Full text & analysis: Central Economic Work Conference 2022
"Starting with improving psychological expectations in society and boosting confidence in development”: private economy, tech companies, real estate, CPTPP, foreign investment, etc.
Every mid-December, China holds the Central Economic Work Conference that offers the fullest clue to its “economic work” for next year. For two years, Pekingnology has offered near-full translations of the readouts faster than anybody else in the world.
This year is no exception. And my special thanks for the significant technical help generously extended by China Neican, a paid newsletter led by Adam Ni, which makes the translation much easier.
2021
2020
Since this is the world’s second-largest economy’s economic blueprint for 2023, you can expect it to be very, very long: many takeaways before the full translation of the readout (CN) published by Xinhua.
China obviously will miss this year’s economic growth target. Numbers from the last few months are particularly frustrating. Covid-19 is spreading fastly in Beijing and other cities after an abrupt and dramatic relaxation of restrictions in place for almost three years. So the confidence is low.
That’s why the readout emphasizes “starting with improving psychological expectations in society and boosting confidence in development.” And “boost market confidence.”
Amid the wide perception that China has been favoring the state sector at the cost of the private sector in recent years, the readout dedicates one entire paragraph to saying China stands firm behind the development of the private economy. (There are five comparable paragraphs, each emphasizing one particular point.)
Effective implementation of "the "Two Unswervings" [of consolidating and developing the public sector and encouraging, supporting and guiding development of the non-public sector].” In response to the incorrect comments on whether we adhere to "the "Two Unswervings" in society, we must make our attitude clear and unambiguous. We must deepen the reform of state-owned enterprises and improve their core competitiveness. Adhere to the direction of classification-based reform and deal with the relationship between the economic and social responsibilities of SOEs. We should improve the modern corporate governance of SOEs with Chinese characteristics and truly operate them according to market-oriented mechanisms. The requirement for equal treatment of state-owned and private enterprises should be put into practice in terms of systems and laws, and the development and growth of the private economy and private enterprises should be encouraged and supported in terms of policies and public opinion. Protect the property rights of private enterprises and the rights and interests of entrepreneurs in accordance with the law. Leading officials at all levels must solve problems and do practical things for private enterprises and build a close but uncorrupted government-business relationship.
Somewhere later in the readout, it is emphasized that “make sure all types of enterprises are treated equally (irrespective of their ownership types).”
And there is no reference to oversight of the “capital,” whether “capital” is disorderly expansion, and whatnot.
“Expanding domestic demand” actually tops five paragraphs.
The first, focus on expanding domestic demand. We must give priority to restoring and expanding consumption. Enhance consumption capacity, improve consumption conditions and innovate consumption scenarios. We will increase the income of urban and rural residents through multiple channels, and support the consumption of housing improvement, new energy vehicles and services for elderly people. Government investment and policy incentives should be used to effectively drive investment across society, accelerate the implementation of major projects under the 14th Five Year Plan [2021-2025], and strengthen inter-regional infrastructure links. Policy financing should increase its support for financing major projects in line with national development plans. Encourage and attract more private capital to participate in the construction of major national projects and projects that make up for shortcomings. We should continue to enable exports to play a supportive role to the economy and actively expand imports of advanced technology, important equipment, energy resources and other products.
As I have explained in a thread, the Party itself officially says it has elevated “expanding domestic demand” in its own system
b. Professor Michael Pettis has a thoughtful response
China’s real estate industry has apparently been in big trouble for some time. Financing has been significantly eased in recent months. The readout still touts the well-known “ housing is for living in, not for speculation,” but offers much more accommodating language.
We must ensure the stable development of the real estate market, do a solid job of ensuring the delivery of buildings, people's livelihood, and stability, meet the reasonable financing needs of the industry, promote restructuring and mergers and acquisitions in the industry, effectively prevent and resolve the risks of high-quality, leading housing enterprises and improve their asset and liability positions, while resolutely combating illegal and criminal acts in accordance with the law. We should adopt city-specific policies, support rigid and improved housing needs, solve the housing problems of new citizens and young people, and explore the construction of a long-term rental housing market. We should adhere to the positioning of “housing is for living in, not for speculation,” and promote a smooth transition to a new development model for the real estate industry. We must prevent and resolve financial risks, and ensure all parties do fulfill their responsibilities to prevent the formation of regional and systemic financial risks.
But then certainly there are some “illegal and criminal acts” in the real estate industry that the authorities believe need to be “resolutely combated?” Curious if there will be some examples to be made.
Compare with the last two years, big Internet companies - “platform companies” in Chinese official language - have a less volatile regulatory environment in 2022. The readout adds to the optimism by not mentioning anti-trust and whatnot and specifying their potential contribution to the big picture:
We should vigorously develop the digital economy, improve regular oversight, and support platform enterprises in leading development, job creation and international competition.
Multinational corporations have complained about Covid-19 restrictions’ challenges to their operations. The deteriorating relations between China and the U.S. certainly didn’t help either. Beijing, on the other hand, has always been steadfast in repeating that it’s committed to opening-up. The readout promises that China will mount efforts to join CPTPP and, in a further step, review its domestic policies to bring them in line with CPTPP even before joining it.
And there are promises of equal treatment for foreign companies, including in government procurement, and “maxium convenience” for foreign investors to come to China, perhaps in view of the fact that very few foreigners have visited China since early 2020.
greater efforts should be made to attract and utilize foreign investment. We must promote a high level of openness to the outside world and improve the quality and level of trade and investment cooperation. We must expand market access and increase the opening up of the modern service sector. We must implement national treatment for foreign-funded enterprises, guarantee equal participation of foreign-funded enterprises in government procurement, bidding, and standard setting in accordance with the law, and increase the protection of intellectual property rights and the legitimate rights and interests of foreign investors. We should actively promote accession to high-standard economic and trade agreements such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA), and take the initiative to deepen reforms in relevant domestic areas in reference with the relevant rules, regulations, management, and standards. We should provide maximum convenience for foreign investors to engage in trade and investment negotiations in China, and promote the landing and construction of landmark projects for foreign investment.
On Covid-19, the readout, unsurprisingly, shows the goalpost has been moved. It
sort of recognizes there will be a 流行期 period where Covid-19 spreads.
We will better coordinate the Covid-19 response with economic and social development, optimize the Covid-19 response measures according to the time and situation, conscientiously implement the Covid-19 response initiatives adapted to our new phase [of prevention and control], protect the public access to health care and medication, focus on the prevention and control of Covid-19 among the elderly and groups suffering from underlying diseases, and make efforts to protect health and prevent serious illnesses.
Follow the Party Central Committee’s deployment, optimize the adjustment of the Covid-19 response policy, strengthen the coordination, organize and implement the adjustment in an orderly fashion to get smoothly through the period in which Covid-19 spreads, to ensure a smooth transition and stability in social order.
To avoid non-economic policies sabotaging the economy
We should better integrate economic policies with other policies, enhance the overall perspective, and strengthen the assessment of [other policies’] consistency with the macro policy orientation.
And also
strengthening coordination and cooperation among various policies, and forming a synergy to promote high-quality development next year.
The readout includes very few words on agriculture. Didn’t mention the term “common prosperity.”
Some of the specific, eye-catching industrial priorities that get mentioned publicly include “new energy, artificial intelligence, bio-manufacturing, green low-carbon, and quantum computing.”
Photo by Pat Whelen on Unsplash
Full translation of the readout (CN)
The Central Economic Work Conference was held in Beijing from December 15 to 16. General Secretary of the Communist Party of China (CPC) Central Committee Xi Jinping, also President and the chairman of the Central Military Commission, attended and delivered an important speech. Li Keqiang, Li Qiang, Zhao Leji, Wang Huning, Han Zheng, Cai Qi, Ding Xuexiang, and Li Xi attended the conference.
In an important speech(es), Xi Jinping summarized the economic work in 2022, analyzed the current economic situation, and planned the economic work in 2023, while Li Keqiang made plans for the economic work next year. Li Qiang made a concluding speech.
[Review of 2022]
The Conference believes this is an extremely important year in the history of the Party and the country. The 20th National Congress [of the Communist Party of China], which we held in triumph, has drawn up a grand blueprint for building a modern socialist country in all respects. In the face of a stormy international environment and the daunting task of domestic reform, development, and stability, under the strong leadership of the Party Central Committee with Comrade Xi Jinping at its core, the entire Party, and the Chinese people of all ethnic groups, rose to the challenge and forged ahead, co-ordinated the Covid-19 response with economic and social development, ensured both development and security, stepped up macroeconomic regulation and control, responded to the impact of factors beyond expectations. The quality of development has been steadily improved, scientific and technological innovation has been fruitful, reform and opening up have been comprehensively deepened, employment and prices have been basically stable, food security, energy security, and people's livelihood have been effectively guaranteed, and the general economic and social stability has been maintained. The Beijing Winter Olympic Games and the Winter Paralympic Games were successfully held. These achievements are not easy to achieve and should be cherished.
The meeting pointed out that the foundation of China's economic recovery is not yet solid, pressure on three fronts - shrinking demand, supply shocks, and weakening expectations - is still large, the external environment is turbulent and unstable, with a deepening impact on our economy. However, we should see that our economy is resilient, with potential, and dynamic, and the effects of various policies continue to emerge. The economy is expected to generally rebound next year. We must be confident that we can do a good job in economic work.
The meeting concluded that the past five years have been extremely unusual and extraordinary. We have withstood the accelerated evolution of changes unseen in a century, the impact of COVID-19, the domestic economic downturn, and other multiple tests, effectively guarding the safety of people's lives and health, and our economic ship has ridden the waves. The decade of the new era in which China's economic and social development has made historic achievements, undergone historic changes, and shifted to high-quality development. We have historically solved the problem of absolute poverty and built a moderately prosperous society on schedule, and our country's development stands at a new and higher historical starting point.
The meeting pointed out that to do a good job in economic work, one must uphold overall leadership of the Party, especially the centralized, unified leadership of the Central Committee; adhere to development as the Party's first priority in governing and making the country prosper, development must be high-quality development, fully, accurately, and comprehensively apply the New Development Philosophy on all fronts; adhere to the general principle of pursuing progress while ensuring stability, adhere to seeking truth from facts, respect laws, systemic concepts, bottom-line thinking, take practice as the test of persist and improve] the basic economic system of socialism, adhere to the direction of socialism market economy reform, adhere to the "Two Unswervings" [of consolidating and developing the public sector and encouraging, supporting and guiding the development of the non-public sector]"; adhere to promoting a high level of openness to the outside world, and steadily expand institutional openness in terms of rules, regulations, management, standards, etc. It also insists on promoting economic development on the track of the rule of law, protecting property rights and intellectual property rights in accordance with the law, abiding by the spirit of contract, and creating a market-oriented, rule-of-law, and internationalized first-class business environment.
[2023 starts here]
The conference emphasized that to do a good job in economic work next year,it’s necessary to take the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as the guideline, fully implement the guiding principles of the Party's 20th National Congress, push forward Chinese path to modernization,uphold the general principle of pursuing progress while ensuring stability, fully and faithfully apply the New Development Philosophy on all fronts, accelerate the creation of a new development pattern, pursue high-quality development, better coordinate the Covid-19 response with economic and social development, better ensure both development and security, comprehensively reform and opening up, boost market confidence, make sure that our implementation of the strategy to expand domestic demand is integrated with our efforts to deepen supply-side structural reform,emphasize the work of stabilizing growth, employment and prices, fend off and defuse major risks,promote the overall turnaround of the economy, realize the effective promotion of quality and the reasonable growth in quantity, to have a headstart in building a modern socialist country in all respects.
The meeting called for making economic stability the top priority and pursuing progress while ensuring stability, continuing to implement a proactive fiscal policy and a prudent monetary policy, increasing macro policy regulation and control, strengthening coordination and cooperation among various policies, and forming a synergy to promote high-quality development next year.
A proactive fiscal policy should be strengthened and made more effective. The government should maintain the necessary intensity of fiscal spending, optimize the combination of deficits, special bonds, interest subsidies and other tools, and ensure fiscal sustainability and controlled risk of local government debt in the effective support of high-quality development. The central government should increase its transfer payments to local governments, promote the sinking of financial resources, and do a good job of protecting the "three guarantees" at the grassroots level. [guaranteeing basic livelihoods, wage payment to civil servants, and operation of the local government.]
A prudent monetary policy should be precise and strong. It should maintain a reasonable abundance of liquidity, keep the growth rate of broad money supply and social financing scale basically matching the nominal economic growth rate, and guide financial institutions to increase their support for small and micro enterprises, scientific and technological innovation, green development and other areas. Maintain the basic stability of the RMB exchange rate at a reasonably balanced level and strengthen the financial stability protection system.
Industrial policies should uphold development and security at the same time. Optimize the implementation of industrial policies, focus on the transformation and upgrading of traditional industries and the cultivation and growth of strategic emerging industries, focus on strengthening the weak links in the industrial chain, and forge new industrial competitive advantages in the process of implementing the carbon peak and carbon neutral targets. Promote the virtuous cycle of "science and technology - industry - finance".
Science and technology policy should focus on self-reliance and self-improvement. Education, science and technology, and talent should be strongly coordinated. We will lay out and implement a number of major national science and technology projects, improve the new system for mobilizing the resources nationwide to achieve breakthroughs in core technologies in key fields, let government play a good organizing role in the key core technologies research, and highlight the main position of enterprises in science and technology innovation. Improve the quality and capacity of independent training of talents and accelerate the introduction of high-end talents.
Social policies should ensure people's livelihood. Implement the employment-first policy and give more prominence to promoting the employment of young people, especially university graduates. The impact of structural price rises on some people in need should be mitigated in a timely and effective manner. Strengthen the protection of the rights and interests of workers in new forms of employment, and steadily promote the national co-ordination of pension insurance. Promote the expansion and reach (into lower-level regions) of quality medical resources and a balanced regional layout. Improve the maternity support policy system, implement at an appropriate time the policy of gradually delaying the statutory retirement age, and actively respond to the aging population and low birth rate.
The meeting stressed that next year's economic development is facing many difficulties and challenges, we must adhere to the system concept, innovate on the basis of what has worked in the past. We will better coordinate the Covid-19 response with economic and social development, optimize the Covid-19 response measures according to the time and situation, conscientiously implement the Covid-19 response initiatives adapted to our new phase [of prevention and control], protect the public access to health care and medication, focus on the prevention and control of Covid-19 among the elderly and groups suffering from underlying diseases, and make efforts to protect health and prevent serious illnesses. We will better co-ordinate the effective promotion of quality and the reasonable growth in quantity, insist on winning with quality, and achieve qualitative change with the accumulation of quantitative change. We should better coordinate supply-side structural reform and the expansion of domestic demand, create effective demand through high-quality supply, and support the expansion of domestic demand in a variety of ways and through a variety of channels. We should better integrate economic policies with other policies, enhance the overall perspective and strengthen the assessment of [other policies’] consistency with macro policy orientation. We should better coordinate domestic and international circulations, focus on building a new development paradigm, enhance the endogenous dynamics and reliability of the domestic cycle, and improve the quality and level of the international cycle. We should better integrate the current and long-term, both to do a good job in the current work and to allow for a good connection with future development.
The meeting pointed out that the economic work for next year is very complicated, so we should take a strategic and holistic approach, starting with improving psychological expectations in society and boosting confidence in development, and doing a good job with an outline.
The first is to focus on expanding domestic demand. We must give priority to restoring and expanding consumption. Enhance consumption capacity, improve consumption conditions and innovate consumption scenarios. We will increase the income of urban and rural residents through multiple channels, and support the consumption of housing improvement, new energy vehicles and services for elderly people. Government investment and policy incentives should be used to effectively drive investment across society, accelerate the implementation of major projects under the 14th Five Year Plan [2021-2025], and strengthen inter-regional infrastructure links. Policy financing should increase its support for financing major projects in line with national development plans. Encourage and attract more private capital to participate in the construction of major national projects and projects that make up for shortcomings. We should continue to enable exports to play a supportive role to the economy and actively expand imports of advanced technology, important equipment, energy resources and other products.
Second, accelerate the construction of a modern industrial system. Focusing on key industrial chains in the manufacturing industry, we will identify key core technologies and weak links in components and concentrate quality resources on joint efforts to ensure that the industrial system is independently controllable, safe, and reliable, and that the national economic circulation is smooth. Strengthen the domestic exploration and development of important energy and mineral resources and increase storage and production, accelerate the planning and construction of new energy systems, and enhance the national strategic material reserve guarantee capacity. Implement a new round of action to increase grain production capacity by 100 billion jins (50 mln metric tons). Upgrade the status and competitiveness of traditional industries in the global industrial division of labour, and accelerate the research and development and application and promotion of cutting-edge technologies such as new energy, artificial intelligence, bio-manufacturing, green low-carbon and quantum computing. We should vigorously develop the digital economy, improve regular oversight, and support platform enterprises in leading development, job creation and international competition. Seize the new opportunities bred in the process of global industrial restructuring and layout, and be bold in opening up new areas and winning new tracks.
The third is the effective implementation of "the "Two Unswervings" [of consolidating and developing the public sector and encouraging, supporting and guiding development of the non-public sector]". In response to the incorrect comments on whether we adhere to "the "Two Unswervings" in society, we must make our attitude clear and unambiguous. We must deepen the reform of state-owned enterprises and improve their core competitiveness. Adhere to the direction of classification-based reform and deal with the relationship between the economic and social responsibilities of SOEs. We should improve the modern corporate governance of SOEs with Chinese characteristics and truly operate them according to market-oriented mechanisms. The requirement for equal treatment of state-owned and private enterprises should be put into practice in terms of systems and laws, and the development and growth of the private economy and private enterprises should be encouraged and supported in terms of policies and public opinion. Protect the property rights of private enterprises and the rights and interests of entrepreneurs in accordance with the law. Leading officials at all levels must solve problems and do practical things for private enterprises and build a close but uncorrupted government-business relationship.
Fourth, greater efforts should be made to attract and utilize foreign investment. We must promote a high level of openness to the outside world and improve the quality and level of trade and investment cooperation. We must expand market access and increase the opening up of the modern service sector. We must implement national treatment for foreign-funded enterprises, guarantee equal participation of foreign-funded enterprises in government procurement, bidding, and standard setting in accordance with the law, and increase the protection of intellectual property rights and the legitimate rights and interests of foreign investors. We should actively promote accession to high-standard economic and trade agreements such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA), and take the initiative to deepen reforms in relevant domestic areas in reference with the relevant rules, regulations, management and standards. We should provide maximum convenience for foreign investors to engage in trade and investment negotiations in China, and promote the landing and construction of landmark projects for foreign investment.
Fifth, effectively prevent and resolve major economic and financial risks. We must ensure the stable development of the real estate market, do a solid job of ensuring the delivery of buildings, people's livelihood, and stability, meet the reasonable financing needs of the industry, promote irestructuring and mergers and acquisitions in the industry, effectively prevent and resolve the risks of high-quality, leading housing enterprises and improve their asset and liability positions, while resolutely combating illegal and criminal acts in accordance with the law. We should adopt city-specific policies, support rigid and improved housing needs, solve the housing problems of new citizens and young people, and explore the construction of a long-term rental housing market. We should adhere to the positioning of “housing is for living in, not for speculation,” and promote a smooth transition to a new development model for the real estate industry. We must prevent and resolve financial risks, and ensure all parties do fulfill their responsibilities to prevent the formation of regional and systemic financial risks. Prevent and resolve the risk of local government debt, resolutely curb its increase and resolve the debt stock.
The meeting pointed out that we should comprehensively promote rural revitalization and resolutely prevent the return of poverty on a large scale. Plan a new round of comprehensive and deepened reforms. Promote high-quality development of the Belt and Road Initiative (BRI). Deepen the implementation of major strategies for respective regions and coordinated regional development strategies. Promote the green transformation of the economy and society in development, synergistically promote carbon reduction, pollution reduction, green expansion and growth, and build a beautiful China.
The meeting stressed that for an economy as large as ours, it is vital to keep the economy running smoothly. We should focus on stabilizing growth, employment, and prices, and keep the economy running within a reasonable range. Focus on the needs of market players around the policy, improve the implementation of policies to enhance the timeliness and precision. We should unwaveringly deepen reform, provide greater stimulation of market vitality and creativity in society. Respect the laws of the market, streamline the government, delegate power, and improve government services, and make sure all types of enterprises are treated equally (irrespective of their ownership types). Focus on the development of the real economy, rely on innovation to cultivate and grow the development of new dynamic energy. We should promote the transformation and upgrading of traditional industries, support the development of strategic emerging industries and modern service industries, promote the deep development of mass entrepreneurship and innovation, and maximize the release of the innovative and creative potential of society as a whole. We must fully tap the potential of the domestic market and enhance the role of domestic demand in driving economic growth. Centering around economic development and the urgent needs of people's livelihoods, we will promote the construction of major projects that make up for shortcomings, and make efforts to eliminate the unfavourable factors restricting residents' consumption. Strengthen the prevention and control of financial and local debt risks, and guard the bottom line of no systemic risk. Make greater efforts to stabilize the scale of foreign trade and improve the structure of foreign trade. Make greater efforts to promote foreign investment to stabilize the existing foreign investment and expand its growth. Cultivate new growth points in international economic and trade cooperation.
Strengthen basic public services, hold the bottom line of basic people's livelihood, support and guide non-state forces to increase diversified supply, and continue to enhance people's well-being.
The meeting requested that we should accurately grasp the requirements of next year's economic work deployment, dare to take charge, good action, check the reality, creatively grasp the implementation, and strive to achieve the main expectations and goals of next year's economic development, to promote high-quality development to achieve new results with new workstyle and new action. Unswervingly deepen reform and expand openness, and constantly enhance the momentum and vitality of economic and social development. We should steadily deal with and resolve major risks and dangers, and maintain the stability of the economy, finance and society in general. Follow the Party Central Committee’s deployment, optimize the adjustment of the Covid-19 response policy, strengthen the co-ordination, organize and implement the adjustment in an orderly fashion to get smoothly through the period in which Covid-19 spreads, to ensure a smooth transition and stability in social order. We should do a good job at the end of the year and the beginning of the year, strengthen the market supply and price stability, strengthen the regulation of coal, electricity, oil and gas transportation, to ensure that the masses are warm and safe through the winter. Protect the basic livelihood of the people in distress due to epidemics and disasters and special groups such as the elderly, the weak, the sick, and the disabled, strengthen the oversight of production safety, and resolutely prevent and curb serious accidents.
The meeting stressed that all departments, local authorities, and leading officials at all levels should align their thoughts and actions to the CPC's guiding principles of the Party's 20th National Congress and the CPC Central Committee's decisions and deployments on economic work. [We] insist on setting high-quality development as the primary task of building a modern socialist country in all respects, improve the mechanisms through which the CPC Central Committee's major decisions and plans are implemented, and commit to economic work with a vigorous spirit and a sense of responsibility of "taking responsibilities at all times." New leadership teams should have new workstyles and new actions, strengthen their studies, and become experts and expert leaders. Insist on real work, be realistic and pragmatic, oppose formalism and bureaucracy, have scientific and precise accountability, and take responsibility for those who take charge.
The meeting called on the whole CPC to tightly unite around the CPC Central Committee with Comrade Xi Jinping at its core, strengthened the “Four Consciousnesses “[of the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment with the central Party leadership], insisted on the “Four Confidences” [in the path, theory, system, and culture of socialism with Chinese characteristics], realized the “Two Upholds” [of upholding Comrade Xi Jinping’s core position on the CPC Central Committee and in the Party as a whole and upholding the Central Committee’s authority and its centralized, unified leadership], committed to concerted efforts, moved forward determinedly, strived to meet goals in economic and social development, for building a modern socialist country in all respects and making novel contributions to comprehensively enhance the great rejuvenation of the Chinese nation.
Relevant leading comrades from the CPC and the state attended the conference.
Chief leading comrades from CPC and government branches within all provinces, autonomous regions, municipalities directly under the central government, cities with independent planning status, and the Xinjiang Production and Construction Corps (XPCC), and from relevant CPC central and government departments, relevant people's organizations, certain financial institutions and enterprises managed by the central government, and various departments of the Central Military Commission, etc. attended the conference. (Enditem)
Again, many thanks to China Neican, a paid newsletter led by Adam Ni, for helping make the translation much easier.