Li Yuju and Gu Yan: Adhere to the Five "Must-Coordinates" [1] to Conduct Economic Work
The national economy is a complex large-scale system; to conduct economic work well, one must coordinate all factors and maintain a comprehensive balance. The goal of coordination is to ensure overall consideration—to be adept at viewing problems from a global perspective, balancing the relationships between various aspects of economic and social development, and strengthening the coordination and alignment of various policies to form a synergy for promoting high-quality development. Since the 18th National Congress of the CPC, General Secretary Xi Jinping has creatively applied the basic principles of dialectical materialism to China's economic practice, emphasizing the adherence to a systemic concept and putting forward requirements for correctly handling several major relationships centered around a series of key tasks.
The Central Economic Work Conference [1] held in December 2024 proposed: "We must coordinate the relationship between an efficient market and a promising government to form an economic order that is both 'dynamic' and 'under control'"; "We must coordinate the relationship between total supply and total demand to smooth the circulation of the national economy"; "We must coordinate the relationship between nurturing new drivers of growth and updating old ones to develop new quality productive forces according to local conditions"; "We must coordinate the relationship between optimizing incremental growth and revitalizing existing stock to comprehensively improve the efficiency of resource allocation"; and "We must coordinate the relationship between improving quality and expanding total volume to consolidate the material foundation for Chinese-path modernization." These five "must-coordinates" represent a regular understanding summarized by our Party from the practice of China's economic work. They are a concrete manifestation of using the methodology of dialectical materialism and historical materialism to analyze and resolve prominent contradictions in the current economic field. They further enrich and develop Xi Jinping Economic Thought, serving both as principles that must be adhered to in conducting economic work and as a scientific methodology for achieving high-quality development and advancing Chinese-path modernization.
I. We must coordinate the relationship between an efficient market and a promising government
The relationship between the government and the market is a global conundrum in economics. Our Party has continuously sought solutions in the great pioneering undertaking of building a socialist market economy. General Secretary Xi Jinping pointed out: "The market determining resource allocation is a general law of the market economy; a market economy is essentially an economy in which the market determines resource allocation." The Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Comprehensively Deepening Reform [2] adopted at the Third Plenary Session of the 18th CPC Central Committee proposed that economic system reform is the focus of comprehensively deepening reform, and the core issue is handling the relationship between the government and the market well, allowing the market to play the decisive role in resource allocation and better play the role of the government. This was another major advancement in theory and practice for our Party and a new breakthrough in understanding the laws of building socialism with Chinese characteristics. The report to the 20th CPC National Congress proposed "building a high-standard socialist market economy system," emphasizing "giving full play to the decisive role of the market in resource allocation and better playing the role of the government." The Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Advancing Chinese-path Modernization adopted at the Third Plenary Session of the 20th CPC Central Committee emphasized: "We must better leverage the role of market mechanisms, create a fairer and more dynamic market environment, and achieve optimal resource allocation efficiency and maximized benefits."
Both the theory of political economy with Chinese characteristics and the practice of economic construction for socialism with Chinese characteristics have fully proven that market allocation of resources is the most efficient form, conducive to producing as many products as possible and obtaining the greatest possible benefits with the least possible resource input. At the same time, it must be recognized that the market has defects and problems that it cannot overcome or solve on its own; it cannot play the entire role in resource allocation. This inevitably requires the government to compensate for market failures and regulate market order. For our country, the major prerequisite for developing a market economy is adhering to the leadership of the CPC and the socialist system. In building a socialist market economy, we must apply dialectics and the "two-point theory" [3], continuously working on the integration of the basic socialist system with the market economy, requiring both an "efficient market" and a "promising government." In deepening economic system reform, we must also handle the core issue of the relationship between the government and the market, making good use of both the "invisible hand" and the "visible hand." Only in this way can we give play to the positive effects of market resource allocation while demonstrating the superiority of the socialist system and effectively preventing the shortcomings of the capitalist market economy.
In recent years, we have persisted in better combining an efficient market with a promising government, focusing on solving problems such as imperfect market systems and inadequate government supervision to further stimulate economic vitality. In 2024, the number of registered business entities nationwide reached 189 million, an increase of 3.1% over the previous year. Under the guidance of the government's forward-looking strategic leadership, scientific planning, and various policy supports—and through enterprises seizing opportunities, intensifying R&D, and engaging in full competition—new products such as the "New Three" [4] (electric guest vehicles, lithium batteries, and photovoltaic products) have continuously emerged. Notably, the production of new energy vehicles (NEVs) increased rapidly from 18,000 units in 2013 to over 13 million units in 2024, driving our country from a large automobile nation toward an automobile power. The leapfrog development of NEVs since the New Era is a vivid practice of correctly handling the relationship between the government and the market.
The 2024 Central Economic Work Conference emphasized that we must coordinate the relationship between an efficient market and a promising government to form an economic order that is both "dynamic" and "under control." Currently, to better coordinate this pair of major relationships, we must accelerate the construction of a unified national market. This is a strategic move to further aggregate resources, drive growth, encourage innovation, optimize the division of labor, and promote competition on the new journey, allowing the significant advantages of our country’s ultra-large-scale market to be more fully utilized. The realization of these advantages requires the government to maintain macroeconomic stability, strengthen and optimize public services, guarantee fair competition, strengthen market supervision, maintain market order, and promote sustained and healthy economic development. We must resolutely break down local protectionism and market segmentation; we must never be keen on closed small markets or self-contained small circulations, and we must never hinder the unified market or fair competition. We should issue guiding opinions to standardize market supervision and law enforcement behavior, strengthen the governance of arbitrary fees imposed on enterprises at the source, and improve the long-term legal and regulatory system for enterprise-related fees. We must push for the effective implementation of the unified national market to facilitate the synergy between an efficient market and a promising government.
II. We must coordinate the relationship between total supply and total demand
Total supply refers to the total volume of products and services actually provided to the market for final use by social production activities in a country or region over a certain period. Total demand refers to the total purchasing power for products or services actually formed by the expenditures that society can use for investment or consumption. Coordinating the relationship between total supply and total demand means continuously achieving a high-level dynamic balance in the operation of the national economy. Supply and demand are the two basic aspects of the unity of opposites in market economic operations. Without supply, demand cannot be met; without demand, supply cannot be realized. New supply creates new demand, and new demand gives birth to new supply. General Secretary Xi Jinping emphasized: "We must comprehensively grasp the new changes in the relationship between total supply and demand and conduct scientific macroeconomic regulation," and "Macroeconomic regulation must adapt to the characteristics of the development stage and changes in the economic situation—expanding demand when it needs to be expanded and adjusting supply when it needs to be adjusted, making timely decisions and prescribing the right medicine." Precisely because supply and demand are interdependent and mutually conditional, in macroeconomic governance, we must synergistically utilize the two basic means of supply-side management and demand-side management.
The report to the 20th CPC National Congress proposed "organically combining the strategy of expanding domestic demand with deepening supply-side structural reform." This means leveraging the advantages of supply-side management in solving structural problems by optimizing factor allocation and adjusting production structures to improve the quality and efficiency of the supply system; meanwhile, leveraging the advantages of demand-side management in solving aggregate problems by adjusting taxes, fiscal expenditures, and monetary credit to effectively regulate demand. In the practice of coordinating the expansion of domestic demand with supply-side structural reform, we must make good use of the Marxist method of contradiction analysis. When structural problems become the principal contradiction [5] constraining economic development, and the principal aspect of the contradiction is on the supply side, we must increase the intensity of supply-side structural reform. When the adverse effects of aggregate and cyclical factors rise significantly and the problem of insufficient domestic demand becomes prominent, expanding domestic demand must be placed in a more important position. In short, whether economic policy focuses on the supply side or the demand side depends on making the correct choice based on the economic situation; the key is to adapt to the dynamic changes in the principal contradiction of economic development and the principal aspect of that contradiction.
Since the second and third quarters of 2024, new changes have occurred in the relationship between total supply and total demand in China, and the challenges brought by insufficient domestic demand have become more severe. The CPC Central Committee with Comrade Xi Jinping at its core has responded calmly and implemented comprehensive measures. In particular, the meeting of the Political Bureau of the CPC Central Committee on September 26, 2024, decisively deployed a package of incremental policies, which effectively promoted consumption and investment demand, boosted social confidence, and led to a significant economic recovery. This package of incremental policies accurately grasped the relationship between supply and demand and is a vivid practice of scientifically applying Xi Jinping Economic Thought to guide economic work.
The 2024 Central Economic Work Conference emphasized that we must coordinate the relationship between total supply and total demand to smooth the circulation of the national economy. Among the nine key tasks identified for 2025, the first is to "vigorously boost consumption, improve investment efficiency, and expand domestic demand in an all-round way." By implementing special actions to boost consumption, moderately increasing investment within the central budget, stepping up the expansion of "Two New" policies [6], and providing greater support for "Two Major" projects [7], we will certainly be able to give fuller play to the fundamental role of consumption and the key role of investment. This will form a higher-level dynamic balance where demand pulls supply and supply creates demand, thereby continuously enhancing the internal momentum and reliability of the domestic grand circulation and making the domestic and international dual circulation smoother.
III. We must coordinate the relationship between nurturing new drivers of growth and updating old ones
Both new and old drivers of growth are external manifestations of the productive forces, and industry is an important carrier of social productive forces and development momentum. General Secretary Xi Jinping emphasized: "We must rely on innovation, especially scientific and technological innovation, to realize the transformation of power and growth drivers," and "adhere to the simultaneous progress of transforming and upgrading traditional industries and nurturing and strengthening emerging and future industries." In the process of developing new quality productive forces according to local conditions, we must coordinately promote the upgrading of traditional industries, the expansion of emerging industries, and the cultivation of future industries to promote a smooth and continuous transition between old and new growth drivers.
From the perspective of the internal mechanism of industrial structure upgrading and development momentum transformation, it is inevitable that emerging industries and traditional industries promote each other, and new and old growth drivers are coordinated. On one hand, we must fully utilize the new technologies, new products, and new business models associated with emerging industries and new drivers to create conditions and open paths for the transformation of traditional industries and the renewal of old drivers. On the other hand, we must fully utilize the basic scale, coverage, and existing advantages of traditional industries and old drivers to provide trial fields and broaden application scenarios for the expansion of emerging industries and the cultivation of new drivers. Developing new quality productive forces does not mean ignoring or abandoning traditional industries. Nurturing new drivers does not mean excluding or eliminating old ones. We must continuously form new growth points and power sources through the interdependence of new quality productive forces and traditional productive forces, and through the mutual transformation of new and old growth drivers.
Currently, the world economy is in a period of shifting gears for momentum transformation, and the pulling effect of traditional growth engines on the economy is weakening. New technologies such as big data, cloud computing, artificial intelligence, and quantum information are constantly emerging, giving birth to new industries. China's economy has transitioned from a stage of high-speed growth to a stage of high-quality development and is in a critical period of transforming the development mode, optimizing the economic structure, and shifting growth drivers. Seizing the precious opportunities of the new round of technological revolution and industrial transformation, and using technological innovation to open up new realms and tracks of development and shape new drivers and advantages for development, is the general trend and an urgent requirement for high-quality development. As of the end of November 2024, the total number of 5G base stations in China exceeded 4.19 million, and digital transformation is covering an increasing number of enterprises. New industries and new drivers are showing huge development potential and room for growth.
The 2024 Central Economic Work Conference emphasized that we must coordinate the relationship between nurturing new drivers of growth and updating old ones, and develop new quality productive forces according to local conditions. According to the conference deployment, the focus is on leading the development of new quality productive forces through technological innovation and building a modernized industrial system. By launching large-scale application demonstration actions for new technologies, new products, and new scenarios, and the "AI Plus" action...
...actions and other pragmatic measures. We must persist in the industrial development direction of digitization, intellectualization, and greening, allowing new quality productive forces to further stimulate new developmental momentum in traditional agriculture, traditional manufacturing, and traditional service industries. This will ensure that traditional industries—alongside strategic emerging industries and future industries—all become fertile ground for generating revolutionary technological breakthroughs, the innovative allocation of production factors, and the deep transformation and upgrading of industries. In this process, we must accelerate the formation of relations of production compatible with new quality productive forces, focus on clearing the "bottlenecks" and "stuck points" [8] restricting their development, and strive to eliminate institutional and mechanistic obstacles hindering the conversion of old kinetic energy into new. We must thoroughly implement the deployments of the Third Plenary Session of the 20th CPC Central Committee and promote the aggregation of various advanced production factors toward the development of new quality productive forces.
IV. We must coordinate the relationship between optimizing "increments" and revitalizing "stock"
The total scale of China's economy has long ranked second in the world, maintaining an ultra-large volume across many fields. Due to this massive base, even a small percentage of growth represents a significant "increment" (new growth). In his profound explanation of the new characteristics of China's economic development stage, General Secretary Xi Jinping pointed out that China's economic structure is undergoing a deep adjustment, shifting from a primary focus on expanding "increments" and capacity to a state where adjusting "stock" (existing assets) and optimizing "increments" coexist. When determining developmental ideas, formulating economic policies, and implementing macro-control, we must consider both incremental issues and stock factors.
Coordinating the relationship between increment and stock fully reflects the consideration of balancing the present with the long term; it fully embodies the method of differentiated treatment and categorized policy application; and it fully reflects the objective requirements of treating both symptoms and root causes. In many fields, General Secretary Xi Jinping has emphasized the use of this scientific method. For instance, regarding urbanization, he has repeatedly emphasized that promoting the urbanization of the agricultural transfer population [9] must persist in being voluntary, categorized, and orderly, prioritizing the resolution of the "stock" (those already in cities) while orderly guiding the "increment" (new migrants). Regarding the coordinated development of the Beijing-Tianjin-Hebei region, he emphasized combining the control of increments with the relocation of stock, handling both internal functional restructuring and outward relocation to promote the work forcefully, orderly, and effectively. Regarding the prevention and resolution of risks, he emphasized doing a good job in replacing the stock debt of local governments while strictly controlling new incremental debt. Regarding economic structural adjustment, he emphasized guiding increments, optimizing stock, and proactively reducing excess [10], while actively promoting the development of new technologies, industries, business forms, and models to accelerate the cultivation of new economic growth points. Regarding real estate, he emphasized combining new changes in the supply-demand relationship of the market with the people's new expectations for high-quality housing, holistically researching policy measures to digest stock housing and optimize incremental housing, promoting the construction of a new model for real estate development, and advancing high-quality development in the sector.
The 2024 Central Economic Work Conference emphasized the necessity of coordinating the relationship between optimizing increments and revitalizing stock to comprehensively improve the efficiency of resource allocation. The conference made new deployments in this regard. For example, it proposed vigorously implementing urban renewal and rationally adjusting the allocation of urban spaces and public resources to achieve "metabolism" [11]. This involves a large number of stock and incremental issues; we must closely integrate the implementation of urban renewal with the renovation and upgrading of stock housing, increase efforts to renovate "villages-in-the-city" [12] and dilapidated houses, enhance social well-being, improve quality of life, and promote high-quality urban development. Additionally, it proposed reasonably controlling the supply of new land for real estate, revitalizing stock land and commercial/office buildings, and advancing the disposal of stock commodity housing. To do this work well, we must coordinate objectives by setting different task indicators and measurement standards for stock and increment; coordinate policies by managing rhythm, intensity, and timing to ensure they pull in the same direction and resonate at the same frequency; and coordinate risk management to prevent existing risks from spiraling out of control while properly resolving newly emerging risks.
The Third Plenary Session of the 20th CPC Central Committee proposed to "explore the implementation of national macro-balance sheet management." Balance sheets primarily analyze the stock of assets and liabilities, providing a new perspective for analyzing the macroeconomy from the micro-level of enterprises and households. This complements traditional "flow" analysis (such as GDP), helps reveal the correspondences between major economic activities, accurately depicts the asset-liability situation of the nation, localities, and various departments, and facilitates the organic integration of incremental and stock analysis with total supply and demand analysis. This allows for more accurate macro-economic policy proposals. This work is extremely important and has a certain foundation; we need to continuously expand the monitoring, early warning, and management functions of the balance sheet in practice.
V. We must coordinate the relationship between improving quality and expanding the total aggregate
The law of the transformation of quantity into quality is one of the three fundamental laws of dialectical materialism. General Secretary Xi Jinping pointed out: "Economic development is a process of spiral ascent; the ascent is not linear. Once quantitative accumulation reaches a certain stage, it must turn toward qualitative improvement. China's economic development must also follow this law." Development in the New Era must be high-quality development; without high-quality development, there can be no talk of socialist modernization.
High-quality development contains both qualitative and quantitative prescriptions. In economic development, "quality" is usually manifested in structure, efficiency, and security; qualitative change is a fundamental shift or a sudden leap in these areas. "Quantity" is usually manifested in scale, degree, and speed; quantitative change is a continuous, gradual, and inconspicuous change in these areas. In the stage of high-quality development, economic operation takes the form of non-linear evolution, wave-like development, and progress through twists and turns. The cyclical changes of economic fluctuations are intertwined with long-term trends, technological factors, and institutional factors. Quantitative factor dividends are gradually giving way to quality-and-efficiency-based factor dividends, and the production possibility frontier of the Chinese economy is breaking through old boundaries and continuously expanding outward. Production methods are shifting toward networking and intellectualization; industrial innovation, demand capture, brand influence, and core competitiveness are continuously strengthening; the national economic circulation is becoming smoother; and distribution methods are being optimized toward promoting common prosperity for all people. Through the continuous accumulation of "quantity," economic development is daily approaching a new "qualitative" leap.
Based on a new historical coordinate and according to changes in "time and momentum" [13], the Party and the government are firmly grasping high-quality development as the primary task. They are continuously strengthening top-level design, and the strategic planning, support systems, policy measures, and working mechanisms for key fields, regions, and industries are being rapidly improved, with the beneficial effects of policies being continuously released. The endogenous momentum for high-quality development is strengthening, supporting conditions are improving, and social consensus and conscious action have significantly increased. The Chinese economy is in a stage of spiraling, accelerated ascent from quantitative accumulation to effective qualitative improvement.
The 2024 Central Economic Work Conference emphasized the necessity of coordinating the relationship between improving quality and expanding the total aggregate to consolidate the material foundation for Chinese-path modernization. High-quality development is mainly reflected in being "high" and "new," including building a high-standard market system, promoting high-level institutional opening-up, accelerating the formation of new quality productive forces, and creating a high-quality life. The conference made new deployments and requirements: on one hand, it precisely applies force to expand the total aggregate, including expanding domestic demand across the board, actively developing the "debut economy" [14], ice-and-snow economy, and silver economy, and vigorously developing county-level economies, marine economies, and bay area economies, while cultivating new growth points like green buildings and expanding service consumption to actively foster new growth poles. On the other hand, it precisely applies force to improve quality, including actively utilizing digital and green technologies to transform and upgrade traditional industries, completing the task of deepening and enhancing the reform of state-owned enterprises with high quality, expanding pilot programs for opening up in fields such as telecommunications, medical care, and education, and steadily expanding institutional opening-up.
Coordinating these five pairs of major relationships—effective market and proactive government, total supply and total demand, cultivating new momentum and renewing old momentum, optimizing increment and revitalizing stock, and improving quality and expanding the total aggregate—profoundly reveals the basic laws of using a systems-thinking approach to do economic work. Methodologically, it enriches the toolbox for conducting the "great economic chorus" [15]; in practice, it provides an action guide for improving macroeconomic governance; and theoretically, it forms an innovative achievement of contemporary Chinese Marxist political economy. These should be persisted in and correctly applied over the long term. Especially in a situation where external pressure is increasing and internal difficulties are mounting, it is even more necessary to uphold the Party's comprehensive leadership, particularly the centralized and unified leadership of the CPC Central Committee, to coordinate a series of major relationships in economic and social development, comprehensively coordinate work in all aspects, and continuously form a powerful synergy to effectively respond to risks and challenges and solidly promote high-quality development.
Source: Qiushi (Red Flag Manuscript) [16], Issue No. 2, 2025 Web Editor: Bao Luo