Zhao Yiliang: Profoundly Understanding and Applying the "Five Must-Coordinates"
At present, our country’s economic operations are generally stable and progressing toward improvement, demonstrating strong vitality and resilience, yet they also face considerable risks and challenges. To this end, General Secretary Xi Jinping has emphasized that we “must coordinate the relationship between an effective market and a proactive government,” “must coordinate the relationship between aggregate supply and aggregate demand,” “must coordinate the relationship between fostering new drivers of growth and updating old ones,” “must coordinate the relationship between optimizing increments and revitalizing stock,” and “must coordinate the relationship between improving quality and expanding the aggregate.” These recognitions of objective laws reflect the key requirements for further improving economic work. Deeply understanding and applying these “Five Mandatory Coordinations,” and seizing the initiative in economic work through overall planning and all-around consideration, is of great significance for achieving a successful conclusion to the 14th Five-Year Plan [1] and a strong start for the 15th Five-Year Plan.
Better Integration of an Effective Market and a Proactive Government
Handling the relationship between the government and the market is the core issue of economic structural reform. Since the beginning of Reform and Opening-up, and especially since the New Era, the Party has led the people in deepening their understanding of the relationship between government and market through practical exploration, promoting a better integration of an effective market and a proactive government.
Coordinating the relationship between an effective market and a proactive government is key to forming an economic order that is both “dynamic without being chaotic” and “governed without being stagnant.” General Secretary Xi Jinping noted: “Market-determined resource allocation is a general law of the market economy; a market economy is essentially an economy where the market determines resource allocation. To improve the socialist market economy system, we must follow this law and focus on solving problems such as imperfect market systems, excessive government intervention, and inadequate supervision.” The advantage of an effective market lies in its ability to optimize resource allocation efficiency and maximize benefits. The role of a proactive government lies in assuming the functions of maintaining market order and compensating for market failures.
At the beginning of this year, the Guidelines for the Construction of a Unified National Market (Trial) was formally released. The sixth meeting of the Central Financial and Economic Affairs Commission [2] pointed out that to advance the construction of a unified national market in depth, the basic requirements are the “Five Unifications and One Openness”—namely, unifying the basic market systems, market infrastructure, standards for government behavior, market supervision and enforcement, and factor and resource markets, while continuously expanding internal and external openness. In current economic work, whether constructing the New Development Paradigm [3] or promoting high-quality development, there is an urgent need to build a unified national market. This requires coordinating the relationship between an effective market and a proactive government. On one hand, based on the principles of marketization and the rule of law, we must give full play to the decisive role of the market in resource allocation, create a fairer and more vibrant market environment, and use the “invisible hand” to solve problems of vitality and efficiency. On the other hand, the government must play its role better, speed up the transformation of government functions, and use the “visible hand” to solve problems of order and fairness. By scientifically defining the boundaries between government and market, we can regulate improper market competition and intervention, thereby improving the quality and efficiency of economic development.
Dynamic Equilibrium of Aggregate Supply and Aggregate Demand
Supply and demand are the two fundamental aspects of the internal relations of a market economy, constituting a dialectical relationship that is both oppositional and unified. Aggregate supply generally refers to the total volume of products and services provided by a national economy to society as a whole over a certain period. Aggregate demand generally refers to the total purchasing power of society for products and services over a certain period. Without demand, supply cannot be realized, and new demand can give rise to new supply; without supply, demand cannot be satisfied, and new supply can create new demand. The dynamic equilibrium of aggregate supply and aggregate demand is a prerequisite for the healthy operation of the socialist market economy.
Coordinating the relationship between aggregate supply and aggregate demand is an important foundation for smoothing the domestic economic cycle. To do economic work well, we must apply force synergistically from both the supply and demand ends, ensuring that both sides are strongly driven, generally matched, dynamically balanced, and interacting benignly. Demand-side management focuses on solving aggregate problems and emphasizes short-term regulation, primarily expanding or suppressing demand by adjusting taxation, fiscal expenditure, and monetary credit to drive economic growth. Supply-side management focuses on solving structural problems and emphasizes stimulating the drivers of economic growth, primarily improving the quality and efficiency of the supply system by optimizing factor allocation and adjusting the production structure.
Currently, to smooth the domestic economic cycle, we must organically combine deepening supply-side structural reform with implementing the strategy of expanding domestic demand. On one hand, we must comprehensively optimize and upgrade the industrial structure, strengthening the resilience of the supply system by improving innovation capabilities, competitiveness, and comprehensive strength. We must enhance the quality of the supply system by optimizing factor allocation, promoting technological innovation, and adjusting production structures, continuously expanding effective supply and high-end supply to reinforce the adaptability of supply to changes in demand. On the other hand, we must firmly grasp the strategic basis of expanding domestic demand, stimulating latent domestic demand and accelerating the repair of shortfalls in domestic demand, especially consumption. We must implement the Special Action Plan for Boosting Consumption issued in March this year, applying the “Two News” and “Two Heavies” [4] policies with greater force to continuously release consumption potential and stimulate investment vitality. By exerting force from both sides, we can continuously enhance the suitability and balance of supply and demand, allowing supply-side reform and demand-side management to complement and reinforce each other. This will form a higher-level dynamic equilibrium where demand pulls supply and supply creates demand, achieving a benign cycle for the national economy.
Synergistic Advancement of Fostering New Drivers and Updating Old Drivers
New and old drivers of growth refer to different sources of power in economic development. New drivers refer to the power formed in the new round of technological revolution and industrial transformation, while old drivers refer to the power formed by relying on traditional industries and development models. New and old drivers are interconnected and influence one another. The cultivation of new drivers is based on old drivers, while the update of old drivers requires the leadership and drive of new drivers. General Secretary Xi Jinping emphasized: “We must take technological innovation as the lead, vigorously cultivate and strengthen emerging industries and future industries, occupy the commanding heights of international competition, and shape new drivers and advantages for economic development. At the same time, we must accelerate the transformation and upgrading of traditional industries, which serve as the basic support for economic growth, employment, and income, so that they radiate new vitality and promote a smooth transition between old and new development drivers.”
Coordinating the relationship between fostering new drivers and updating old ones is an inherent requirement for developing new quality productive forces according to local conditions. When economic development reaches a certain stage, it inevitably faces the problem of transitioning between old and new drivers. This transition is essentially a shift from traditional factor-driven growth to innovation-driven growth, involving the adjustment of power mechanisms, the upgrading of industrial structures, and the reshaping of institutional mechanisms. It is not a simple replacement of the old with the new, but rather the updating of old drivers while fostering and strengthening new ones. On one hand, we must emphasize the development of strategic emerging industries and the forward-looking layout of future industries, shaping new advantages and proactively fostering new drivers. On the other hand, we must focus on using advanced and frontier technologies to transform and upgrade traditional industries. In this process, we must prevent the abandonment of traditional industries as “low-end” or “backward,” and also focus on solving the problem of traditional industries being “large but not strong.” This requires the timely application of technological innovation achievements to specific industries and industrial chains, improving the modern industrial system and further enhancing the resilience and security levels of industrial and supply chains.
The State Council issued the Opinions on Deeply Implementing the ‘AI+’ Action in August this year to comprehensively promote AI technological innovation, industrial development, and empowering applications. Implementing the “AI+” action—fully utilizing our country’s advantages of rich data resources, a complete industrial system, and broad application scenarios—will strengthen the deep integration of AI across various fields. This helps accelerate the transition between old and new drivers, promotes the upgrading of traditional industries, and opens new tracks for strategic emerging industries and future industries. The cultivation of new drivers and the updating of old ones is a long-term process. We should persist in seeking progress while maintaining stability, promoting stability through progress, and “establishing the new before breaking the old” [5]. Through systemic integration and synergistic cooperation, we must grasp the relationships between the new and the old, stability and progress, and establishment and breaking. We must deeply implement the innovation-driven development strategy, promote the innovative configuration of production factors and the systematic upgrading of industrial structures, and promote high-quality development through the smooth transition of growth drivers.
Optimization of Increments and Revitalization of Stock Complementing Each Other
Stock and increment are a pair of important concepts in economics. Stock refers to the total wealth formed by past economic activities, generally representing existing commodities, capital, and industries, constituting the basic base of the current economy. Increment refers to the increase in assets generated by economic activities during a certain period, generally representing new resources and new production capacity.
Coordinating the relationship between optimizing increments and revitalizing stock is an important way to comprehensively improve resource allocation efficiency. Revitalizing stock refers to the optimization and reorganization of economic resources including land, capital, technology, equipment, and talent, reallocating idle or low-efficiency resources to more efficient fields to create and realize greater benefits. Its core lies in activating idle assets, tapping into and releasing the potential of existing resources, and improving resource utilization efficiency. Optimizing increments emphasizes paying more attention to improving quality and efficiency when inputting new factors, maximizing the marginal rate of return of various assets through technological innovation and industrial upgrading.
It can be said that optimizing increments opens space and provides opportunities for revitalizing stock, while revitalizing stock creates the prerequisites and provides resources for optimizing increments; the two are organically unified and complementary. After long-term development, our country needs to coordinately utilize all kinds of incremental and stock resources, becoming adept at using stock revitalization to drive incremental growth. For example, to promote high-quality urban development, it is necessary to fully transform and utilize stock housing such as old factories, low-efficiency office buildings, and idle traditional commercial facilities on the basis of a comprehensive survey of urban housing, facilities, land, and other assets. We must establish planning adjustment mechanisms adapted to the needs of functional conversion and mixed-use requirements. Currently, various localities are revitalizing low-efficiency land in practice, ensuring space for industrial transformation and upgrading, expanding the space for the development of new quality productive forces, and increasing new drivers for growth. By revitalizing stock to drive increments and comprehensively improving resource allocation efficiency, we will play an important role in promoting high-quality development.
Dialectical Unity of Improving Quality and Increasing the Aggregate
The law of the transformation of quantity into quality is a general law of the development of things; economic development is a dynamic process of the dialectical unity of quantitative change and qualitative change. The aggregate is the foundation, concerning the speed, scale, and degree of economic development. Without a certain aggregate, there is no guarantee for the steady operation of the economy, and high-quality development is out of the question. Only through the continuous accumulation of the economic aggregate can conditions be created for qualitative improvement. Quality is the key, concerning the structure, level, and benefits of economic development.
Coordinating the relationship between improving quality and expanding the aggregate is an inevitable requirement for consolidating the material foundation of Chinese-path modernization. Expanding the aggregate emphasizes pursuing the growth of quantitative indicators such as industrial scale and market share, reflecting the accumulation of quantity, which can provide a solid material foundation and powerful technical support for high-quality economic development. A large aggregate means possessing huge resources and production capacity, and the material basis for realizing industrial upgrading and technological progress. Improving quality emphasizes pursuing the growth of qualitative indicators such as technical content, innovation capability, structural rationality, and resource utilization efficiency, which signifies a strong internal drive for innovation and sustainable development capacity. From the perspective of their relationship, qualitative improvement provides continuous momentum for quantitative growth, and quantitative growth provides an important foundation for qualitative improvement; the two are mutually conditional and complementary.
General Secretary Xi Jinping pointed out: “Economic development is a process of spiral ascent; ascent is not linear. When quantity accumulates to a certain stage, it must turn toward qualitative improvement. Our country’s economic development must also follow this law.” When economic development reaches a certain stage, the industrial structure will shift from being dominated by resource-intensive and labor-intensive industries to being dominated by technology-intensive, innovation-driven industries and the service sector. Building a modern socialist country in all respects puts forward new and higher requirements for the scale, quality, structure, and speed of economic development; we must coordinate the relationship between improving quality and expanding the aggregate.
During the “14th Five-Year Plan” period, our country’s economic aggregate has successively broken through 110 trillion yuan, 120 trillion yuan, and 130 trillion yuan, and is expected to reach around 140 trillion yuan this year, with positive results achieved in high-quality development. As the 14th Five-Year Plan draws to a close, we are planning and gathering momentum for the 15th Five-Year Plan. We must unify effective qualitative improvement and reasonable quantitative growth throughout the entire process of high-quality development, both continuously expanding the scale and aggregate while focusing on enhancing quality and efficiency, so as to promote the realization of development that is of higher quality, more efficient, fairer, more sustainable, and more secure.