Han Wenxiu discusses "seeking progress while maintaining stability": Caution in implementing contractionary and restrictive measures.

Source: The Paper

General Secretary Xi Jinping delivered an important speech at the recent Central Economic Work Conference, comprehensively summarizing the economic work in 2023, deeply analyzing the domestic and international economic situation, and systematically deploying the economic work in 2024. General Secretary Xi Jinping's important speech provides us with fundamental guidance and action guidelines for correctly assessing the situation and doing a good job in economic work. We must earnestly study and implement the spirit of the Central Economic Work Conference, focus on promoting high-quality development, and consolidate and enhance the positive trend of economic recovery.

China's economy is recovering well, and high-quality development has achieved new results

In the past year, under the leadership of the Party Central Committee with Comrade Xi Jinping at the core, the whole Party and the people of all ethnic groups in the country have united and overcome external pressures and internal difficulties, comprehensively deepened reform and opening up, and increased macroeconomic regulation. China's economy has achieved a good recovery and solid progress in high-quality development, taking solid steps towards building a socialist modern country.

The construction of a modern industrial system has made positive progress. Under the drive of technological innovation, China's industrial structure has continued to optimize, traditional industries have accelerated transformation and upgrading, strategic emerging industries have flourished, and future industries have been orderly laid out. Many innovative achievements have emerged in key core technologies, major scientific frontiers, and high-end equipment. The Shenzhou 16 manned spacecraft successfully returned, and the Shenzhou 17 was successfully launched. The domestically-produced large aircraft has officially entered commercial operation. The first domestically-produced large-scale cruise ship has completed its trial voyage. The annual production and sales of automobiles in 2023 are expected to reach around 30 million vehicles, reaching a historical high, with exports exceeding 5 million vehicles, ranking first in the world.

The coordination of regional urban-rural development continues to increase. The high-quality promotion of major regional development strategies and the deepening implementation of regional coordinated development strategies have optimized the regional economic layout. Summarizing and promoting the experience of Zhejiang's "Million Project," comprehensively promoting rural revitalization, and making positive progress in the construction of new urbanization, narrowing the income gap between urban and rural residents.

New progress has been made in green and low-carbon transformation. Coordinated protection and systematic governance of mountains, rivers, forests, farmland, lakes, grasslands, and deserts have been carried out, and the battle against pollution prevention and control has been deepened. The governance of ecological environment protection has been continuously strengthened. The peak carbon emissions and carbon neutrality have been orderly promoted, the energy structure has been further optimized, and the installed capacity of renewable energy power generation nationwide has reached 1.45 billion kilowatts, accounting for more than 50% of the total installed capacity of power generation in the country.

High-level opening up continues to expand. The successful hosting of the Third Belt and Road Initiative International Cooperation Summit Forum, the sixth China International Import Expo, and other events have demonstrated to the world the prosperity, openness, and inclusiveness of a major country. In the context of insufficient momentum in the world economy and trade, China's import and export scale in 2023 remained the same as in 2022, and the share of exports in the international market remained at about 14%. Many foreign-funded enterprises continue to have confidence in China, invest in China, and deepen their presence in China.

Livelihood security is effective and powerful. The overall employment situation is stable, and residents' income growth is faster than economic growth. The achievements in poverty alleviation have been consolidated and expanded. The effects of flood control, debt reduction, risk prevention, and building delivery have been significant. The level of basic public services and social security has continued to improve, and the people's sense of gain, happiness, and security have become more substantial, guaranteed, and sustainable. According to predictions from some institutions, China's economy is expected to grow by around 5.2% in 2023. In comparison, although there are base factors at play, the overall trend for 2023 is an improvement compared to the previous year. Horizontally, many economies around the world are experiencing weak recovery, high prices, and high debt, with some countries and regions facing social unrest and even conflicts. In contrast, China's economy is developing rapidly, with stable employment and prices, a balanced international balance of payments, and overall social stability. These achievements have not come easily and should be cherished.

However, we must also recognize that China's economic development faces various external uncertainties and challenges, as well as internal difficulties. There are obstacles in the domestic circulation. We need to enhance our awareness of potential risks and effectively address and solve these problems.

In summary, the basic trend of China's economy improving and maintaining long-term growth remains unchanged. The factors supporting high-quality development continue to accumulate and outweigh the unfavorable factors. We need to strengthen our confidence and determination to overcome difficulties and continue moving forward.

Adhering to stability while seeking progress, using progress to promote stability, and addressing challenges in a step-by-step manner

The Central Economic Work Conference in 2023 emphasized the need to adhere to stability while seeking progress, using progress to promote stability, and addressing challenges in a step-by-step manner. We need to deeply understand the profound implications of these requirements.

Stability while seeking progress means adhering to the basic methodology of economic work. Stability should be the foundation and the overall consideration, and we should stabilize what needs to be stabilized. We should implement policies that promote stable expectations, growth, and employment, while cautiously introducing contractionary and restrictive measures to create favorable conditions for progress.

Using progress to promote stability means taking progress as the direction and driving force, and not being passive or complacent. We should take the strategic initiative in stabilizing economic growth, guiding social expectations, and preventing and resolving risks. We should actively pursue transformation, structural adjustment, quality improvement, and efficiency enhancement, consolidating the foundation of stable and positive development. We should be forward-looking, ensuring that reform measures and macroeconomic policies are ahead of market changes and risk exposure, to ensure the steady and long-term development of the Chinese economy.

**Addressing challenges in a step-by-step manner means considering stability and progress in a coordinated and dialectical manner. We should proactively address what needs to be established, using new mechanisms, experiences, and rules that are scientific and reasonable to create new growth drivers. We should firmly address what needs to be broken, promptly eliminating institutional mechanisms and policy measures that do not meet the requirements of the new era. At the same time, we should be steady and pragmatic, respecting laws and regulations, and finding the right timing and effectiveness, avoiding one-size-fits-all approaches and striving for the best results.

Strengthening innovation and coordination of macroeconomic policy tools

In the face of complex and ever-changing domestic and international economic situations, we need to innovate and improve macroeconomic regulation and control, strengthen countercyclical and cross-cycle adjustments, and provide strong support for high-quality development.

Fiscal policy should be moderately strengthened and improved. We should allocate appropriate scale of deficits, special bonds, budgeted investments, and transfer payments, optimize the structure of fiscal expenditures, and effectively use precious fiscal funds where they are most needed. We should implement structural tax reductions and fee reductions, with a focus on supporting technological innovation and the development of the manufacturing industry. We should enforce financial discipline and strictly supervise the use of transfer payment funds. We should ensure the bottom line of "three guarantees" at the grassroots level and enhance fiscal sustainability. A stable and prudent monetary policy should be flexible, appropriate, precise, and effective. It is necessary to maintain reasonable and ample liquidity, ensuring that the scale of social financing and the money supply are in line with the goals of economic growth and price level expectations. We should make good use of both the quantity and structure of monetary policy tools, activate existing resources, improve efficiency, and focus on five major areas: technology finance, green finance, inclusive finance, pension finance, and digital finance. We should promote a stable and moderate decline in the overall financing cost of society, and better support the development of the real economy. The exchange rate of the RMB should be kept basically stable at a reasonable and balanced level.

We should enhance the consistency of macroeconomic policies. Practice has shown that many non-economic policies have direct or indirect impacts on economic operations in addition to economic policies. We should adhere to a systematic approach, strengthen policy coordination, and evaluate the consistency of non-economic policies with macroeconomic policy orientations, while strengthening coordination and cooperation among fiscal, monetary, and other policies, to ensure concerted efforts and synergy.

Continuously promote qualitative and effective improvement and reasonable growth in quantity of the economy

We should focus on promoting high-quality development, highlighting key areas, and effectively carrying out key economic tasks.

We should lead the construction of a modern industrial system with technological innovation. We should seize the new opportunities brought by the new round of technological revolution and industrial transformation, use disruptive and cutting-edge technologies to foster new industries, new models, and new drivers of growth, and develop new productive forces. We should strengthen applied basic research and frontier research, and enhance the role of enterprises as the main force of innovation. We should cultivate and expand emerging industries, create strategic emerging industries such as bio-manufacturing, commercial aerospace, and low-altitude economy, and explore new future industry tracks such as quantum and life sciences. We should widely apply smart technologies and green technologies, and accelerate the transformation and upgrading of traditional industries.

We should focus on expanding domestic demand. China has great potential for domestic demand and is a rich mine. We should stimulate potential consumption, expand beneficial investment, and form a virtuous cycle of mutual promotion between consumption and investment. We should tap into potential demand in areas such as urban underground pipeline renovation, urbanization of migrant workers, education, healthcare, and elderly care, cultivate and expand new types of consumption, and vigorously develop new sources of consumption growth. We should use the improvement of standards for technology, energy consumption, emissions, and other aspects as traction, promote large-scale equipment renewal and the replacement of consumer goods. We should make good use of the amplification effect of government investment, improve investment and financing mechanisms, and support social capital participation in the construction of new infrastructure and other areas.

We should continue to deepen reform and opening up. We should use reform as a means to solve problems encountered in development, plan major measures to comprehensively deepen reform, and continuously inject strong impetus into the promotion of high-quality development and the acceleration of China's modernization. We should continuously improve and implement the institutional mechanisms of "two unswerving commitments", fully stimulate the endogenous power and innovation vitality of various types of market entities. We should expand high-level opening up, consolidate the foundation of foreign trade and foreign investment, and accelerate the cultivation of new drivers of foreign trade. We should benchmark international high-standard economic and trade rules and continuously build a first-class market-oriented, rule-of-law-based, and internationalized business environment.

We should continue to effectively prevent and resolve risks in key areas. We should take measures from both the supply and demand sides, continue to promote the stable and healthy development of the real estate market, treat different types of real estate enterprises equally and meet their reasonable financing needs, promote the real estate market to reach a new balance, and accelerate the construction of a new model for real estate development. We should accelerate the construction of affordable housing, "dual-use" public infrastructure, and the transformation of urban villages, which are the "three major projects". To effectively implement a comprehensive plan to resolve local debt risks, crack down on illegal financial activities, and firmly guard against systemic risks.

To effectively protect and improve people's livelihoods. We must do our best within our capabilities to ensure the bottom line of people's livelihoods, enhance people's well-being through high-quality development, stimulate new social demands through social security, and form a virtuous cycle between economic development and social security. We must integrate the promotion of new urbanization and comprehensive rural revitalization, and create a new pattern of integrated urban-rural development. We must deepen the construction of ecological civilization and promote green and low-carbon development, and accelerate the construction of a beautiful China.

In the new year, the tasks of national economic and social development are arduous and heavy. We must adhere to high-quality development as the hard truth of the new era. We must deepen supply-side structural reform and focus on expanding effective demand in a coordinated manner. We must rely on reform and opening up to enhance the endogenous driving force of development. We must adhere to the interaction between high-quality development and high-level security. We must promote Chinese-style modernization as the greatest political task and continue to promote the qualitative and quantitative improvement of the economy. We must closely unite around the Party Central Committee with Comrade Xi Jinping at the core, forge ahead and make new and greater contributions to the comprehensive promotion of Chinese-style modernization and the construction of a strong country and national rejuvenation.

(The author is the Deputy Director in charge of daily work of the Central Finance Office and the Director of the Central Agricultural Office)