A worker on the assembly line of a “specialized, fine, peculiar, and innovative” enterprise in Shenyang City, Liaoning Province, on Feb. 22 Photo: CFP

Fulfilling the central task of economic development, successfully conducting 2022’s economic work, and promoting stable economic growth in quality with a reasonable increase in volume are not only important for the realization of the 14th Five-Year Plan (2021–25), but also of special significance to the 20th CPC National Congress.

Tackling challenges

The 2022 government work report concluded that in 2021, China responded to COVID-19 and pursued economic and social development in a well-coordinated way, launched the 14th Five-Year Plan to a good start, and made new and significant achievements in its development. China’s global leading advantages in COVID-19 response ensured the stable socio-economic development. We should take the initiative in COVID-19 prevention and control, as well as in socio-economic development.

When analyzing the international situation, we see that global economic recovery lacks driving forces, commodity prices hover at a high level, and external environments are becoming more complex and uncertain. In addition, COVID-19 and regional conflicts have further disrupted the global industrial chains, and expectations of a global economic recovery have weakened. Domestically, China’s economic development is also facing shrinking demand, disrupted supply and weakening expectations. However, China’s economy has strong resilience. We have the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core. The economic downturn is short-term and cannot change fundamentals of our economy, which will maintain long-term growth. China’s development has always advanced in response to challenges. We can foster new opportunities amid challenges and make new advances amid changes.

New development paradigm

In light of the current situation and our targets for 2022, the government work report puts forward overall requirements, policy orientations, and specific work for socio-economic development. These arrangements fully reflect the Party and country’s regulatory understanding and flexible application of economic work over the years.

Firstly, China’s long-term economic development requires domestic circulation as the mainstay while domestic and international circulations reinforce each other, which is a regluatory pattern that underlies building a new development paradigm. Combining this with economic operation policies and transforming them into economic practice guarantees scientific economic regulation and control. Marxist political economy profoundly reveals basic principles of economic circulation. Capital (Das Kapital) analyzes the law of capital movement and economic circulation from two aspects: individual capital and total social capital. In socialized production, the key to smooth economic circulation lies in the realization of consumption welfare through the use-value of commodities and the realization of value proliferation through the use of capital. These two realizations represent the “salto mortale” of the commodity, which fuels economic circulation and continuously expands socialized reproduction. In economic circulation, production is not only the main factor which determines distribution, circulation, and consumption, but also the main contradiction that unblocks economic circulation. Therefore, we emphasize supply-side structural reform. We pursue high-quality production activities with high returns and strong technology spillover effects, improve the efficiency of factors of production allocation, realize the optimization of factor combination structures, and form a strong and effective supply capacity.

The 2022 government work report emphasizes the need to implement the innovation-driven development strategy and strengthen the foundation of the real economy. Meanwhile, we should expand domestic demand and promote coordinated regional development and new type of urbanization, see that domestic demand plays a bigger role in driving economic growth and smooth the domestic economic circulation. Under the conditions of economic globalization, the free flow of goods, services, and resources and production factors improves the quality and efficiency of a country’s total social capital movement. Therefore, we should make full use of both international and domestic markets and resources. We should continue to expand high-level opening up, especially institutional opening up.

Secondly, cyclical regulation and expectation management should be refined. The government work report points out that China is making cross- and counter-cyclical adjustments with macro policies. We thus effectively dealt with all risks and challenges that arose. Cross-cyclical regulation is a new understanding and new practice of economic operation laws. Cross-cyclical regulation is implemented after China’s economy enters the medium and high-speed shift period, as it gradually slides to the medium speed growth track. Main measures of cross-cyclical adjustments help enterprises resolve difficulties, strengthen employment, and enhance the stability of both supply and prices of bulk commodities through accurate fiscal policy and stable and flexible monetary policy. These new understandings and practices enrich and develop China’s economic macro-regulation connotations and policy tools.

Finally, a full understanding of people-centered economic development inevitably requires diverse and scientific policy portfolios. The purpose of the socialist market economy with Chinese characteristics is to meet people’s growing needs for a better life. To regulate economic operation, we must use diverse policy combinations to achieve our expected purpose. Specifically, macro policies should be stable and effective, micro policies should continue to stimulate the vitality of market entities, structural policies should smooth the national economic circulation, sci-tech policies should be solidly implemented, reform and opening up policies should stimulate development vitality, regional policies should enhance the balance and coordination of development, and social policies should maintain the bottom line of people’s livelihoods. Moreover, these policy combinations need systematic coordination. Socio-economic development forms an interrelated complex system, and the fallacy of composition should be prevented. China’s economic operation management not only has its own characteristics, but also is more difficult and has greater responsibility than in capitalist countries. Therefore, requirements for innovative economic theories are higher.

Ensuring stable growth

China’s main projected targets for development in 2022 include: a GDP growth of around 5.5%; over 11 million new urban jobs; a surveyed urban unemployment rate of no more than 5.5%; a CPI increase of around 3%; growth in personal income that is basically in step with economic growth; steady increases in both the volume and quality of imports and exports; and a basic equilibrium in the balance of payments, and a further improvement in the environment. Among these targets, setting the expected target for economic growth mainly considers the need to stabilize employment, ensuring people’s livelihoods and preventing risks. Therefore, we should not only set the general tone by making economic stability our top priority and pursuing progress while ensuring stability, but also place stability in a more prominent position under new downward pressures in 2022’s economic work. At present, it is of utmost importance to enhance confidence in reaching our economic development goals. We should fully understand that China is still in a period of strategic opportunities for development. We have many favorable conditions for sustaining development. Most notably, our people, in their hundreds of millions, aspire to a better life, have huge potential for starting businesses and engaging in innovation, and are resolved to overcome all difficulties together. We have also acquired a wealth of experience in dealing with major risks and challenges. Specifically, several new economic drivers will emerge in 2022.

On the demand side, in 2021, consumption steadily upgraded in the process of China’s continuous recovery, and the total retail sales of social consumer goods reached 44.08 trillion yuan, featuring the new phenomenon of consumption transformation and green consumption. By the end of February 2022, more than 500 green shopping malls were established in China. In 2021, the sales volume of new-energy vehicles in China reached 3.521 million, with a year-on-year increase of 1.6 times.

On the supply side, with the continuous optimization of the business environment nationwide, the total number of market entities exceeded 150 million in 2021, and the proportion of active market entities remained at about 70%. In 2021, the construction of strategic emerging industrial clusters made steady progress, and the added value of high-tech manufacturing and investment in high-tech industries increased by 18.2% and 17.1%, respectively. In January 2022, China’s SMEs Development Index was 89.4, enterprises’ investment willingness and enthusiasm to expand production rebounded, and the number of “specialized, fine, peculiar, and innovative,” or “little giant” enterprises reached 4762.

Pei Changhong is a professor from the University of Chinese Academy of Social Sciences.