Zhang Jiangang: Promoting High-Quality Economic Development through a Higher-Level Dynamic Balance of Supply and Demand
Since the 18th National Congress of the Communist Party of China, the Party Central Committee with Comrade Xi Jinping at its core has creatively proposed a series of new visions, new ideas, and new strategies while uniting and leading the people of the nation in the great practice of advancing socialism with Chinese characteristics, thereby forming and developing Xi Jinping Economic Thought. Over the past ten years, under the scientific guidance of Xi Jinping Economic Thought, China's economic development has achieved historical accomplishments and undergone historical transformations. Promoting high-quality development is a vital component of Xi Jinping Economic Thought. It primarily entails that in the New Development Stage, we must take the promotion of high-quality development as the main theme; persist in putting quality first and prioritizing efficiency; promote changes in quality, efficiency, and growth drivers; and adhere to taking supply-side structural reform as the main line. This involves improving the quality and efficiency of the supply system so that it better adapts to changes in the structure of demand, thereby achieving a higher-level dynamic equilibrium between supply and demand. These elements have deepened our Party’s understanding of the laws governing economic development and have enriched and developed Marxist political economy regarding the theory of developmental quality. High-quality development is the theme of China's economic and social development during the 14th Five-Year Plan period and beyond, and it concerns the overall situation of China's socialist modernization. To achieve high-quality development, we must be problem-oriented, persist in a systems concept [1], and promote sustained, healthy, and stable economic development within a higher-level dynamic equilibrium.
1. Dialectically handling the relationship between supply and demand
Current problems in China's economic development exist on both the supply and demand sides. Resolving these issues requires both deepening supply-side structural reform and conducting demand-side management, as well as implementing the strategy of expanding domestic demand. Advancing supply-side structural reform is consistent with implementing the strategy of expanding domestic demand; they are not in a relationship of simple substitution. From the perspective of political economy, it is one-sided to discuss the supply side while abandoning the demand side, or vice versa. The two are not in a zero-sum relationship where one exists at the expense of the other; rather, they are in a relationship of mutual coordination and synchronized advancement. To deepen supply-side structural reform, we must make good use of demand-side management as an important tool, organically combining the strategy of expanding domestic demand with the deepening of supply-side structural reform. We must place equal emphasis on demand-side management and supply-side reform to form a higher-level dynamic equilibrium where demand pulls supply and supply creates demand.
High-quality development is development that can better meet the people’s ever-growing needs for a better life; it is development that embodies the New Development Philosophy [2]; and it is development where both supply and demand rise to higher levels and achieve dynamic equilibrium at these higher levels. From the supply perspective, promoting high-quality development requires efforts to make the industrial system more complete and production organizational methods more networked and intelligent. We must constantly enhance the innovation capabilities, demand-capturing abilities, brand influence, and core competitiveness of enterprises and industries, and continuously improve the quality of products and services. From the demand perspective, the process of promoting high-quality economic development is one of continuously meeting the personalized, diversified, and upwardly mobile needs of the masses. These changes in demand continuously guide changes in the supply system and structure, which in turn constantly catalyze new demand through supply transformations.
Economic development is a process of spiraling upward; it is a process where supply and demand influence each other and undergo continuous upgrades. To promote high-quality economic development, we must focus on resolving various problems on both the supply and demand sides that constrain economic development, encouraging supply to satisfy upgraded demand more fully and demand to guide supply upgrades more efficiently, thereby forming a situation of benign interaction, mutual matching, and dynamic equilibrium between supply and demand.
Judging from the current state of economic development, China's economy faces issues on both the supply and demand sides that constrain high-quality development. On the supply side, this is primarily manifested in the structural imbalance of the real economy and the imbalance between finance and the real economy. On the demand side, we primarily face a lack of growth momentum in external demand, insufficient capacity and willingness for household consumption, a lack of new growth points for mid-to-high-end consumption, and a lag in the upgrading of consumption structures. Regarding supply-side issues, we need to stimulate the momentum of economic growth, optimize factor allocation, adjust production structures, and continuously improve supply quality and efficiency by deepening supply-side structural reform, thereby promoting economic growth. Regarding demand-side issues, we need to implement the strategy of expanding domestic demand, cultivate a more complete domestic demand system, expand household consumption, raise consumption levels, open up urban and rural consumer markets, improve the consumption environment, and continuously release consumption potential, giving full play to the fundamental role of consumption in driving economic development.
2. Adhering to supply-side structural reform as the main line
At present and for some time to come, among the series of problems and challenges facing China's economic development, structural problems are the most prominent. Among these, the principal aspect of the contradiction [3] lies on the supply side. Therefore, advancing supply-side structural reform is the main line of economic work for the current and future periods. It is an inevitable requirement for cultivating new growth drivers, forming new advantages for development, and achieving innovation-led development. It is the fundamental cure for transforming the mode of economic development and improving the efficiency and quality of the supply system.
General Secretary Xi Jinping has pointed out: "Supply-side structural reform, in the final analysis, has the ultimate goal of meeting demand, the main direction of improving supply quality, and the fundamental path of deepening reform." Meeting demand means conducting in-depth research on market changes, understanding actual and potential demand, and better satisfying the people's ever-growing needs for a better life while liberating and developing social productive forces. Improving supply quality means reducing ineffective supply, expanding effective supply, optimizing the allocation and combination of existing factors of production, optimizing the existing supply structure, and optimizing existing products and services—focusing on elevating the quality of the entire supply system and using innovation-driven, high-quality supply to lead and create new demand. Deepening reform means continuing to improve relevant systems and mechanisms so that the market plays the decisive role in resource allocation, while better exerting the role of the government, breaking monopolies, improving factor markets, and ensuring the price mechanism truly guides resource allocation.
Supply-side structural reform is a critical battle [4] that concerns the overall and long-term situation. We must adhere to the eight-character principle of "consolidating, strengthening, elevating, and smoothing" (巩固、增强、提升、畅通) [5]. This is the general requirement for deepening supply-side structural reform and promoting high-quality economic development at present and for some time to come. We must consolidate the results of the "Three Removals, One Reduction, and One Improvement" [6]; increase the intensity of "breaking, establishing, and reducing"; and persist in overcapacity reduction, inventory reduction, deleveraging, cost reduction, and bolstering weak spots. We must strengthen the vitality of micro-entities, accelerate the improvement of the modern enterprise system with Chinese characteristics, establish fair, open, and transparent market rules, improve a market-oriented, law-based, and internationalized business environment, and accelerate the construction of world-class enterprises. We must elevate the modernization level of industrial and supply chains, persist in self-control, security, and efficiency, carry out strategic design and precision policy implementation for supply chains by industry, and promote the optimization and upgrading of entire industrial chains. We must smooth the circulation of the national economy, relying on a strong domestic market to break industry monopolies and local protectionism, forming a benign cycle for the national economy.
3. Building a New Development Paradigm with expanding domestic demand as the strategic basis
With changes in the global political and economic environment and the rise of unilateralism and protectionism, constructing a New Development Paradigm—with domestic circulation as the mainstay and domestic and international dual circulation mutually reinforcing each other—has become an important strategic choice for China to enhance its level of economic development and respond to risks and challenges. General Secretary Xi Jinping noted: "To build a New Development Paradigm, we must persist in the strategic basis of expanding domestic demand, ensuring that production, distribution, circulation, and consumption rely more on the domestic market, thus forming a benign cycle for the national economy." Forming a strong domestic market is a vital support for constructing the New Development Paradigm and the fundamental basis for promoting high-quality economic development. Expanding domestic demand provides a guarantee of momentum for the sustained, healthy, and stable development of China's economy and creates favorable conditions for China's industrial and consumption upgrades.
To expand domestic demand, we must implement precision policies targeting the structural imbalances on the supply side, guide supply to improve quality and efficiency, and promote the swift transition between old and new growth drivers to facilitate high-quality economic development. We must focus on guiding the upgrading of consumption structures, satisfying the personalized, diversified, and high-end consumption needs of the masses, and encouraging the development of new consumption models and business formats. We should continuously improve the capacity and willingness of residents to consume, combining the expansion of consumption with the improvement of the people's quality of life. Furthermore, expanding domestic demand should focus on tapping the potential for investment demand, deepening the reform of the investment and financing system, comprehensively improving the investment environment, leveraging the role of government investment, and stimulating the vitality of private investment. We should carry out infrastructure investment with moderate foresight, advancing the construction of "new infrastructure" [7], new urbanization, and major projects in transportation and water conservancy. We should support the development of new technologies, products, formats, and business models, and accelerate the achievement of more results in key core technology breakthroughs.
4. Adhering to the general principle of seeking progress while maintaining stability
Achieving high-quality economic development is a systemic project characterized by long-term, arduous, and complex nature; it must be advanced systematically by adhering to the general principle of seeking progress while maintaining stability (稳中求进). General Secretary Xi Jinping has pointed out: "The general principle of seeking progress while maintaining stability is an important principle for our national governance and a methodology for doing economic work well." To promote high-quality economic development, we should persist in seeking progress through stability and consolidating stability through progress. We must ensure that economic growth, employment, and prices do not experience major fluctuations, and ensure that regional or systemic financial risks do not emerge. Simultaneously, we must be proactive and enterprising, firmly grasping the initiative in development, continuously improving the quality and efficiency of economic development, enhancing the core competitiveness of enterprises, and cultivating new economic growth points and poles. This ensures that new achievements are made in transforming the mode of economic development and in innovation-driven development. We must adhere to the principle of "establishing the new before breaking the old" [8] and making steady progress. We must organically combine stabilizing growth with adjusting structures and promoting reform; unify supply-side structural reform with demand-side management; and integrate the implementation of the New Development Philosophy with the construction of the New Development Paradigm, continuously driving changes in quality, efficiency, and momentum to achieve sustained, healthy, and high-quality economic development.
To advance high-quality economic development solidly under the general principle of seeking progress while maintaining stability, we must persist in a systems concept. General Secretary Xi Jinping emphasized that "the systems concept is a fundamental ideological and working method." Proceeding from systems theory, we should optimize economic governance methods, apply dialectics, take all factors into consideration for overall balance, and highlight key points to drive the whole situation. We must improve our ability to plan holistically and advance in a coordinated manner, seeking dynamic equilibrium among multiple objectives. We must dialectically handle the relationship between supply and demand to foster a situation of benign interaction and mutual matching; holistically consider short-term responses and medium-to-long-term development, external shocks and endogenous momentum; and coordinate the two domestic and international interests. We must efficiently coordinate epidemic prevention and control with economic and social development; adhere to the "whole country as a single chessboard" (全国一盘棋) [9] to better leverage the initiative of the central government, local governments, and all parties; and strive to match the overall situation with local parts, combine curing the symptoms with curing the root causes, and link gradual progress with breakthroughs. Finally, we must achieve the unification of development quality, structure, scale, speed, efficiency, and security.