Major Issues in Economic Work

Xi Jinping

Economic work in 2023 will be complex. We need to bear in mind the overall strategic picture and focus on major problems. We should start with improving public expectations and boosting confidence in development and pay close attention to major and key links, as this will lay the ground for overall success in our work.

I. Expanding domestic demand

The prominent issue we face in economic development at present is insufficient aggregate demand. Therefore, we need to vigorously implement the strategy for expanding domestic demand and adopt more effective measures to ensure a virtuous cycle of social reproduction. In the past, China has expanded domestic demand in order to effectively respond to the Asian financial crisis in 1998, the international financial crisis in 2008, and the impact of Covid-19 since 2020, and has thus accumulated successful experience in this regard. We now need to optimize our policy initiatives to give full play to the fundamental role of consumption and the key role of investment.

First, we should prioritize the recovery and expansion of consumption.

With China making steady strides in new industrialization, informatization, urbanization, and agricultural modernization, consumption is now playing a fundamental role in driving economic growth. To fully realize the potential of consumption, we need to boost consumer purchasing power, improve the conditions for consumption, and create new consumption channels. As there is a direct correlation between consumption and income, we must raise the incomes of both urban and rural residents through various channels. It is especially important to increase the spending power of the low- and middle-income groups, which have a high propensity to consume but were severely affected by Covid-19. Steps should be taken to reasonably increase consumer credit so as to support spending on housing improvements, new energy vehicles, elderly care, and services related to education, health care, culture, and sports.

Second, we should drive investment society-wide with government investment and policy incentives.

Currently, private investment expectations are low. We must fully harness the guiding role of government investment, which is a powerful tool for responding to cyclical fluctuations in the economy. Government investment should be ramped up in terms of laying strong foundations, generating long-term benefits, shoring up weak spots, and adjusting the economic structure. We should expedite the implementation of major projects under the 14th Five-Year Plan (2021-2025), strengthen infrastructure development in transportation, energy, water conservancy, agriculture, and information, and advance infrastructure connectivity between regions. We should support city clusters and metropolitan areas in building modern infrastructure systems and implement initiatives for urban renewal and rural development. We should increase investment in technology and industry and adopt a forward-looking approach to the development of major scientific and technological infrastructure and R&D capabilities for core technologies in key fields. To see that policy-backed finance plays its role in countercyclical regulation, we should give more financial support to major projects in line with national development planning and industrial policy guidance, while ensuring a balance between social and economic returns. We should widen market access for private investment to encourage and attract the participation of more nongovernmental capital in major national projects and projects aimed at strengthening areas of weakness. We should also increase reserves and preparations of projects and provide stronger support in terms of production factors.

The role of exports in driving economic growth should be further leveraged. We should keep exports to developed countries stable and expand exports to emerging economies. We should upgrade the processing trade to increase the value added of exports, expand trade in services, and develop digital trade. We should consolidate and expand export advantages in new industries, such as new energy vehicles, and increase imports of advanced technologies, important equipment, and energy and resources. We should give full play to the role of China-Europe freight train services and work faster to build China into a trader of quality.

II. Building a modern industrial system

We need to bolster domestic foundations in order to remain on a solid footing. China has the world's most complete industrial system and a domestic market with the greatest potential for growth. We must take effective steps to boost the resilience and security of our industrial and supply chains and move rapidly to address weak links and build on existing strengths.

First, we should ensure smooth flows in the national economy.

China's economy must safeguard national security, meet basic living needs, and ensure the normal functioning of infrastructure and basic industries. We need to improve our capacity to ensure food, energy, and resource security. In particular, we must maintain firm control of our food supply. We should launch a new drive to increase China's grain production capacity by 50 million tons, further expand production capacity through farmland protection and the application of science and technology, and increase yields by better utilizing our country's land resources. Greater efforts should be made to explore and develop important energy and mineral resources domestically and to discover more reserves and boost production. We should ensure power generation, transmission, loading, and storage are well-coordinated and ramp up our efforts to develop a new energy system. We should support enterprises in carrying out overseas economic and trade activities together and diversify our imports. We should build up our capacity to guarantee and stockpile national strategic goods.

Second, we should accelerate the upgrading of China's industrial system.

We should make forward planning for key areas and fully modernize the industrial system. We must consolidate the leading position of traditionally competitive industries while also carving out new competitive advantages. We should seize the opportunities arising from changes to the structure and layout of global industry to open up new fields and succeed in new arenas. Traditional manufacturing is the foundation of the modern industrial system. We must accelerate the digitalization of traditional manufacturing, and apply advanced and appropriate technologies to make this sector higher-end, smarter, and more eco-friendly. Strategic emerging industries are the pillars and arenas that will drive future development. We should promote research, development, and application of frontier technologies for new energy, artificial intelligence, biological manufacturing, green and low-carbon industries, and quantum computing and support the development of enterprises that use sophisticated technologies to produce novel and unique products. We should devote significant efforts to developing the digital economy, strengthening regular oversight, and supporting platform enterprises to fully harness their potential to drive development, create employment, and increase international competitiveness.