New development model supports the construction of an economic powerhouse
The outline of the 15th Five Year Plan proposes to promote the formation of more economic development models driven by domestic demand, consumption, and endogenous growth. This is a major deployment based on the new changes in China's development stage and the new situation of the international development environment, and it is also a strategic task to move from an economic power to an economic powerhouse. We should base ourselves on the actual national conditions, deepen our understanding of the regularity in summarizing development experience, clarify the main direction of attack, better coordinate the current and long-term, domestic and international, take reform and innovation as the fundamental driving force, accelerate the formation of a higher level of dynamic balance between consumption and investment, and efficient adaptation of supply and demand.
Important experience:
Optimize development orientation, pattern, and structure
The characteristics of a major country's economy are dominated by domestic demand and internally recyclable. Looking at the world, economic powerhouses generally have strong domestic demand, especially consumption, as a driving force for economic growth. For China, to move from an economic powerhouse to an economic powerhouse, it is necessary to leverage the unique advantages of a super large market that is recyclable and firmly grasp the initiative of development in complex and ever-changing situations; On the basis of continuously expanding the total economic output, we must significantly improve the quality and efficiency of development, and form more economic development models led by domestic demand, driven by consumption, and endogenous growth; We must continue to enhance our global influence with high-level openness, assume international responsibilities that match our economic strength and international status, and actively participate in and lead global economic governance.
Since the 18th National Congress of the Communist Party of China, facing the unprecedented changes in the world and the transformation of the domestic economic development stage, the Party Central Committee has assessed the situation, scientifically judged and promoted the systematic optimization and reshaping of the economic development direction, pattern and structure, and initially formed a new situation of domestic demand driving economic growth, accumulating important experience for building an economic powerhouse.
Firstly, promote the transformation of development orientation, with high-quality development as the theme. Under the new development orientation, taking major strategies, policies, projects, and engineering as the starting point, we continuously solve development problems and strengthen our development advantages. On the one hand, there is a greater emphasis on innovation driven development. By 2025, the R&D investment intensity of the whole society in China will increase to 2.8%, and the innovation index ranking will rise to the 10th place in the world; The digital economy, new energy vehicles and other fields have entered the world's leading level. On the other hand, there is a greater emphasis on improving both quantity and quality. While achieving steady growth in the overall economic output, significant achievements have been made in the construction of a modern industrial system. The added value of manufacturing accounts for about 30% of the global total, and the proportion of high-tech manufacturing is steadily increasing. During the 14th Five Year Plan period, the pace of green and low-carbon transformation will accelerate, the quality of the ecological environment will continue to improve, and the installed capacity of non fossil energy power generation will exceed that of fossil energy. By 2025, the energy consumption per unit of GDP will decrease by 5.1%, and the development background will be greener and more complete.
Secondly, promote the reshaping of the development pattern, emphasizing the domestic circulation as the mainstay and the mutual promotion of domestic and international circulations. Take the implementation of the strategy of expanding domestic demand as a key support for addressing risks and challenges, and ensuring development security. From 2013 to 2024, the average contribution rate of domestic demand to China's economic growth reached 93.1%. In 2025, the dependence on foreign trade will further decrease, and we will firmly grasp the initiative of development in our own hands. The average contribution rate of final consumption expenditure to economic growth during the 14th Five Year Plan period reached about 60%, an increase of about 10 percentage points compared to the 13th Five Year Plan period, further highlighting the role of consumption as the main engine driving economic growth.
Thirdly, promote the optimization of development structure and solve the problem of regional and urban-rural development imbalance. A series of major strategies have been deeply implemented, and the economic growth rate of the central and western regions has been faster than that of the eastern regions for many consecutive years. The gap in per capita GDP has continued to narrow, and a spatial layout of complementary advantages has been initially formed, making regional development more coordinated. At the same time, the integration of urban and rural areas is being promoted in depth. By 2025, the urbanization rate of permanent residents will reach 67.9%, and the new urbanization will improve quality and efficiency. The income ratio of urban and rural residents will be reduced to 2.34:1 in 2024, and the two-way flow mechanism of urban and rural factors will continue to be improved.
Fourthly, promote a leap in the level of openness, shifting from commodity and factor flow oriented openness to institutional oriented openness. While consolidating the advantages of opening up, the service industry will be regarded as an important focus of high-level opening up, and the scope of opening up in fields such as finance, telecommunications, and healthcare will continue to expand. Steadily promote institutional openness in rules, regulations, management, standards, and other areas. The pilot free trade zone has been upgraded and expanded to 22, and the Hainan Free Trade Port has achieved closed operation; Introduce the Foreign Investment Law and continuously reduce the negative list of foreign investment access; Promote the process of independent and unilateral opening up, implement zero tariffs on 100% of taxable products from all least developed countries that have established diplomatic relations, and provide unilateral or comprehensive visa free access to over 70 countries. China's position in global economic governance has significantly improved, with the scale of goods trade ranking first in the world for many consecutive years. Its contribution to world economic growth has remained at around 30% for a long time, making it the largest engine of global economic growth.
Important tasks:
Collaborative efforts from three dimensions
A strong domestic market is not only an important support for building a new development pattern, but also the economic advantage of a major country. In the next 5 to 10 years, China will be in a historical window period of economic transformation and structural adjustment, with the conditions to build an economic powerhouse supported by a new development model while unleashing the enormous growth potential hidden in economic transformation and upgrading. To achieve this strategic goal, we need to work together from three dimensions: filling the gaps in consumption, strengthening service trade, and actively expanding imports.
From the perspective of filling the consumption gap, we need to make precise efforts to form a positive interaction between supply and demand. One is to build a super large scale market characterized by "Made in China+Chinese Consumption". According to relevant calculations, by 2024, the added value of China's manufacturing industry will account for nearly 30% of global consumption, and the final consumption will account for about 13% of global consumption. Preliminary estimates suggest that if the latter reaches the level of the former, it will add no less than $10 trillion to the consumer market. If a super large scale market with strong supply and demand is formed, its global influence will be further enhanced, and the Chinese market will bring broader market opportunities, investment opportunities, and growth opportunities to the world. The second is to expand the breadth and depth of the market with service-oriented consumption as the leading factor. By 2025, the per capita service consumption expenditure of urban and rural residents in China will reach 46.1%, but there is still significant room for improvement compared to developed countries. In the next 10 years, China will be in a period of rapid growth in service-oriented consumption. By 2035, if the proportion of service-oriented consumption among Chinese residents increases to over 55%, it will unleash enormous consumption potential. Entering the era of rapid development of artificial intelligence, the integration of material consumption and service-oriented consumption will become a major trend, which will give rise to a large number of new formats and models, injecting strong impetus into the construction of an economic powerhouse. The third is to increase the consumption rate of residents. In 2024, China's resident consumption rate will be 39.9%, with a gap of 10 to 30 percentage points compared to developed countries. By 2030, the resident consumption rate has the potential to increase to around 45%, and further increase to over 50% by 2035. At that time, the size of China's consumer market may reach 110 trillion yuan, and the contribution rate of consumption to economic growth will significantly increase, with domestic demand leading and consumption driven becoming more established.
From the perspective of strengthening service trade, the focus should be on improving the efficiency of domestic market operations to achieve connectivity between domestic and foreign markets. Service trade is the key to a country's economic competitiveness, as well as the "lubricant" and "adhesive" that connects internal and external cycles. In the current global final product prices, the value-added in the service sector exceeds 60%. Playing the role of the engine of service trade and promoting its continuous increase in proportion is an inevitable requirement for building an economic powerhouse. By 2024, over 54% of global service trade will have achieved digital delivery, while this proportion is relatively small in China during the same period. At present, the basic conditions for the development of digital trade in China, such as market demand, technology supply, and enterprise entities, have been basically formed. With the conditions, we can promote the strong development of digital trade and achieve the goal of increasing the proportion of service trade that can be digitally delivered to over 50% by 2035. Strengthening service trade and building a major service trading country rely on breakthroughs in institutional openness. In this process, we should actively layout and create diverse forms of open highlands, promote the integration of service trade in the Guangdong Hong Kong Macao Greater Bay Area, and benchmark the world's highest level of open forms to promote the construction of Hainan Free Trade Port; We need to further reduce the national version of the negative list for cross-border service trade and accelerate the integration of rules, regulations, management, standards, etc. with the international community.
From the perspective of actively expanding imports, it is necessary to enhance the discourse power in formulating economic and trade rules while significantly enhancing the global attractiveness and influence of the Chinese market. By 2025, China's import scale will reach 18.5 trillion yuan, making it the world's second-largest import market for 17 consecutive years. Building an economic powerhouse requires competitive exports and an increase in import scale to promote balanced trade development. This is not only a "booster" to meet the needs of the people for a better life, but also a "catalyst" to drive the transformation and upgrading of domestic industries, and an important task to build a strong domestic market. In practice, the global influence of "Chinese prices" can be enhanced by relying on relevant platforms and market construction. Attract and gather high-quality factors in the process of actively expanding imports and building a large import market. For example, shifting from "attracting investment" to "selecting investment" and filling the gaps in the industrial chain; Actively building research platforms and multinational enterprise R&D centers to build a global talent pool; Relying on rich application scenarios and comprehensive industrial support, attract global scientific and technological innovation achievements to be implemented and transformed; wait. Give full play to the important role of the world's second largest import market in driving the international economic cycle, and actively expand the import of energy products, high-quality consumer goods, and related services to ASEAN and other regions.
Important measures:
Using reform methods to solve development problems
Currently, China's economic operation is facing a structural contradiction of strong supply and weak demand. We must focus on deepening structural reform and inject strong impetus into the construction of an economic powerhouse supported by a new development model through the coordinated efforts of investment and consumption, urban and rural areas, and government and market.
Firstly, clarify the relationship between consumption and investment, and achieve dynamic balance between supply and demand while expanding effective demand. Consumption is the endpoint and new starting point of the economic cycle. To adapt to the trend of upgrading the consumption structure of urban and rural residents from material to service-oriented, it is necessary to promote the shift of investment focus towards balancing people and materials, adhere to the close combination of investment in materials and investment in people, and better solve the structural contradiction between investment and consumption. If trillions or even trillions of yuan are invested in people in the future to ensure and improve people's livelihoods, it will promote the formation of a long-term mechanism for residents to be able to consume, dare to consume, and be willing to consume, making consumption the driving force behind economic growth. At the same time, consumption upgrading should be used to force investment structure optimization. Adapting to the new requirements of upgrading the consumption structure on the investment system, we will significantly open up market access for medical, health, education and other service industries, support and guide domestic and foreign investment to enter the weak areas of people's livelihood, and stimulate and create effective demand with high-quality supply.
Secondly, we must adhere to the integrated development of urban and rural areas, and unleash the enormous potential of domestic demand in promoting the people-oriented new urbanization. Currently, China has generally entered the late stage of industrialization, but there is still significant room for improvement in the level of urbanization. According to estimates, for every 1 percentage point increase in China's urbanization rate, there can be an annual increase of over 200 billion yuan in consumer demand. By 2035, if the urbanization rate of registered residence population rises to about 65%, it will form an important driving force for building a strong domestic market. The key to promoting a people-oriented new urbanization lies in institutional innovation. We need to comprehensively deepen the reform of the registered residence system, promote the citizenization of agricultural transfer population, and enable farmers to settle down in cities and towns and stabilize consumption. Steadily and orderly promote the integration of urban agglomerations and the development of metropolitan areas, optimize the spatial layout of population and industry. On the premise of not increasing the burden on residents, establishing a sound rural pension insurance system can consider accelerating the establishment of a basic public service system with roughly equivalent standards between urban and rural areas and regions.
Thirdly, handle the relationship between the government and the market well, and enhance the vitality of the domestic market in optimizing the business environment. On the one hand, with the premise of clarifying functional boundaries, we aim to enhance the efficiency of macroeconomic governance. We need to clarify the relationship between power and responsibility, optimize the division of administrative and financial powers between governments, stimulate the enthusiasm of local governments in creating an environment, investing in people, and boosting consumption, and form a joint force to build a strong domestic market. On the other hand, to break down barriers to factor flow through market-oriented reforms. Deepen the construction of a unified national market, accelerate the market-oriented reform of factors such as land, labor, capital, technology, and data, and achieve equal use of production factors by all types of business entities in accordance with the law; Deepen the construction of a rule of law government and strengthen the fundamental position of competition policy; Enhance international competitiveness through institutional openness, prioritize the opening up of the service industry, and strengthen the global attractiveness of the domestic market through the integration of domestic and foreign market rules.