China's Economy Reaches New Heights

The year 2020 was an extraordinary one in the history of the People's Republic of China. Last year, China faced a grave and complex international situation and arduous tasks in domestic reform, development, and stability, especially in response to Covid-19. Confronted with these challenges, under the leadership of the CPC Central Committee, with President Xi Jinping at its core, China's economy stabilized and recovered, jobs and people's livelihoods were safeguarded, major development goals were met, the 13th Five-Year Plan was brought to a successful conclusion, and victory in building a moderately prosperous society in all respects was within sight. All of this has laid a solid foundation for embarking on our new journey to build a modern socialist country. 

I. Achievements in the containment of Covid-19 and economic and social development 

In response to the grave test posed by the Covid-19 epidemic, a severe global economic recession, and a more perilous external environment, President Xi and the CPC Central Committee have persistently prioritized the people and their health, led the country in waging an all-out people's war against Covid-19, and coordinated economic and social development work. In so doing, they were at the forefront of virus containment efforts, made China one of the first countries to get back to work and resume production, and achieved positive economic growth, thereby demonstrating the resilience and vitality of China's economy. 

China was the only major global economy to achieve growth last year. By late March 2020, the spread of Covid-19 had largely been contained in China. By mid-April, large-scale enterprises were operating at over 90% capacity. In the second quarter, GDP recovered from the previous quarter to register an increase of 3.2% over the same period the previous year, with a growth of 4.9% in the third quarter and 6.5% in the fourth quarter, giving a full-year growth of 2.3%. According to the World Bank's latest estimates, the world economy was expected to shrink by 4.3% in 2020, with the United States, the Eurozone, and Japan experiencing falls of 3.6%, 7.4%, and 5.3%, respectively. According to follow-up analysis and annual forecasts, again by the World Bank, of the 18 major economies with GDP greater than US$1 trillion, China was the only one to achieve positive economic growth in 2020.

Deep Sea No. 1, a deep-water semi-submersible oil production and storage platform, independently developed and built in China and the world's first with a 100,000-ton capacity, is delivered, January 14, 2021, Yantai, Shandong Province. China's economy grew in 2020, bucking the prevailing international trend. The structure of the economy continued to improve and quality gradually rose, bringing China's economic might, scientific and technological capabilities, and overall national strength to new heights. PEOPLE'S DAILY / PHOTO BY TANG KE 

China's GDP exceeded RMB100 trillion yuan for the first time. According to preliminary figures, China's GDP in 2020 was about RMB101.6 trillion yuan (US$14.7 trillion, at an average annual exchange rate). This means China maintains its position as the second largest economy in the world and is expected to make up roughly 17% of the world economy. China bucked the prevailing economic trend by optimizing its economic structure to gradually improve the quality of its development. This resulted in leaps to new heights for China's economic might, scientific and technological capabilities, and comprehensive national strength. 

II. A decisive victory in the fight against poverty 

All local authorities and central departments have provided targeted poverty relief, focused on implementing policies that address prominent issues and weak links, and launched a dedicated assault on the last bastions of poverty, yielding major results in poverty alleviation. 

The goal of eradicating absolute poverty in the new era was realized. China targeted the most deeply impoverished areas, including the "three regions" (the Tibet Autonomous Region, Tibetan ethnic areas in the four provinces of Qinghai, Sichuan, Gansu and Yunnan, and the four prefectures of Hotan, Aksu, Kashgar, and Kizilsu in southern Xinjiang) and the "three prefectures" (Liang-shan Yi Autonomous Prefecture in Sichuan, Nujiang Lisu Autonomous Prefecture in Yunnan, and Linxia Hui Autonomous Prefecture in Gansu), synonymous with poverty, along with other places that had not yet eliminated poverty. By current standards, all of China's rural poor and all 832 poor counties have been lifted out of poverty. This means that extreme poverty has been eliminated for the first time in China's history, creating a miracle in humanity's fight against poverty.

Tourists visit the "Tunnel Through Time" in Leisure Town, Urumqi County, Xinjiang Uygur Autonomous Region, January 10, 2021. China has continued to promote the expansion of domestic demand as a key strategic goal, put focus on integrating every link in the chain from production, distribution, circulation to consumption, and accelerated the development of a dynamic in which demand drives supply and supply creates demand. PEOPLE'S DAILY / PHOTO BY CAI ZENGLE 

Fruitful progress has been made in key initiatives, such as the relocation of residents from impoverished areas. China overcame the adverse impact of Covid-19 and floods on poverty alleviation efforts by supporting poor laborers to find employment, developing local industries, boosting consumption of products from poor areas, and consolidating and expanding achievements in relocating people from poverty-stricken areas. During the 13th Five-Year Plan period, a total of 35,000 resettlement zones were developed and more than 9.6 million poor people were relocated and assisted in moving toward prosperity. 

The income of rural residents in poor areas increased rapidly. The appearance of poverty-stricken areas has changed significantly as people's production and living conditions have continuously improved and the income of farmers has continuously increased. In 2020, per capita disposable income of rural residents in poverty-stricken areas increased 5.6% in real terms over the year before, which was 1.8 percentage points higher than for rural residents in other parts of the country. 

III. Remarkable achievements in macro control 

The state stepped up macro-policy mitigation efforts by adopting a more proactive fiscal policy, a sound and flexible monetary policy, and a large-scale relief program to help businesses through difficulties. It introduced a package of measures to maintain employment and protect livelihoods, encouraged consumption and investment, stabilized foreign trade and investment, and stimulated market entities. Precise implementation of policies and direct mechanisms led to the stable and continuous recovery of our economic operations and fulfillment of the main targets for full-year development set out in the 2020 Government Work Report. 

Economic growth exceeded expectations. Following substantial declines in major economic indicators in Q1, China returned to growth in Q2 and continued to recover steadily in Q3 and Q4. For the year as a whole, most indicators registered increases, and by the fourth quarter, major indicators had returned to normal levels. For example, in Q4, GDP increased 6.5%, up 0.7 percentage points over the same period the year before, and value-added of large-scale industrial enterprises increased 7.1%, 1.1 percentage points higher. 

The objective of stabilizing employment and prices was achieved. In 2020, 11.86 million new jobs were created in urban areas across the country, exceeding the annual target; the surveyed national urban unemployment rate averaged 5.6%, lower than the forecast of 6%; and consumer prices rose by 2.5% year-on-year, below the expected figure of 3.5%. 

Personal income and the economy grew almost in step. In 2020, national per capita disposable income was RMB32,189 yuan, an actual increase of 2.1% over the previous year, and the income of rural residents grew faster than that of urban residents. 

China's balance of international payments improved. In 2020, the surplus in imports and exports of goods increased, and the deficit in imports and exports of services decreased. China had foreign exchange reserves of US$3.2 trillion at the end of the year, an increase of US$108.6 billion over the end of the previous year, the highest in the world. 

Energy consumption per unit of GDP fell. China continued its structural reform of the energy supply side, optimized its energy consumption structure, and improved energy efficiency. As a result, in 2020, energy consumption per unit of GDP fell by 0.1% compared to the previous year. 

IV. Stabilizing the "six fronts" and guaranteeing the "six priorities"* 

The highlights of China's economic development in 2020 were its mindfulness of worst-case scenarios and ability to deliver an effective combination of policies to ensure stability, seek progress amid stability, stabilize economic fundamentals, and maintain overall social stability. 

Employment was guaranteed. Employment pressure for college students gradually eased. In December 2020, the surveyed urban unemployment rate of people aged 20-24 with a college degree or higher qualification (mainly new college graduates) fell by 7.2 percentage points from the figure of July. The employment situation of migrant workers also improved significantly, and the proportion of migrant workers in 2020 was 98.2% of the previous year's total. 

Basic living needs were effectively guaranteed. The policy of ensuring supply and stabilizing prices was firmly and effectively implemented, and the prices of basic foods gradually fell. In October, November, and December 2020, pork prices fell by 2.8%, 12.5%, and 1.3%, respectively. Social security increased, and national per capita net transfer income increased by 8.7% in nominal terms in 2020 over the previous year, which played an important role in stabilizing residents' income. 

The vitality of market entities increased. Policies to help enterprises through difficulties were fully implemented, tax cuts and cost reductions were continued, and financial support for the real economy was strengthened, which gradually improved corporate efficiency. In 2020, total profits of large-scale industrial enterprises across China increased year-on-year by 4.1%, including a 20.1% increase in December, the seventh consecutive month of double-digit growth. The outlook for businesses is generally positive, with both the manufacturing purchasing managers' index and non-manufacturing business activity index in positive territory for 10 consecutive months between March and December. 

Food and energy supplies increased. Last year was another good year for grain production. Total grain output in 2020 hit a record high, and exceeded 650 billion kilograms for the sixth year running. Energy production increased steadily, with total primary energy production up by 2.8% over the previous year. 

Industrial and supply chains remained stable. Industrial growth continued, with upstream and downstream industry chains as well as large and small enterprises recovering together. By the end of 2020, 25 of 41 large-scale industrial sectors achieved growth in added value, five more than in Q3. 

Functions of primary-level governments were maintained. China has increased its fiscal deficit ratio within an appropriate range and accelerated direct access to funds for grass-roots government, strengthening the fiscal resources of counties and townships. In 2020, local general public budgets increased 3.3% over the previous year, with expenditure guarantees in the key areas of epidemic prevention and control, poverty alleviation, and grass-roots government. National health expenditure increased by 15.2% over the previous year, including an increase of 74.9% in health expenditure directly related to epidemic prevention and control measures; spending on housing increased by 10.5%; and social security and employment expenditure increased by 10.9%. 

V. Implementation of the high-quality development philosophy 

All local authorities and central departments conscientiously implemented China's new development philosophy, which focuses on promoting high-quality development. This effectively transformed China's economic development model, cultivated new drivers of growth, and steadily improved the quality and efficiency of economic development. 

Innovation increasingly became the prime driver of development. China continued to make major scientific and technological achievements, with notable attainments in the fields of lunar and Mars exploration, satellite navigation, deep ocean exploration, and quantum computing. Due to Covid-19, integration of online and offline elements accelerated, as new technologies such as 5G and AI were widely utilized and new industries, formats, and products appeared. In 2020, the added value of large-scale high-tech manufacturing enterprises increased by 7.1% over the previous year, 4.3 percentage points higher than for large-scale industrial enterprises in all fields, and online retail sales of physical goods grew by 14.8%. 

Internal coordination played an increasingly prominent role. New steps were taken to transform the industrial structure. The added value of China's tertiary industry accounted for 54.5% of GDP in 2020, an increase of 0.2 percentage points over the previous year. New progress was also made in adjusting the demand structure, and there was double-digit growth in both high-tech industry investment and social investment in 2020. The development gap between urban and rural areas narrowed further, and the ratio of per capita disposable income of urban and rural residents fell from 2.64 in 2019 to 2.56. 

China's environmental credentials improved. The energy consumption structure was optimized, as the consumption of clean energy, such as natural gas, hydropower, nuclear power, and wind power as a proportion of total energy consumption increased by 1.1 percentage points over the previous year. Notable results were achieved in environmental governance. In 2020, the proportion of days with good air quality in 337 cities at and above the prefecture level across China increased by 5 percentage points over the year before, while average PM2.5 concentration in these cities fell 8.3%. 

The scope of China's opening up was expanded. In 2020, China celebrated the 40th anniversary of the establishment of special economic zones in Shenzhen and other locations as well as the 30th anniversary of the development and opening of Shanghai's Pudong New Area. There were also positive results in developing the Belt and Road Initiative; the Regional Comprehensive Economic Partnership agreement was signed; negotiations on the China-EU Comprehensive Agreement on Investment were completed; and the safe and steady operation of freight trains between China and Europe drove open development in China. 

The fundamental importance of sharing was highlighted. The quality of life of our people has continuously improved, and their ownership of durable goods has increased rapidly. In 2020, the number of cars per 100 households nationwide was 37.1, an increase of 5.2% over the previous year. The development of a multi-level social security system accelerated, enhancing our ability to guarantee basic public services, and social undertakings prospered in such areas as education, culture, health, and sports. 

VI. Miraculous developments in reform and opening up 

China is sticking firmly to its path of reform and opening up to become a strong nation, and it is paying more attention to systematic, integrated, and coordinated reforms. It is not letting up in either its reform or opening up; rather, it is reinforcing them in response to challenges and enriching its development based on practical experience, thereby expanding its economic and social development potential. 

The benefits of having enterprises under multiple forms of ownership increased. China has continued to resolutely consolidate and develop the state sector and encourage and support the development of the private sector. A three-year action plan to reform SOEs is being implemented, and improvements to the operating conditions of various market entities are being encouraged. In December 2020, the profits of large-scale state-holding industrial enterprises increased for the seventh consecutive month. Last year, the profits of foreign-invested industrial enterprises and those invested in by Hong Kong, Macao and Taiwan businesses increased by 7%, while profits of large-scale private industrial enterprises increased by 3.1%.

Hongqi brand cars are loaded onto a ship at the Port of Tianjin, December 30, 2020. A total of 400 cars were shipped that day for Saudi Arabia, Hongqi's largest single export order to date. Against the backdrop of significantly reduced global trade and transnational investment in 2020, China achieved growth in both total trade in goods and actual foreign capital utilization, further consolidating its position as the world's largest trader of goods. XINHUA 

Remarkable achievements were made in supply-side structural reforms. Market entities continued to increase thanks to China's efforts to accelerate reforms aimed at streamlining administration, delegating power, improving regulation, and optimizing the business environment. In the first three quarters of 2020, an average of 22,000 new enterprises were established every day, resulting in an average daily net increase of 12,000. In the fourth quarter, the national industrial capacity utilization rate was 78%, an increase of 0.5 percentage points from the same period the previous year. At the end of 2020, the asset-liability ratio of large-scale industrial enterprises was 56.1%, a decrease of 0.3 percentage points from the end of 2019. 

New breakthroughs were made in opening up. Despite a backdrop of sharp declines in global trade and transnational direct investment, China's total imports and exports of goods and actually utilized foreign capital both registered increases. In 2020, total trade in goods reached a record high of RMB32.2 trillion, an increase of 1.9% over the previous year, consolidating China's status as the largest trader of goods. Actually utilized foreign capital amounted to nearly RMB1 trillion, an increase of 6.2%, as the openness of China's economy increased. 

VII. Historic results in building a moderately prosperous society in all respects 

Since the 18th CPC National Congress, the CPC Central Committee has led the people of all China's ethnic groups in forging ahead, innovating, and eradicating the extreme poverty that has plagued the Chinese people for thousands of years. The dream of building a moderately prosperous society in all respects is on the verge of being realized, which represents a substantial step forward in achieving rejuvenation of the Chinese nation. 

The main objectives and tasks of the 13th Five-Year Plan are complete. China has implemented its new development philosophy, boosted supply-side structural reform, and carried out the main strategic tasks and major engineering projects set out in the plan, with all major targets met ahead of schedule, on schedule, or basically completed. During the 13th Five-Year Plan period (2016-2020), the average annual nominal increase in GDP was RMB6.5 trillion yuan, RMB1 trillion yuan more annually than during the 12th Five-Year Plan period. Per capita GDP in 2019 and 2020 exceeded US$10,000. China's high-speed railway mileage, highway mileage, and the number of 10,000-ton berths rank first in the world. During the 13th Five-Year Plan period, more than 60 million new jobs were created in urban areas, and basic medical insurance was extended to cover more than 1.3 billion people and basic old-age insurance was extended to nearly 1 billion people. By 2020, national per capita disposable income was 100.8% higher in real terms than in 2010. 

Major breakthroughs were made in the three critical battles. There were notable results in the fight against pollution, with significant improvements in air, water, and soil. Progress was made in poverty alleviation, with 55.75 million rural poor people lifted above the current poverty line during the 13th Five-Year Plan period, and initial poverty alleviation investigation results show that all 13.85 million registered poor households have achieved the "two assurances and three guarantees" (assuring the rural poor population that their food and clothing needs will be met and guaranteeing that they have access to compulsory education, basic medical services, and safe housing). There have been positive results in preventing and resolving major risks, including bringing financial risk under control by containing local government debt across the country within the limit approved by the National People's Congress. 

There was progress in the five-pronged strategy to develop socialism with Chinese characteristics. In close step with the goal and work of building a moderately prosperous society in all respects, we coordinated economic, political, cultural, social, and environmental development. As a result, China's economy developed further, its democracy is sounder, its science and education are more advanced, its culture is more prosperous, its society is more harmonious, and its people are more affluent. The self-confidence, pride, and unity of the entire Party and people have also significantly increased. 

VIII. Achieving a positive start to the 14th Five-Year Plan 

2021 is the first year of the 14th Five-Year Plan period as well as of the journey to achieve the Second Centenary Goal, and it is a particularly important year in the process of building a modern socialist China, so there is great significance to, and much work involved in, maintaining sustainable and healthy economic development. There are many uncertainties surrounding Covid-19 and the external environment, and the foundations for an economic recovery are not yet solid enough. To be successful in our economic work in 2021, we must seek progress while maintaining stability, further reform and opening up, implement rigorous and targeted macro-policies, and strive to keep economic operations within rational parameters. 

We must continue to coordinate Covid-19 control and economic and social development. We cannot let up in our on-going fight against Covid-19, and we must maintain continuity, stability, and sustainability in our macro-policies. We need to continue to implement a proactive fiscal policy and a prudent monetary policy, ensuring they are timely and effective, and consolidate and expand upon achievements in virus containment and economic and social development. 

We must continue to promote technological self-sufficiency. We will work hard to master key core technologies, strengthen our control over industrial and supply chains, make enterprises the primary technological innovators, and raise the international level of our technological innovations. 

We must prioritize supply-side structural reforms. China needs to expand its effective supply and improve the ability of the supply structure to adapt to changes in demand. We should also focus on developing the real economy to better stimulate the growth vitality of our hundreds of millions of market entities. 

We must persist with the strategy of expanding domestic demand. Efforts should be made to open all aspects of production, distribution, circulation, and consumption, as well as to quickly create a dynamic in which demand drives supply and supply creates demand. We should focus on the fundamental role of consumption and the key role of investment in swiftly forming a strong domestic market. 

We must bolster reform and opening up. This means promoting in-depth reforms in key areas and key links, combining effective markets with effective government, adhering to all-round opening up, and continuously increasing the appeal of our "bringing in" strategy and the competitiveness of our "going out" strategy. 

We must enhance and improve people's living standards and wellbeing. We should continue to prioritize employment, striving to stabilize the employment of key groups, such as college graduates, migrant workers, and veterans. We need to establish sound long-term mechanisms to consolidate and expand upon the results of poverty alleviation, consolidate the food security responsibility system, and promote rural revitalization in all respects. 

*Stabilizing the "six fronts" refers to employment, finance, foreign trade, foreign investment, domestic investment, and market expectations; guaranteeing the "six priorities" refers to jobs, basic living needs, food and energy security, industrial and supply chains, the interests of market players, and the smooth functioning of grass-roots government. 

Ning Jizhe is Commissioner of the National Bureau of Statistics and Vice Minister of the National Development and Reform Commission. 

(Originally appeared in Qiushi Journal, Chinese edition, No. 3, 2021)