Chen Hangyu: The Theoretical Connotation and Practical Direction of Adhering to the General Principle of Seeking Progress While Maintaining Stability
The 2025 Central Economic Work Conference emphasized that to succeed in economic work for 2026, it is essential to "uphold the general principle of seeking truth from facts while seeking progress through stability." This general principle is an important tenet of our Party’s national governance and a methodology for effective economic work. Since the 18th National Congress of the CPC, General Secretary Xi Jinping has delivered a series of important expositions on upholding this general principle, noting that "development is a compelling logic, and stability is also a compelling logic; we must be firm in grasping both development and stability." He further emphasized the need to "persist in seeking progress through stability, promoting stability through progress, and establishing the new before breaking the old [1]." These important ideological perspectives are vital components of Xi Jinping Economic Thought. They not only deepen our Party’s regular understanding of the endogenous growth of a large-scale economy but also make significant original contributions to enriching and developing Marxist political economy, providing an important guide for consolidating the momentum of economic recovery and promoting high-quality development.
1. Deeply understand the theoretical connotations of the general principle of seeking progress through stability
General Secretary Xi Jinping emphasized: "The focus of 'stability' should be on stabilizing economic operations, ensuring that no major fluctuations occur in growth, employment, or prices, and ensuring that no regional or systemic financial risks arise. The focus of 'progress' should be on adjusting the economic structure and deepening reform and opening up, ensuring new achievements in transforming the mode of economic development and innovation-driven development." This important exposition highlights the significance of stable economic operations and the transformation of development modes for promoting the sustained and healthy development of our country's economy, profoundly revealing the internal mechanisms of endogenous growth in a large-scale economy.
Stable economic operation is a hard cornerstone of endogenous growth in a large-scale economy. It is a norm of macroeconomic operation for economic growth to fluctuate around a steady-state growth rate, exhibiting regular expansion and contraction. If cyclical fluctuations intensify, macroeconomic risks will rise, failing to provide a long-term stable development environment for key factors of steady-state growth, such as technical accumulation. This is detrimental to raising the steady-state growth rate and, in extreme cases, can bring negative shocks. As a large developing country, China's multiplier effect tends to be higher due to its massive market scale and complete industrial system; thus, the negative effects brought by cyclical fluctuations would be further amplified. Smoothing out economic cycles through counter-cyclical adjustments to ensure stable operations and prevent major fluctuations in growth, employment, and prices is a powerful guarantee for the sustainability of endogenous growth.
The transformation of the development mode is the key essence of endogenous growth in a large-scale economy. Economic development is a spiral process. When the stable growth of "quantity" accumulates to a certain stage, one must actively seek progress in promoting innovation, transforming modes, adjusting structures, improving quality, and increasing efficiency, shifting toward the effective enhancement of "quality." Experience from countries that successfully entered the ranks of high-income economies shows that shifting economic growth from traditional factor-driven models to total factor productivity (TFP) driven models is the key to successfully leaping over the "middle-income trap." For example, during its transition period, South Korea significantly increased the contribution rate of TFP to growth, successfully transforming into an innovative development model. In sharp contrast, in Latin America, the contribution of TFP fell rather than rose, making it difficult for those countries to leap into high-income status.
The mutual promotion of "stability" and "progress" provides the sustained momentum for the endogenous growth of a large-scale economy. "Stability" and "progress" share a relationship of dialectical unity: "stability" creates a better environment and opportunity for "progress," while "progress" provides the dynamic support for the equilibrium of "stability." Under stable operations, "stability" becomes the consensus of all market entities, reducing the probability of negative expectations at the source and helping to block the transmission mechanism that turns short-term shocks into negative expectations. However, from the perspective of dynamic equilibrium, if one mechanically pursues stability without considering "progress," the effect of stability on expectation management will gradually decline or even turn directly into negative expectations. Only by upholding "seeking progress through stability" can we guide economic agents to continuously form positive expectations within a dynamic equilibrium, thereby promoting endogenous growth.
2. Scientifically grasp the policy logic of the general principle of seeking progress through stability
Implementing the general principle of seeking progress through stability in economic policy formulation requires maintaining strategic resolve. We must use medium- and long-term planning to guide economic and social development while ensuring that macroeconomic policies—such as counter-cyclical and cross-cyclical adjustments and expectation management—coordinate and work in synergy around major national strategies.
Enhancing the consistency of macroeconomic policy orientation through the scientific formulation of medium- and long-term plans. Economic operation is a complex dynamic equilibrium system involving production, consumption, and distribution; a single policy cannot achieve multiple goals. In economic practice, different dimensions of policy may harbor inconsistencies in objectives, potentially leading to "compositional fallacies" or "decompositional fallacies." Scientifically formulating medium- and long-term plans allows for an optimal policy mix under multiple constraints, effectively promoting synergy across fields—a key measure for improving policy consistency. China has consecutively formulated and implemented fourteen Five-Year Plans. The "Recommendations of the CPC Central Committee for Formulating the 15th Five-Year Plan for National Economic and Social Development," adopted at the Fourth Plenary Session of the 20th CPC Central Committee, has pointed the way forward and provided scientific guidance for economic and social development over the next five years.
Addressing cyclical fluctuations through the coordinated promotion of counter-cyclical and cross-cyclical adjustments. Laws of economic operation show that economic cycles do not appear in a single type or "fixed length" but often as nested long and short cycles. In addressing these cycles, counter-cyclical adjustment—focused on mitigating short-term fluctuations—targets short-term negative factors affecting the trend. In contrast, cross-cyclical adjustment—focused on mitigating long-term fluctuations—emphasizes long-term health and orderly growth. Only by promoting both in coordination can we achieve a dynamic balance between medium-to-long-term development and short-term stability. Currently, as global growth momentum weakens, downward pressure on China's economy is increasing. While implementing counter-cyclical policies that "favor stabilizing expectations, growth, and employment while cautiously introducing restrictive measures," we must focus more on long-term issues such as industrial restructuring, an aging population, and systemic risks. We must increase the intensity of cross-cyclical adjustment to provide a safeguard for the stable operation of our economy on the new journey.
Improving the expectation management mechanism to enhance policy predictability. Under a market economy system, a key channel for government intervention is guiding market entities to form reasonable expectations consistent with policy goals. However, if expectations deviate from policy effects, the goals become difficult to achieve, further widening the gap between a new round of policies and market expectations. Expectation management involves the government sending credible signals to market entities to enhance predictability and stabilize social expectations. Since the 18th National Congress, the Party Central Committee has attached great importance to expectation management. Both the Third and Fourth Plenary Sessions of the 20th CPC Central Committee proposed "improving the expectation management mechanism," indicating that China’s macro-control is paying more attention to policy predictability and the micro-foundations of intervention.
3. Uphold the general principle of seeking progress through stability to conduct economic work under the new situation
To succeed in economic work under the new situation, we must adhere to seeking progress through stability and improving quality and efficiency in our policy orientation. Following the deployments of the 2025 Central Economic Work Conference, we must grasp key leverage points within the overall situation, focusing on cultivating endogenous growth drivers such as domestic demand, innovation, human capital, and opening up. We must promote high-quality development and use the certainty of high-quality development to counter various uncertainties.
Expand domestic demand across all fronts. Domestic demand is the primary driver and stable anchor of economic growth. Expanding it enhances the endogenous power of the domestic cycle and effectively counters external shocks. We must implement special actions to boost consumption, formulate plans to increase the income of urban and rural residents, further raise minimum wages and basic pensions, and broaden channels for residents' property income to steadily expand the middle-income group. We should increase the supply of high-quality goods and services, lead the development of new types of consumption with "AI Plus," and accelerate the empowerment of consumer product upgrades through disruptive technological innovation. We must optimize "Two New" policies [2], make full use of various government bond funds, and implement "double interest subsidies" for personal consumer loans and service industry loans to increase support, expand the scope, and give local governments more autonomy.
Lead the development of new quality productive forces. New quality productive forces represent an advanced state of productivity that breaks away from traditional growth modes and paths; leading their development is an inherent requirement for high-quality development. We must promote the deep integration of technological and industrial innovation. Technological innovation should be guided by industrial demand to provide endogenous power, while industrial innovation should focus on raising technological levels to create value. We must reinforce the principal position of enterprises in technological innovation, building a multi-layered structure of innovation subjects featuring deep integration of industry, academia, and research, and efficient collaboration between large, medium, and small enterprises. We should give full play to the strategic supporting role of leading enterprises—especially state-owned enterprises—and stimulate the emergence of "specialized, refined, differential, and innovative" firms with outstanding collaborative capabilities. We must accelerate the smooth flow of advanced production factors toward new quality productive forces, breaking institutional barriers and improving the mechanism where factors participate in income distribution to better reflect the market value of knowledge, technology, and human capital.
Promote high-quality and full employment. The accumulation of human capital is an important path for endogenous growth. Promoting high-quality and full employment converts population resources into human capital, providing key support for high-quality development. We must stabilize employment for key groups such as college graduates and migrant workers, creating more jobs with stable growth expectations and establishing wage growth mechanisms. We should strengthen the synergy between industry and employment, driving job growth through industrial upgrading and supporting workers in improving their skills to adapt to the needs of emerging and future industries. We must reduce re-employment costs, increase support for workers from traditional industries who have lost their jobs, and encourage local governments to build intelligent employment platforms using AI to precisely match the unemployed with job vacancies.
Expand high-level opening up. Opening up is a powerful engine for high-quality development. Expanding high-level opening up allows for the effective use of both domestic and international markets and resources, improving the quality of the international cycle. We must actively expand autonomous opening up, focusing on the service sector to broaden market access. This includes promoting pilot programs in telecommunications and healthcare and steadily expanding autonomous opening in education and culture. We must steadily expand institutional opening up, proactively aligning with high-standard international economic and trade rules according to our development needs, achieving compatibility in rules, regulations, management, and standards regarding property rights protection, industrial subsidies, environmental standards, and labor protection. We must accelerate the creation of high-level opening platforms, optimizing the layout of Free Trade Zones (FTZs), solidly advancing the construction of the Hainan Free Trade Port, and accelerating the "dual-zone linkage" development of a high-standard free trade area network and a high-quality FTZ network.