On Oct. 18, the National Bureau of Statistics of China unveiled the economic performance data for the first three quarters of 2023. It was reported that China’s GDP during this period reached 91.3 trillion yuan ($12.5 trillion), reflecting a year-on-year growth of 5.2%. In the third quarter alone, the GDP experienced a month-on-month increase of 1.3%, indicating positive developments across various sectors and indicators. Scholars attribute this accomplishment to a series of macro policies implemented by the Chinese government, encompassing fiscal, monetary, real estate, consumption, and employment measures.

Signs of positive policy effects

During a meeting held on July 24, the Political Bureau of the CPC Central Committee ordered to strengthen macro policy control and prioritize the expansion of domestic demand, aiming to boost confidence. Since Aug. 1, China has actively leveraged the role of taxation in fiscal policy, further increasing the degree of tax preferences and exemptions for micro and small businesses. As of Oct. 8, the issuance of special bonds reached 3.51 trillion yuan, achieving 92% of the annual target.

In terms of monetary policy, China has reinforced countercyclical regulation since the start of 2023, and announced two reductions to the bank reserve ratio, each by 0.25 percentage point, on March 27 and Sept. 15, respectively.

Regarding industrial and consumption policy, plans for stabilizing growth in 10 key sectors have been unveiled, with detailed arrangements for each industry’s development objectives alongside supporting policies. Meanwhile, efforts have been made to galvanize consumption of staple commodities like automobiles, electronic products, and household products.

Since the implementation of the aforementioned policies, positive outcomes have gradually emerged. Yu Ze, an economics professor at Renmin University of China, highlighted that the data has revealed a series of positive signals in China’s aggregate economy, further evidencing effective restructuring and high-quality development.

On the aggregate level, the manufacturing purchasing managers’ index returned to the expansion zone on both the production and demand ends in September. The non-manufacturing business activity index, in particular the index of the construction industry, rose by 2.4 percentage points from August. Meanwhile, with the issuance of local government bonds, China’s infrastructure construction has further accelerated.

On the demand side, investment maintained steady growth from January to August as a key driver of China’s high-quality development, accompanied by an upturn in commodity consumption. In August, commodity retail grew 3.7%, up 2.7 percentage points from July. Expanded domestic demand fueled a recovery in manufacturing. In August, profits of industrial enterprises increased after a period of decline, up 17.2 percentage points year-on-year. Among others, green- and intelligence-based industrial production transformation has further accelerated.

Distinctive macroeconomic governance

The Chinese macroeconomic governance system, as an important component of Xi Jinping Economic Thought, represents a significant innovation in macro control theory achieved by the CPC Central Committee with Comrade Xi Jinping at the core. The macroeconomic governance system consists of macroeconomic policy, monitoring, control, and evaluation.

According to Western economics, the macroeconomic control system includes only demand management policies. In the view of Su Jian, director of the National Economy Research Center at Peking University, this [narrow definition] has resulted in the Western macro control system falling significantly behind advancements in the macroeconomic theoretical system. As a result, it is unable to target multiple policy goals simultaneously, hence its limited effectiveness.

Generally, the normal operation of the market economy is bolstered by the supply side, the demand side, and the market on which the two sides rely. Accordingly, a complete macro control system should cover demand, supply, and market environment management. In China’s macroeconomic governance system, market environment management aims to eliminate market failures, lower trading costs, and maximize the role of the market mechanism. The goal of demand management is to reduce excessive capacity and unemployment by expanding demand, while that of supply management is to affect supply by regulating incentives and constraints on producers. Su said that unlike Western countries, which focus only on demand management, China’s distinctive macro control system centers around market environment management, followed by supply management and supplemented by demand management.