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China’s Two Sessions help shape economic policy

Author  :  Wang Chunyan     Source  :    Chinese Social Sciences Today     2019-04-02

China’s annual Two Sessions—the second session of the 13th National People’s Congress (NPC) and the second session of the 13th Chinese People’s Political Consultative Congress (CPPCC) closed in Beijing in mid-March.

During the two sessions, the NPC deputies and CPPCC members made suggestions for China’s economic and social development.

On March 15, before the NPC closing meeting, Cai Fang, member of the Standing Committee of the NPC and vice president of the Chinese Academy of Social Sciences, answered questions from reporters on employment issues. Cai pointed out that elevating the employment-first policy to the status of a macro policy can be regarded as the 3.0 version of the employment-first policy or of active employment policy. This has enhanced and improved the system of macroeconomic policies; more importantly, it has given the policy system a clearer goal.

As China enters a new stage of economic growth, the elasticity coefficient between the rate of economic growth and the expansion of employment also is changing. As such, instead of seeking employment goals indirectly, it is better to directly use employment as the basis for the adjustment and implementation of macroeconomic policies, Cai observed, adding that in this way, our goal will be clearer, and an organic mechanism with intrinsic bonds will be formed between employment goals and macroeconomic policy instruments.

Cai further stated that the surveyed unemployment rate in 2018 is stable at a low level of around 5 percent, which indicates relatively full employment. Relatively full employment does not mean zero unemployment but indicates an unemployment rate with no cyclical factors. It consists mainly of structural unemployment and frictional unemployment.

To resolve structural and frictional unemployment, it is necessary to implement a positive employment policy and to improve market functions in terms of training, education and providing better public employment services so that job seekers and intentional employers can better connect. If the surveyed unemployment rate rises above 5 percent, it will signal a more complicated and severe external environment. If any impact on the demand side affects the economic growth rate, economic growth may be lower than the potential growth capacity, and there will be higher unemployment rates.

An unemployment rate of more than 5 percent is an indicator of cyclical unemployment. At this point, it is suggested that macroeconomic policies, monetary policies and fiscal policies should be more active and more proactive, with intensified efforts. This is why the government work report sets the target of a surveyed urban unemployment rate of around 5.5 percent, Cai said.

In addition to offering interpretations of policies using their own expertise, NPC deputies and CPPCC members trained in the social sciences put forward suggestions and proposals featuring in-depth research and practical feasibility.

Luo Weidong, CPPCC member and vice president of Zhejiang University, was very concerned about the development of the Yangtze River Delta Region. He suggested building a science and technology center in the region and making it a strong growth pole.

On March 15, the second session of the 13th NPC voted to pass the Foreign Investment Law of the People’s Republic of China.

Shen Manhong, NPC deputy and president of Ningbo University, said that the Foreign Investment Law is a sign of both comprehensive deepening reform and expanding opening up in the new era. Only by forming a benign interaction between reform and opening up can we make full use of both domestic and international resources and markets on both sides.

Shen concluded that the adoption and implementation of the Foreign Investment Law will further strengthen the confidence of domestic and foreign investors in China and will strengthen people’s confidence in reform and opening up.

Editor: Li Yujie

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