China: Driving the New Normal with Innovation during the 13th Five-Year Plan Period

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Currently, China is facing a strategic period with opportunities of making great achievements amidst daunting challenges of interwound conflicts, increased risks and potential problems. People from both home and abroad have cast their eyes over China’s prospects, strategies and measures for development. Against the backdrop, the 5th Plenary Session of the 18th CPC Central Committee deliberated and passed the “Recommendations for the 13th Five-Year Plan for Economic and Social Development”(hereinafter referred to as the Recommendations in the following text). The Recommendations defined the general approach toward development in the new period, set forth a series of policies and measures for propelling development, and responded to the common concern of the people. The Recommendations fully demonstrate the key thoughts on governance by the CPC Central Committee with Xi Jinping as the general secretary, and serve as the overall guideline for development in the next five years. To fully fulfill the tasks set in the Recommendations, it is necessary to focus our work on the general goal of building an overall well-off society, have a better understanding of the spirit of the Recommendations, and guide economic growth and social progress with a new concept of development.

 

Putting in place the transformation of development concept

 

The Communist Party of China has attached great importance to development, and proposed relevant scientific judgments such as “development is of overriding importance”, and “it holds the key to resolving all issues in China”, etc. The Party has made major theoretical innovations relating to what is development, what is sound development, and how to achieve such a development. The 17th National Congress of the CPC came up with the Scientific Outlook on Development, and the 18th National Congress of the CPC made it the guiding principle of the Party. Since then, in face of the new situation, new tasks and new expectations of the people, the CPC Central Committee headed by General Secretary Xi Jinping has further developed the theory of development relating to its nature, connotations and approaches and made it clear that “people are the fundamental driving force for promoting development and we must follow a people-centered principle in development”. Based on that, the Party put forward the concept of innovative, coordinated, green, open and shared development, further clarified the questions of whom to rely on, for whom to make development and how to carry out development, straightened up the development approaches, charted the course of development and noted the major issues in development. The new development concept brought up by CPC Central Committee fully shows the unity between ideal and reality, between subject and object issues and between development goals and means for realization. It has deepened the Party’s understanding on the law of governance, the law for building socialism and the law of development for human society, which will bring about profound changes in China’s overall development. Therefore, to fulfill the goals set in the Recommendations, we must have our ideas concentrated onto the above-mentioned development issues. The concept of innovative, coordinated, green, open and shared development gives an active response to newly-emerged problems and challenges. Over the past 30 years of rapid development, China has become the second largest economy in the world, with per capita GDP substantially increased to around $7800. Yet some relatively prominent problems also cropped up in the course of development, including structural imbalance, stagnant social development, imbalanced regional and urban-rural development, expanded income difference, environmental pollution and ecological degradation. If these issues are left unresolved, they may delay China’s modernization drive. The concept of innovative, coordinated, green, open and shared development is raised exactly in light of these new problems and new challenges.

The concept of innovative, coordinated, green, open and shared development is a forward-looking development idea. When development enters a new stage, the people will cherish expectations for a better life, a fairer society and a comfortable environment. There is a long way to go if these wishes are to be realized. To reach the other shore successfully, it is necessary to explore and take new routes of development.

The concept of innovative, coordinated, green, open and shared development is related to the overall development along the charted course. It can ensure a more balanced, inclusive and sustainable development and enable the modernization drive to get onto a high level.

The concept of innovative, coordinated, green, open and shared development reflects the requirement of modern era for progress. During the UN Development Summit 2015, various countries adopted the 2030 Agenda for Sustainable Development. Compared with the “Millennium Development Goals” brought up by the United Nations 15 years ago, this new agenda for development has got richer meaning and higher requirements. The MDGs involve three basic factors of subsistence, green development and cooperation, while the new development agenda includes another three factors: health, equality and dignity.

The concept of innovative, coordinated, green, open and shared development is consistent with the international community’s deepened understanding of development, bearing strong features of modern times.

 

Taking structure adjustment as the main goal for economic development during the new normal

 

The Recommendations brought up a series of major tasks for China’s economic and social development during the 13th Five-Year Plan period. Some tasks hold fundamental significance with overall influence. If these tasks are accomplished prior to other tasks, there will be fewer difficulties in fulfilling others. To meet the requirements in the Recommendations, we should take adjusting the structure and leading the new normal as the main goals, which are internally combined with each other, and leading the new normal must depend on effective structural adjustment. Currently, the mismatch between the supply-side management and the demand-side management is the main problem affecting economic development. Therefore, the main task and key point of macro-control is to forge ahead with the supply-side structural reform. The formation of the new economic structure is both the result of new development models and a crucial embodiment for entering a higher-level of economic operation stage with optimized division of labor and a more reasonable structure.

Only by adjusting and upgrading the structure can we lay a solid foundation for pragmatically changing the development model and securing sustained economic growth. Currently, China’s working-age population is decreasing year by year, the resource supply is imposing more rigid constraints on growth, and the ecological system can accommodate no more pollutants. The past extensive, low-added-value economic structure with excessive independence on labor input must be turned into an intensive, high-added-value structure and highly relying on technological progress. Only in this way can rapid growth be kept for a long term.

Only by adjusting and upgrading the structure can we have the ability to enhance people’s livelihood. Along with improved income, people would prefer a better life quality. They hope to buy good-quality, safe, comfortable and green manufactured goods and enjoy better medical and health care as well as cultural and tourism services.

Only by adjusting the structure can we better cater to these new demands. Only by adjusting and upgrading the structure can we offer effective guarantee for ecological civilization building. Problems relating to ecology and environment issues have affected people’s life quality. To resolve these problems, we need to increase investment, strictly implement the environmental protection law and strengthen end-of-pipe treatment. But if these problems are to be resolved fundamentally, it is necessary to optimize the industrial structure, energy and consumption mix, develop clean energy and substantially decrease pollutant emissions in production and life.

Only by adjusting and upgrading the structure can we create better conditions for social equity. Currently, the imparities between the rich and poor, between urban and rural areas and between various regions have become key factors undermining social fairness. Whether can we solve the problem of “three imparities” is not only related to present social stability and harmony, but also connected with the success of building an overall well-off society, and whether China could smoothly stride across the “middle income trap” to become a high-income modern country. During the 13th Five-Year Plan period, we must implement more effective regional policies to promote balanced regional development, advance the new-type urbanization and new-village building, enhance coordinated urban-rural development, and improve the income distribution system toward a fair sharing of development outcomes.

Urgent as it is, structural adjustment cannot be done at one go. Structural problems have been accumulated in the long-term development, so resolving these problems also requires a long and arduous process. We must have full preparations in mind and formulate relevant policies.

 

Taking innovation as the core to underpin the overall development

 

It is stated in the Recommendations that innovation must be put in the core of national development and run through every aspect of work by the Party and government. This statement has given top priority to innovation in economic and social development unprecedentedly.

In the era of economic globalization and deepened IT application, changes and conditions are taking place more quickly for development than in any other periods; only by creating more innovations can we keep up with the times. As competition between countries is becoming even fiercer, innovation has been taken as the key to victory by all countries; only with stronger input into innovation can we seize the commanding height in development. During the pivotal period when China is changing from an upper and middle-level income country to a high-level income one, people would have more and more expectations for future development, and only with a more proactive attitude and unremitting spirit can we really put “the people-centered principle” into practice.

Innovation covers a wide range of sectors, involving both theoretical innovation and institutional innovation, scientific innovation and cultural innovation, which makes innovation the core to shore up the overall development and the primary driver to lead development. Innovation is indeed all-directionary and all-dimensional, but there are different sectors for making innovation in different stages. The main line for advancing innovation is to bring into full play the role of innovation in forming new development drivers with targeted policy measures. In the current stage of development, scientific innovation is one of the sectors requiring major breakthroughs. During the 13th Five-Year Plan period, we should follow the arrangements made by the central government, fully leverage the leading role of scientific innovation in overall innovation programs and base innovation-driven development on constant technological progress.

 

Focusing our major work on improving the quality and efficiency of development

 

To reach the goal of building an overall well-off society, we must maintain a relatively high growth rate, keep expanding the economic aggregate and more importantly improve the quality of development. Development quality is a comprehensive notion, involving the intensive, stable, balanced, inclusive and sustainable aspects of development. To enhance development quality is a system project which includes at least the following basic requirements.

In terms of the development approach, more importance should be attached to the accumulation of social wealth. In the past, GDP had always been pursued by local governments for the evaluation of their performance. It is reasonable in a certain development stage, and GDP growth still needs to be promoted in the future. But it should be noted that what GDP reflects is the ability of a country or a region to offer products and services in a certain period. Such ability can not only create new wealth, but may also destroy the wealth accumulated in history for a long time; this ability can not only create the wealth with a long-term value for use, but may also create wealth with a mere short-term value for use. Some local governments only pay attention to GDP growth while neglecting wealth accumulation in the process of development, resulting in serious disproportion between investment and outcomes and people’s inputs far exceeding due returns. During the 13th Five-Year Plan period, it is necessary to give more importance to the accumulation of social wealth and avoid those duplicated construction projects.

In terms of the development driver, more attention should be drawn to the role of scientific and technological innovation. To nurture new growth drivers and avoid fluctuations in economic performance in the process of shifting from old drivers of growth to new ones under the new normal, we need to improve institutional mechanisms, enhance labor quality and make more scientific innovations. General Secretary Xi Jinping has clearly pointed out that innovation is the primary driver to lead development. Emphasizing innovation means to focus our work on development, and spending more efforts on innovation would lead to a better future. During the 13th Five-Year Plan period, we must construct a sound ecological system for innovation, increase inputs into R&D, coordinate and make full use of all sorts of resources for innovation, so as to make breakthroughs in a series of key technological fields.

In terms of economic operation, more importance should be attached to maintaining the stability of growth. Market economy features cyclic operation, with unavoidably fluctuations in the economy, but sharp rise and fall of economic performance will inevitably undermine productive forces. The goal of macro-control is exactly to maintain relatively stable economic growth. During the 13th Five-Year Plan period, we should, by improving the macro-control approaches, mechanisms and policies, allow “the visible hand” of government control and “the invisible hand” of market mechanism to complement each other for positive interaction and stable economic operation.

 

Article by Li Wei