Three factors that will not change the long-term positive trend of the Chinese economy
2019年，在以习近平同志为核心的党中央坚强领导下，全国上下坚持稳中求进工作总基调，坚持以供给侧结构性改革为主线，加强宏观政策逆周期调节，全力做好“六稳”工作，经济运行总体平稳，发展质量稳步提升，主要预期目标任务较好完成。2020年，新冠肺炎疫情的暴发使大家担心这次疫情会对中国经济带来负面影响，笔者认为，这次疫情短期内会对消费、投资等带来较大负面影响，但从长期来看，中国经济长期向好的趋势不会改变。
Summary of Four Characteristics of China's Economic Development Trends in 2019
Firstly, the Chinese economy continues to maintain a medium to high growth rate. Data shows that the gross domestic product in 2019 was close to 100 trillion yuan, an increase of 6.1% over the previous year, which is in line with the expected target of 6% -6.5% set at the beginning of the year and significantly higher than the global economic growth rate. Being ranked first in an economy with over 1 trillion US dollars can be said to be hard-earned. It is undoubtedly the "ballast stone" of the global economy, achieving a new leap forward.
Secondly, China's economic structure continues to optimize and upgrade. According to statistical data, in 2019, the added value of the three industries accounted for 7.1%, 39.0%, and 53.9% of GDP respectively, indicating a continuous optimization of the economic structure. From the perspective of industry composition, new driving forces and industries are thriving, driving the sustained development of related industries and becoming a strong driving force for economic growth. Among them, the value-added of information transmission, software and information technology services, leasing and business services, and finance industries are leading the growth of other industries, and the trend of the economy moving towards the mid to high end is very obvious.
Thirdly, employment continues to expand and prices remain generally stable. In 2019, the monthly national urban survey unemployment rate was between 5.0% and 5.3%, lower than the expected target of around 5.5% set at the beginning of the year. In 2019, the consumer price index for residents increased by 2.9% compared to the previous year, which is in line with the expected target of around 3% set at the beginning of the year. This also indicates that the Chinese economy is running steadily.
Fourthly, the import and export of foreign trade and foreign investment have grown against the trend. Statistical data shows that in 2019, the total import and export volume of goods increased by 3.4% compared to the previous year, with exports growing by 5% and imports growing by 1.6%, achieving stable and high-quality foreign trade. According to customs statistics, China's goods trade surplus in 2019 was 2.9 trillion yuan, an increase of 25.4% compared to the previous year, while the service trade deficit narrowed compared to the previous year. This also indicates that the resilience of the Chinese economy is strengthening.
Analysis of Three Factors: Why the Long term Positive Trend of China's Economy Will Not Change
From the general theory and historical experience of economics, any economic shock caused by an epidemic is essentially exogenous, short-term, and localized, and will not cause large economies to deviate from their economic development trends. The actual growth rate of an economy is determined by its potential growth rate, and this epidemic "exogenous variable" will not fundamentally change the potential growth rate of an economy. Specifically, during major epidemics, social life and market order are often affected by "restrictions on personnel mobility," "difficulties in the combination of production factors," "chaos in social public opinion," "rising pessimistic expectations," and "intensified distortions in resource allocation." This also puts significant pressure on service industries such as catering, entertainment, transportation, and tourism, including the secondary industry such as manufacturing, which in turn affects economic operations. Especially with this epidemic, it has a strong contagiousness, which further restricts the movement and contact of people.
However, these are difficult to fundamentally change the various factors and production capacity of a region or country, as well as the economic development fundamentals and trends determined by them. Economic theory suggests that the long-term development trend and production capacity of a country mainly depend on factors such as material capital, human capital, technology, and institutions. Specifically, there are several factors: first, capital stock and its growth rate. Our capital will not disappear due to the epidemic, and the way it accumulates and updates will not undergo fundamental changes due to short-term epidemics. The second is the status of labor force and its human capital accumulation. The third is technological progress and improvement in resource allocation efficiency. From a historical perspective, human technological progress has never been interrupted or weakened by epidemics. Instead, it has stimulated people to pay more attention to technological innovation, new technological means, and invest more in public health and urban infrastructure.
In fact, the current Chinese economy has tremendous resilience and strong defense and self-healing capabilities against the impact of the current epidemic, and can quickly return to the track of positive and high-quality development. The resilience of China's economy stems from the leadership of the CPC and the institutional advantage of socialism in concentrating its efforts on major issues. This advantage not only enables us to uphold integrity, innovate, carry on the past, and create the Chinese miracle in normal times, but also enables us to quickly win the battle against the epidemic prevention and control with the strength of the whole country, and restore normal economic and social order in China as soon as possible. With the timely introduction of control and prevention measures by the Party Central Committee and the State Council, as well as the concerted efforts of the whole nation to fight against the epidemic, the epidemic will definitely be completely controlled. The author believes that there are three reasons why the long-term positive trend of the Chinese economy will not change.
One is the institutional advantage of socialism with Chinese characteristics. The leadership of the Party is the most essential feature of socialism with Chinese characteristics and the greatest advantage of the socialist system with Chinese characteristics. To do a good job in economic work, it is necessary to strengthen the centralized and unified leadership of the Party Central Committee, and improve the Party's ability and level of leading economic work. Since the founding of the People's Republic of China, especially since the reform and opening up, it is under the leadership of the Party that we have adhered to economic construction as the center, continuously improved our ability to control the economy, and enhanced the efficiency of economic decision-making and work execution, which has enabled our country's economy to have a very strong ability to cope with various risks and challenges.
Secondly, there is a vast market resource space. After more than 70 years of construction in the People's Republic of China, China has formed an unparalleled market space compared to other countries: a population of 1.4 billion, nearly 900 million labor force, over 800 million netizens, and over 100 million market entities... These market resources and spaces, which can easily reach billions, are important competitive advantages for participating in global economic competition. According to the requirement of "market determines, government takes action", we can ultimately unleash the power of moving mountains and filling land to maintain stable economic growth.
The third is a complete industrial system. After more than 40 years of reform and opening up, China has become a major industrial and manufacturing country in the world, and the only country in the world with all industrial categories in the United Nations Industrial Classification. Industrialization has also accumulated a strong material foundation for the country, giving it unparalleled industrial supporting capabilities, technological achievement transformation capabilities, and risk resistance capabilities compared to other countries. Even if some industries are affected by external factors, the accelerated development of other industries can not only supplement, promote, and support these industries to overcome difficulties, but also effectively hedge their impact on the overall economy.
Based on the above analysis, under complex and severe environmental conditions, the Chinese economy indeed has strong resilience, potential, and room for maneuver, which also indicates that the basic trend of stable and long-term improvement in the Chinese economy has not changed. Of course, it should also be noted that the overall global economic growth is slowing down, and there are still many unstable and uncertain factors contributing to the increasing economic and trade pressure. How to promote the orderly resumption of work of various enterprises while ensuring the prevention of the spread of the epidemic is a key task at present. We believe that as long as the whole party and the whole country have firm confidence and work together, they will surely overcome various risks and challenges. In the next stage, we still need to further do a good job in the "six stabilizations" work according to the decisions and deployments of the Party Central Committee and the State Council, fight the battle against poverty, promote sustained and healthy economic development, and ensure the smooth realization of the great goal of building a moderately prosperous society in all respects this year. (Zhou Yuehui)
Information source: People's Daily Online
Editor He Yang of this website/Organizing
