China's Economy: From High-Speed Growth to High-Quality Development

China's Economy: From High-Speed Growth to High-Quality Development* 

December 18, 2017 

As socialism with Chinese characteristics has entered a new era, China's economic development has also embarked on a new phase, the basic feature of which is that our economy is now transitioning from rapid growth to high-quality development. I emphasized this in the report to the 19th CPC National Congress in 2017. It is a weighty conclusion, and its historical and current significance must be fully understood.

First, it is an essential requirement for our country to maintain sustained and sound economic development. China has reached a critical stage in transforming the growth model, and is faced with prominent problems such as rising labor costs, increased constraints imposed by resources and the environment, unsustainable models of extensive development, and impediments in the flows of the economy. At the same time, a new round of scientific and technological revolution and industrial transformation is gaining momentum, and multiple breakthroughs are being made all around the world. We must promote high-quality development if we are to adapt to new technological changes and new needs of the people, and we must form a high-quality, efficient and diversified supply system to provide more quality products and services. Only in this way can supply and demand achieve proper balance at a new level, and can our economy maintain sustained and sound development.

Second, it is an essential requirement for China to adapt to the evolution of the principal challenge facing Chinese society, and achieve moderate prosperity and socialist modernization in all respects. This challenge involves low-quality development as represented by unbalanced and inadequate development. As it evolves, our economy is also entering a new historic stage. To address this challenge, we must promote high-quality development. We must not neglect quantitative development, but we must pay more attention to quality, so as to achieve effective growth in quantity through a substantial improvement in quality.

Third, it is an essential requirement for China to follow the well-established rules of economic development. The world hosts more than 100 middle-income economies. Since the 1960s, only a dozen of these have graduated to high-income economies. Following a phase of rapid economic growth, these successful countries all transformed from quantitative expansion to qualitative improvement. In contrast, those countries that have stagnated or even retrogressed are failing to grow because they have not achieved this fundamental transformation. Economic development is a process of spiral escalation, rather than linear. Once quantitative growth has accumulated to a certain degree, we must turn to qualitative improvement. China must follow this law in its economic development.

High-quality development can meet the people's ever-growing desire for a better life. It reflects the new development philosophy: In high-quality development innovation is the primary driving force; coordination is an endogenous feature; go-green is a prevailing mode; openness is the only path; and sharing is the fundamental goal.

In terms of supply, high-quality development requires a relatively complete industrial system, network-based and intelligent organization of production, and strength in innovation. It means understanding demand, exerting high brand influence, building strong core competitiveness, and delivering high-quality products and services.

In terms of demand, high-quality development should continuously meet the people's individual, diverse, and ever-growing expectations. These needs lead to changes in the supply system and structure, which in return generate new needs.

In terms of input and output, high-quality development should entail improving the efficiency of labor, capital, land, resources and the environment, raising the contribution level of scientific and technological progress to economic growth, and increasing total factor productivity.

In terms of distribution of the proceeds, high-quality development should ensure that investors obtain returns, enterprises make profits, employees earn incomes, and the government receives taxes, and that all such gains correspond to their respective contribution as evaluated by the market.

In terms of the macroeconomic cycle, high-quality development should ensure a smooth cycle of production, circulation, distribution and consumption, rational proportional relationships and configuration of major economic sectors, and stable economic development without excessive rises and falls. To be very specific, high-quality development means a change from seeking growth to seeking better growth.

To promote high-quality development, we need to develop a modern economic system, which is a strategic goal for China. To achieve this goal, we must take firm steps in the following areas:

• put quality first and give priority to efficiency in accordance with the requirements of high-quality development;
• advance supply-side structural reform;
• work hard for high quality, high efficiency and more robust drivers of economic growth through reform;
• build an industrial system that promotes coordinated development of the real economy, technological innovation, modern finance, and human resources; and
• develop an economic system with more effective market mechanisms, dynamic micro-entities, and sound macro-regulation.

Promoting high-quality development is the fundamental requirement behind our goals, our economic policies, and our macroeconomic regulation at present and in the period to come. We must put in place a framework for high-quality development that covers indicators, policies, standards, statistics, performance evaluation, and government appraisal of achievements. With this improved institutional environment, we will work to make constant new progress in high-quality economic development.

* Part of the speech at the Central Conference on Economic Work.

(Not to be republished for any commercial or other purposes.)