in the new era,” Yao Jingyuan, a special researcher of the Counselors’ Office of the State Council, told the Global Times on Sunday.
Chinese technocrats and entrepreneurs, who have witnessed the accumulation of China’s technological expertise and results and are waiting for these strengths to translate into an explosive breakthrough at a certain time, said they are inspired by how the report lays out China’s path of innovation.
“I feel the sense of mission and responsibility to break US blocks and constraints in key technologies. It is imperative for the authorities to organize more top-down research and development (R&D) input,” Wang Chengshan, an academician of the Chinese Academy of Engineering, told the Global Times on Sunday.
Türk said that in light of the deteriorating international economy and protectionism that seems to be on the rise, much [drives to innovation] will depend on planning and policymaking at home.
Zheng Yongnian, professor at the Chinese University of Hong Kong (Shenzhen), and president of the Institute for International Affairs (Qianhai), told the Global Times that there are three main directions for corresponding innovative policies: completeness, systematicness and advancement.
“That means China will have to consolidate its fundamental advantage in complete industrial chains, move up in the value chain and achieve breakthroughs in core bottlenecked technologies, as well as take the global lead in innovation, rather than staying only at the application level,” Zheng said.
For example, solutions could be further elaborated in fields including how to stimulate innovation in subtle strategic sectors such as semiconductors, how to consolidate China’s manufacturing edge and develop it further into a leader, and most importantly, how to take advantage of the “whole nation” system in making technological breakthroughs, observers said, noting that those are areas that China’s strengths and opportunities stem from.
The 20th Party Congress will be followed by a series of high-level meetings, including the Central Economic Working Conference that is due to be held at the end of 2022, and the National People’s Congress which generally convenes in March every year. Observers believe the subsequent meetings will begin manifesting the initiatives and spirit seen in the 20th Party Congress report.
“The Chinese leadership will start the midterm evaluation on the implementation of the 14th Five-Year Plan (2021-25) next year, and it is likely some development goals could be subject to minor revisions or be optimized by that time,” Tian explained.
Modernization path with Chinese characteristics
In the report that Xi delivered on Sunday, he underscored the unique features of Chinese modernization, which he said is the socialist modernization pursued under the leadership of CPC.
Chinese modernization is the modernization of a huge population, of common prosperity for all, of material and cultural-ethical advancement, of harmony between humanity and nature and of peaceful development, Xi said.
In July 2021, China solemnly declared that it had reached its first centennial milestone development goal – building a moderately prosperous society, or xiaokang, in all respects – and was striding confidently toward its second centennial goal.
Yao stressed that Chinese modernization differs drastically from the traditional Western path as Chinese modernization leads to common prosperity, promotes green development and advances globalization on the premise of peaceful development, rather than colonization or imperialism.
Nevertheless, Yao noted that “the headwinds we face in the journey toward the second [centennial] goal will be unprecedented, and the task is far more challenging in the new era than achieving the first centennial goal” when factoring in global uncertainties, crises and volatilities.
A prescription for the external “unprecedented challenge” lies in high-level opening-up, a Chinese commitment that has been honored for decades and is now on vivid display in the 20th CPC National Congress report.
China will steadily expand institutional opening-up with regard to rules, regulations, management, and standards, accelerate the transformation into a trader of quality, and promote the high-quality development of the Belt and Road Initiative, Xi said.
Analysts said it has become a clear trend that China’s opening-up has generated a synergized effect through the sheer size of its domestic market and international economy, as visibly manifested in the successful holding of the China International Import Expo, the world’s first import-themed exhibition, the implementation of Regional Comprehensive Economic Partnership, the world’s largest new multilateral trade deal, and the close economic ties China has achieved with over 140 countries and regions.
“While the US is engaging in building confrontation, leading the whole world into a more confrontational and chaotic situation, pushing up the cost of the industrial chain, China is doing just the opposite,” Wang Yiwei, vice dean of the Academy of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, Renmin University of China, told the Global Times.
“China will not seek ‘decoupling’ with the US but is trying to be more inclusive and interconnected on a larger scale, and this has not only provided enormous opportunity to China, but is also one of China’s biggest contributions to the world,” Wang said.
Zheng noted that China’s consistent commitment to high-level opening-up and support for multilateralism will entrench its image and reputation as a responsible major power, and its paramount implications in the context of the new world order will reverberate throughout the next decade.
Global contribution
While Western doomsayers have for years spared no efforts to hype the “China threat” theory and smear China’s growth model, no one has had the audacity to deny the stunning economic success of the world’s second-largest economy in the past decade, or its ever-expanding role as an anchor for world development.
China’s average contribution to global economic growth had exceeded 30 percent during the past decade. In 2021, its per capita GDP jumped to $12,500, close to the level of a higher-income country. It has also eradicated absolute poverty, an achievement hailed internationally as a miracle for mankind.
Building on this remarkable foundation, global investors and scholars are standing firm in their belief that China, as an enormous ship, will navigate through uncharted waters and move steadily ahead under the strong leadership of CPC.
Renowned international investor Jim Rogers told the Global Times that in the next five years, China “may be the most successful country in the world” and could perform relatively well compared to the US, which has been battered by “high inflation, interest rate hikes and huge amount of debt.” Rogers also made the prediction that China will take over the US as the world’s largest economy, which he thinks will be a natural process “be it in five years or 10 years.”
Xing Zhaopeng, senior China strategist at Australia and New Zealand Banking Group, forecast that the Chinese economy will grow at a firm pace at between 4 and 5 percent in the next five years. Xing told the Global Times that if this rate is maintained, China’s GDP will surpass that of the US before 2035.
Tian said that China’s GDP is likely to hit an economic volume of 150 trillion yuan in 2025, equivalent to a 50 percent growth from that of 2020.
Riding on this momentum, 2030 will be a critical year for China to overtake the US as the world’s largest economy. In 2035, China’s GDP is estimated to hit $40 trillion, according to Tian. And by 2050, he predicted that China’s economic output is likely to be twice as large as that of the US.
Although it’s difficult to gauge the exact number, Tian estimated that China’s GDP per capita could hit $30,000 in 2035, around one-third of that of the US, and in 2050, China’s GDP per capita is likely to expand to a similar size of the US, or at least be second to it. In 2021, China’s GDP per capita ranked around No.60 in the world.
The robust expansion in a country that accounts for an 18 percent share of the global economy and one-fifth of the world’s population- to the disappointment of the China critics and envy of major economies – is invaluable as the rest of the world is spooked by unresolved regional conflicts and risks of recession.
The IMF last week lowered its 2023 global economic growth forecast to 2.7 percent from its July prediction of 2.9 percent, citing high energy and food costs and rate hike pressures, and warned “the worst is yet to come.” World Bank Group President David Malpass also warned of “the risk and the real danger of a world recession next year.”
China’s economic stability is set to offer a beacon of hope for growth and inject confidence and positivity into the world. And with the 20th Party Congress further cementing pledges to bring China’s opening-up to a new level, there will be a drastic shift in China’s role in the new round of globalization in the foreseeable future, from being a participant to a leader, according to analysts.
Biggest socialist system advantage
Coming under the global limelight, the ongoing 20thCPC Party Congress is not only a window into China’s economic policy agenda, but also a vivid display of the CPC leadership’s governing capacity, wisdom and political cohesion – upon which investors, scholars and enterprises derive their confidence in the Chinese economy from and which engines of China’s development draw on.
“The 20th CPC Party Congress is being convened at a crucial juncture for the CPC leadership to unify ideas and enhance top-down cohesion, so that the country is united in overcoming short-term difficulties with clenched teeth and resolute minds, laying a solid base for the first five-year march toward the goal of achieving Chinese socialist modernization, a period identified as ‘crucial for a good start’,” Hu Qimu, chief research fellow at the Sinosteel Economic Research Institute, told the Global Times.
A key aspect of Chinese modernization involves common prosperity, which Hu said aims to “simultaneously make the cake big and divide it fairly.” The goal could only be achieved under CPC leadership with delicate long-term planning, as the modernization roads taken by Western economies have been proven to have widened the gap between rich and poor, analysts said.
The advantage of China’s system “allows the CPC to formulate long-term development plans and ensures continuity and consistency in the implementation of government policies rather than focusing on short-term populist measures to gain political mileage, as in Western democracies,” Koh King Kee, president of Center for New Inclusive Asia, a nongovernment Malaysian think tank, told the Global Times.
That means under the CPC leadership, China’s economic and diplomatic route is the most predictable and has the most continuity, and that’s the root of stability China provides to the world, according to Wang.
Looking ahead, the next five years will see the CPC leveraging its mobilization capacity, orchestrating 460,000 state-owned enterprises, 967 million Party members and nearly 5 million primary-level Party organizations to decisively lead its people move toward modernization and common prosperity.
An assiduous journey of 1.4 billion Chinese people toward the second centennial goal will be a remarkable achievement that is without precedent, making another miracle come true in the history of development.
(Global Times)
