Yuan Lei: Fully Unleashing China's Economic Potential
The 2025 Central Economic Work Conference systematically summarized new understandings and experiences in managing economic work under the new situation, explicitly proposing the "Five Musts," which provide the fundamental guidance for conducting economic work at present and for a period to come. Among these, "must fully tap into economic potential" occupies the primary position. It requires that in our economic work, we give full play to China’s characteristics of strong resilience, ample potential, and vast room for maneuver. We must profoundly understand this potential, effectively stimulate it, and transform it into a surging momentum to drive high-quality development, thereby continuously consolidating and expanding the momentum of economic stability and improvement.
Why We Must Attach Importance to Tapping Into Economic Potential
China's economy is "large" in both scale and potential. A large scale means the ability to achieve internal circulation [1] and strong economic resilience, the capacity to realize independence and self-reliance, and the ability to better withstand internal and external risks. Large potential means that existing developmental advantages have not yet been fully exploited or utilized, developmental capacities have not yet been fully demonstrated or released, and there is broad space for future economic growth and progress. The Central Economic Work Conference elevated "must fully tap into economic potential" to the level of a regularized understanding of the laws of economic development. This is both an accurate grasp of our country’s inherent economic characteristics and a forward-looking judgment of future economic development trends; it is both a profound summary of past working experience and an important orientation for doing future work well.
During the 14th Five-Year Plan period (2021–2025), China’s economic development achieved major breakthroughs. The total economic volume climbed steadily, crossing the thresholds of 110 trillion, 120 trillion, and 130 trillion yuan respectively, and is expected to reach around 140 trillion yuan in 2025. The economic structure has been continuously optimized, and the role of internal demand—specifically consumption—as the main engine of economic growth has become increasingly consolidated, with the average contribution rate of final consumption to economic growth approaching 60% from 2021 to 2024. Innovation-driven development has yielded significant results, with new industries, new business formats, and new models constantly emerging. An important experience in achieving these results is that we have not only profoundly recognized the massive depth and potential of our economy, but have also been able to effectively stimulate that potential through precision policy implementation, transforming it into tangible developmental advantages. For example, we implemented more proactive and effective macro policies, persisted in combining the stimulation of consumption with the improvement of investment efficiency to trigger the potential of our ultra-large-scale market, and strengthened the leadership of innovation by using the development of new quality productive forces as a key lever to promote the deep integration of technology, industry, finance, and talent, thereby transforming innovation potential into a driver for high-quality development.
Currently, China’s internal and external developmental environments are undergoing profound changes. A new round of technological revolution and industrial transformation is accelerating toward breakthroughs, the competition between major powers is becoming more complex and intense, and China is in a critical period for the construction of Chinese-path modernization. The full tapping of economic potential must be understood and advanced at a new strategic level.
From the perspective of grasping the theme of high-quality development, stimulating potential is an inevitable choice for responding to challenges and achieving upgrading. China has transitioned to a stage of high-quality development; in 2024, GDP per capita rose to $13,445, exceeding $13,000 for two consecutive years, placing China at the forefront of upper-middle-income countries. To achieve the goal of "GDP per capita reaching the level of moderately developed countries" by 2035, economic development during the 15th Five-Year Plan period must maintain an appropriate speed. At present, the replacement of traditional growth engines and the cultivation of new ones urgently need to be bridged; we must achieve a smooth transition and transformation by deeply tapping into comprehensive potential in terms of market scale, industrial systems, human resources, and innovation capabilities.
From the perspective of constructing the new development pattern [2], stimulating potential is an important requirement for leveraging the potential of internal demand and achieving high-level self-reliance. The key to constructing the new development pattern lies in fully relying on the advantages of our ultra-large-scale market, cultivating and tapping into the domestic demand market, persisting in independent innovation, promoting industrial structure optimization and transformation, and strengthening the "domestic great circulation" [3] to offset the uncertainties of the "international circulation" with the stability of the domestic cycle. Tapping into economic potential emphasizes transforming the scale advantage of the domestic demand market into actual economic growth through optimizing resource allocation, stimulating market vitality, and releasing growth drivers, thereby providing strong support for the construction of the new development pattern.
At the level of practical operation, the stimulation of potential must fully consider our unique national conditions as a vast country. Through effective market mechanisms and regional policies, we must create a new pattern of coordinated regional development. Differences in resource endowments, industrial foundations, and developmental stages between regions are not merely developmental challenges, but constitute a huge space for "relay-style" and complementary development. Regarding this, the key lies in accelerating the construction of a national unified large market and promoting the orderly flow and optimized configuration of factors [4], which is also an important aspect of stimulating economic potential and shaping growth drivers.
In What Areas is China's Economic Potential Reflected?
The "Recommendations for the 15th Five-Year Plan" [5] state: "China's economic foundation is stable, its advantages are many, its resilience is strong, and its potential is great; the supporting conditions and fundamental trend of long-term improvement remain unchanged, and the advantages of the system of socialism with Chinese characteristics, the ultra-large-scale market, the complete industrial system, and the abundant human resources are becoming more prominent." This discourse accurately summarizes the advantages of China's economic development, which also illustrate the enormous development potential inherent in China's economy. In reality, economic potential manifests as four major dividends that can be continuously released during development.
First, the institutional dividend. The institutional dividend primarily stems from the "advantages of the system of socialism with Chinese characteristics." The greatest advantage of the system of socialism with Chinese characteristics is the leadership of the Communist Party of China (CPC), which possesses a strong organizational and mobilization capacity to "concentrate resources to accomplish large undertakings" [6] and an integrated coordination capacity for the "whole country as a single chessboard" [7]. It is capable of anchoring long-term goals, maintaining strategic resolve, and strengthening top-level design and resource coordination to maintain policy continuity and stability. This not only effectively mobilizes the enthusiasm, initiative, and creativity of all parties, but also, by building a stable and predictable institutional environment, effectively transforms institutional potential into a powerful support for stimulating market vitality and releasing growth momentum. The "Recommendations for the 15th Five-Year Plan" explicitly put forward the goal of "achieving new breakthroughs in further comprehensively deepening reform," which will promote the further perfection of the socialist market economy system, thereby better activating institutional advantages, continuously releasing institutional dividends, and forming a powerful synergy for economic development.
Second, the market dividend. The market dividend primarily stems from the "ultra-large-scale market advantage." As the world's most potential-laden market, China’s market scale is constantly expanding, its market space is continuously broadening, its market hierarchy is steadily rising, and its application scenarios are increasingly rich. The simultaneous rise in both the quantity and quality of the market is releasing a market dividend. In terms of scale, China has a population of over 1.4 billion, with a middle-income group exceeding 400 million, and household income levels and consumption scales are growing steadily. In terms of space, China is deeply implementing the strategy of coordinated regional development and the new-type urbanization strategy; rural and less-developed areas may become rapidly growing emerging markets, bringing a continuous expansion of market space. In terms of hierarchy, the trend of consumption upgrading in China is obvious, with service consumption in education, healthcare, culture, and tourism growing rapidly; consumers are paying more attention to brands, quality, health, and environmental protection, and demand for high-end consumer goods and high-quality services is robust. In terms of scenarios, China's ultra-large-scale market can provide rich application scenarios for new technologies, which not only provides returns for developers but also allows diversified market demand to reduce the cost of trial and error, thereby promoting the rapid, large-scale application and iterative upgrading of new technologies and accelerating the transformation of scientific and technological achievements into actual productive forces.
Third, the industrial dividend. The industrial dividend primarily stems from the "complete industrial system advantage." China is the country with the most complete industrial system in the world, possessing the global manufacturing system with the largest scale and the most comprehensive categories. A complete supporting industrial system not only improves the efficiency of industrial and supply chains—providing a full range of manufactured products at lower costs and higher speeds—it also facilitates the integration of industrial and innovation chains, enhancing the quality and efficiency of industrial innovation. In the next stage, China’s industrial system will accelerate its transformation and upgrading, primarily reflected in the sophisticated development of industrial structures driven by emerging industries and the extension of industries toward the high end of the value chain, thereby significantly increasing the added value of products and services. This will push China from a major industrial power toward a strong industrial power, injecting powerful momentum into economic growth.
Fourth, the talent dividend. The talent dividend primarily stems from the "abundant human resource advantage." By the end of 2024, China's working-age population (ages 16 to 59) was approximately 860 million, and the labor supply remains ample. Meanwhile, the quality of the workforce is accelerating its improvement. In 2024, the average years of education for the working-age population reached 11.21 years, and the average years of education for the newly added workforce exceeded 14 years; the proportion of citizens with scientific literacy reached 15.37%, an increase of 4.81 percentage points over 2020; the number of graduates from ordinary institutions of higher education exceeded 10 million, and the full-time equivalent of R&D personnel ranks first in the world. This provides a massive talent dividend for China's economic development, which not only improves the technological innovation capabilities and management levels of enterprises and promotes the development of knowledge-intensive industries, but also facilitates the rapid development of China's science, culture, education, and other fields, achieving a comprehensive improvement in social civilization and literacy, and laying the foundation for long-term economic and social development.
How to Transform Economic Potential into Development Momentum
The key to tapping economic potential lies in transforming the four major advantages of development into four major dividends, thereby forming a strong momentum to drive economic development. Specifically, efforts must be made in deepening the reform of systems and mechanisms, expanding consumption and investment, promoting industrial innovation, and smoothing the virtuous cycle of education, technology, and talent to cultivate more new growth points and open up new spaces for development.
Increase vitality by accelerating the construction of a high-level socialist market economy system. Persist in and improve the basic socialist economic system, promote the complementary advantages and common development of various forms of ownership [8], and fully stimulate the vitality of all types of market entities. Deepen the market-oriented reform of production factors, establish and improve a unified urban-rural construction land market, a functional capital market, a smooth labor market, and an efficient technology market, break down institutional barriers, and promote the autonomous and orderly flow of factors. Strengthen the strategic guiding role of national development plans, improve mechanisms for inter-regional planning coordination, industrial collaboration, and benefit-sharing, and create a dynamic situation where all regions complement each other's advantages and develop in linkage.
Expand space by applying force from multiple ends to strengthen the domestic market. On the consumption side, release consumption potential by steadily increasing household incomes and improving the social security system, and accelerate the formation of new consumption growth points such as new energy vehicles, smart homes, education and medical care, cultural entertainment and tourism, and "trendy" domestic products [9]. On the investment side, increase investment in areas such as technological innovation, green transformation, and social welfare, better leverage the stabilizing role of state-owned enterprises in advancing major infrastructure construction, and simultaneously relax market access to stimulate the vitality of private investment. Additionally, coordinate the advancement of urbanization with county seats as important carriers and the comprehensive revitalization of the countryside, promote the urbanization of the agricultural transfer population [10], ensure that urban development is synchronized with industrial support, employment transfer, and population aggregation, promote a virtuous cycle between consumption and investment, and further release internal demand potential.
Strengthen momentum by persisting in driving industrial innovation through technological innovation. Increase support for basic research, applied basic research, and frontier research, give full play to the advantages of the new-type whole-nation system [11], and drive decisive breakthroughs in key core technologies in critical fields such as integrated circuits, industrial mother machines, high-end instruments, basic software, advanced materials, and bio-manufacturing across the entire chain. Strengthen the transformation of traditional industries, promote the quality and upgrading of key industries, develop intelligent manufacturing, green manufacturing, and service-oriented manufacturing, and accelerate changes in industrial models and enterprise organizational forms. Accelerate the industrial application of technological innovation achievements, cultivate and strengthen emerging and future industries, and promote quantum technology, bio-manufacturing, hydrogen energy and nuclear fusion, brain-computer interfaces, embodied intelligence, and 6G communications to become new economic growth points.
Improve efficiency by smoothing the virtuous cycle of education, technology, and talent. Establish and improve mechanisms for adjusting academic disciplines and talent cultivation models driven by technological development and national strategic needs, and build a number of high-level scientific research platforms and talent cultivation bases focusing on key areas such as artificial intelligence, quantum technology, and biotechnology. Accelerate the construction of national strategic talent forces, strive to cultivate strategic scientists, first-class technological leaders, and innovation teams, and focus on cultivating outstanding engineers, master craftsmen of the nation [12], and high-skilled talents, creating a massive, well-structured, and high-quality talent pool. Improve talent cultivation mechanisms, fully stimulate the innovation and creativity of talent, and accelerate the formation of a talent institutional system with international competitiveness.
Tapping into economic potential is a systematic project; we must grasp key focus areas within the overall situation. We must look at the present while clearly identifying trends; we must increase policy support while promoting reform and innovation; we must respond to external challenges while "bitterly practicing our internal skills" [13]. To this end, we must persist in strategic thinking, systems thinking, and bottom-line thinking, coordinating the use of short-term and long-term policies, macro and micro policies, economic and non-economic policies, and existing and incremental policies. We must fully tap into economic potential and make the best use of our strategic advantages to lay a solid foundation for a good start to the 15th Five-Year Plan period.