Unveiling New Concepts: China's "unyielding principle" in the new era

INTRO: "It is imperative to uphold high-quality development as the unyielding principle of the new era." This is what Chinese President Xi Jinping noted at the country's annual tone-setting economic work conference late last year and has soon become one of his eye-catching lexicon.

Greetings and welcome to the latest edition of PekingEnsight! We're thrilled to have you join us once again as we navigate the ever-evolving landscape of the Chinese economy.

We've implemented some exciting changes to enhance your understanding of China's unfolding narrative.

At Peking Ensight, we've painstakingly gathered all the essential updates to help you unravel the complexities of this pivotal moment. Your journey through China's economic landscape is about to become even more enlightening, and we're thrilled to have you along for the ride.

Approximately three decades ago, Deng Xiaoping, the architect of China's reform and opening up, introduced the idea that "development is the absolute principle." At that time, China was facing challenges stemming from a shortage economy, and its people aspired to achieve prosperity in their lives.

After years of rapid economic growth, the country has entered a transitional period where higher labor costs and environmental constraints have put pressure on traditional development patterns.

The development concept has evolved over the years, acquiring new meanings through China's efforts that emphasize a shift from old to new growth drivers.

"High-quality development," a concept of Xi holding paramount significance for the country's economic and social development, seeks innovative, coordinated, green, open and shared growth instead. To be very specific, high-quality development means a change from seeking growth to seeking better growth.

The GDP growth rate can not serve as the sole yardstick of success for development. Rather, it is imperative to achieve high-quality development in which innovation is the primary driver, coordination is an endogenous trait, eco-friendly growth prevails, openness to the world is the only way, and shared growth is the ultimate goal, with a view to propelling transformative changes in the quality, efficiency and impetus of economic development.

—— Chinese President Xi Jinping

Positive progress has been made in this regard. For instance, China rose to the 11th spot on the Global Innovation Index 2022 issued by the World Intellectual Property Organization, while the per capita disposable income gap between urban and rural residents dropped from a ratio of 2.88:1 in 2012 to 2.45:1 in 2022.

Renewable energy capacity now constitutes more than half of the country's installed power generation capacity, and high-level institutional opening up has seen continuous expansion for easier market access and greater policy alignment in line with high-standard international rules.

However, challenges still persist, including but not limited to achieving a soft landing for the real estate sector, defusing local debt risks, advancing decarbonization, fostering technological innovation and coping with the implications of its aging population.

According to the recent economic work conference, adhering to high-quality development is a "must-do" for the future and the first and foremost task in China's bid to build a modern socialist country in all respects.

Ideally, this implies that among all factors considered in policymaking and reform, high-quality development carries the greatest significance.

The Chinese economy wrapped up 2023 with target-beating growth despite domestic challenges and external pressure, with GDP up 5.2 percent year on year, according to the National Bureau of Statistics.

Consumption became the main driving force for China's economic growth again last year, with the annual contribution of final consumption expenditure to China's economic growth standing at 82.5 percent. Foreign trade slightly edged up however as a result of the sluggish external demand.

China's contribution to global GDP growth is expected to reach over 30 percent last year, making it the strongest growth engine in the world. China's growth not only outpaces the estimated global growth of 3 percent, but also ranks top among major economies.

Looking into 2024, China and the world face new uncertainties. The year of 2024 is an election year worldwide and possible geopolitical conflicts may bring more fluctuations to the external markets.

Meanwhile, "de-risking" has gained increasing popularity among people in the United States and European countries. The EU's launch of anti-subsidy investigation on Chinese electric vehicles added to the evidence of economic anti-globalization.

What is more, the gap between the U.S. economy's share of global GDP and that of the Chinese economy is widening. That stokes up a view that the Chinese economy has begun a downward trend and will not surpass the United States in the short term.

But on the other hand, there is possibly a growing "China threat" sentiment as the country's pursuit of greater manufacturing strength may trigger more fears from those who prefer to see it as a competitor.

To secure high-quality development in China, policymakers have outlined nine priorities for the next year, with sci-tech innovation placed at the top. In other words, innovation could be an interesting aspect for those intrigued by the country's pursuit of high-quality development in 2024.

China will also deepen reform and opening up next year. It will continue to push ahead with reform in key areas including finance, taxation, science and technology and a unified big market. The high-level opening will focus on behind-the-border opening, which is institutional opening to solve regulatory problems.

The "new three engines" of China's economy, namely the green economy, new consumption and high technology, will continue to be highlights of the Chinese economy. So does the "tech-intensive green trio" in exports, including solar batteries, lithium-ion batteries, and electric vehicles. 

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By Qiao Han