Approximately 300 scholars gathered on Nov. 8 in the Hong Kong Special Administrative Region (HKSAR) to discuss supply-side structural reform, the 13th Five-Year Plan, development trends, economic strategy and policy priorities of the Chinese mainland, as well as the role of and opportunities for Hong Kong.

The International Forum on China’s Economic Operation and Policy 2016 was co-hosted by the National Academy of Economic Strategy (NAES) at the Chinese Academy of Social Sciences (CASS) and the Central Policy Unit of the HKSAR Government.

Prior to the forum, Chief Executive of the HKSAR Leung Chun-ying and Zhang Xiaoming, director of the Liaison Office of the Central People's Government in Hong Kong, met with the delegation led by CASS President Wang Weiguang. They exchanged ideas about cooperation in the field of the humanities and social sciences between the special administrative region and CASS.

Addressing the forum, Wang pointed out that the scientific concept of “one country, two systems” proposed by late Chinese leader Deng Xiaoping has not only opened up a new path for the peaceful reunification of China but also reserved room for the sustained prosperity of Hong Kong.

The smooth return of Hong Kong and its continuous prosperity against the backdrop of global economic recession provide ample evidence of the success of “one country, two systems,” Wang said, adding that the huge advantage and potential of the principle have yet to be fully realized.

Wang said that in the next five years, China will participate in the global economy and governance through the open “Belt and Road” initiative, which will influence global development.

The existing institutions of Hong Kong and its extensive international connections have made the special administrative region a “super-connector” supporting the mainland’s efforts to “go out.” Therefore, exploring a new model that enables Hong Kong to serve China’s opening-up strategy is crucial to making use of the “two systems” and optimizing the development of Hong Kong and the mainland, Wang said.

Assessing the systematic and comprehensive nature of economic policy since the Third Plenum of the CPC’s 18th Central Committee, NAES Director Gao Peiyong said that China’s economic slowdown is due to the chronic, structural changes in the fundamentals.

The reversal of growth in the value added by manufacturing and services, the shrinking working-age population and slowing urbanization all mean that the change in China’s growth is largely structural, rather than cyclical, Gao said, noting that the main contradiction of development is on the supply side, instead of the demand side.

Drastic changes have taken place in the conditions driving the growth on the supply side of the national economy, signaling that the Chinese economy has entered a new normal, Gao said. The traditional economic cycle theory has been incapable of accounting for the Chinese economy, highlighting the need for theoretical and methodological innovation, he added.

Li Xiangyang, director of the National Institute of International Strategy at CASS, explained the deeper implications of the “Belt and Road” initiative.

The focus of the “Belt and Road” initiative is not to export overcapacity but to develop a regional economic cooperation mechanism instead, Li said.

The mechanism is not exclusive. It runs parallel to existing regional economic cooperation mechanisms, complementing and improving them, Li said. It is a new approach to promoting the liberalization of global trade and investment, and a new model for China to provide international public goods, Li added.