Shi Yulong: Strategic Choices for Achieving the Second Centenary Goal
Constructing a new development pattern is an original achievement within Xi Jinping Thought on Economy, possessing great theoretical and practical significance. In April 2020, at a meeting of the Central Committee for Financial and Economic Affairs, General Secretary Xi Jinping forward-lookingly proposed the construction of a new development pattern with the domestic cycle as the mainstay and the domestic and international dual circulation mutually promoting each other. The Fifth Plenary Session of the 19th CPC Central Committee provided a systematic exposition on constructing the new development pattern, and the 20th CPC National Congress made important strategic deployments regarding accelerating its construction and focusing on promoting high-quality development. Recently, during the second group study session of the Political Bureau of the CPC Central Committee, General Secretary Xi Jinping offered a profound exposition and set forth clear requirements for accelerating the construction of the new development pattern and enhancing the security and initiative of development. This provides a powerful ideological impetus and a scientific guide for action as we embark on a new journey with full confidence to open up new horizons.
Constructing the New Development Pattern Concerns the Overall Situation and Has Far-Reaching Influence
Constructing a new development pattern is a strategic decision based on achieving the Second Centenary Goal [1] and coordinating development and security; it is a strategic deployment to grasp the initiative for future development. It holds important and far-reaching significance for comprehensively building a great modern socialist country and comprehensively promoting the great rejuvenation of the Chinese nation through Chinese-path modernization.
First, it focuses on coordinating the "two overall situations" [2] and concerns the timely achievement of the Second Centenary Goal. Currently, we are closer to, and have more confidence and capability than at any period in history to achieve the goal of the great rejuvenation of the Chinese nation. At the same time, the world’s changes unseen in a century [3] are accelerating, and the global economic map and governance landscape are facing a reshaping. We currently find ourselves at a point where "the boat is in midstream where the current is swiftest, and the path is halfway up the mountain where the slope is steepest" [4]—a time when the further we advance, the more difficult and dangerous it becomes, and where there is no turning back; we must press on. Placing the foothold of development domestically, unblocking the domestic cycle, and promoting the mutual reinforcement of domestic and international dual circulation is the strategic choice for achieving the modernization of China's economy. Only by accelerating the construction of a new development pattern, stabilizing the basic economic plate, and promoting the effective improvement of economic quality alongside reasonable growth in quantity can we continuously enhance our country's economic survivability, competitiveness, development capacity, and sustainability, thereby triumphantly achieving the goal of building a great modern socialist country in all respects.
Second, it focuses on coordinating the expansion of domestic demand with the deepening of supply-side structural reform, and concerns the consolidation of the foundations of China’s economic development. China possesses a super-sized domestic market, the most complete industrial system by category, comprehensive supporting capabilities, and abundant human resources. Constructing a new development pattern is conducive to cultivating a complete domestic demand system, improving the adaptability and flexibility of the supply structure, making the supply system better suited to changes in the demand structure, and achieving a leap toward a high-level balance between supply and demand. Only by accelerating the construction of a new development pattern, organically combining the strategy of expanding domestic demand with the deepening of supply-side structural reform, and forming a higher-level dynamic balance where demand drives supply and supply creates demand can we realize a virtuous cycle of the national economy. This will continuously improve the quality of economic development, consolidate its foundation, cross the critical thresholds of a major power's economic development, and steadily enhance China's economic strength, technological prowess, and comprehensive national power.
Third, it focuses on coordinating development and security, and concerns the enhancement of the security and stability of development. Currently, the profound impact of the pandemic of the century persists, anti-globalization sentiments are rising, and unilateralism and protectionism are significantly increasing. The global economic recovery is sluggish, local conflicts and turbulence occur frequently, and global geopolitical and security risks are intensifying. The uncertainty and instability of China's external development environment have risen significantly, making the enhancement of development security and stability a top priority. Only by accelerating the construction of a new development pattern, breaking through the bottlenecks and "choke points" [5] of the national economic cycle, responding to the instability of the international cycle with the reliability of the domestic cycle, achieving high-level self-reliance and strength in science and technology, and improving the quality and level of the domestic and international dual circulation, can we firmly hold the bottom line of secure development and ensure that the "great ship of the Chinese economy" sails steadily and far.
Fourth, it focuses on coordinating international cooperation and competition, and concerns firmly grasping the initiative for future development. Currently, the pattern of the international economic cycle is undergoing accelerated reconstruction, the global division of labor system is experiencing deep adjustments, and competition is becoming increasingly fierce. Accelerating the construction of a new development pattern is a proactive choice based on the characteristics of a super-sized economy to reshape China's new advantages in international cooperation and competition. Only by accelerating the construction of a new development pattern—participating more effectively in the international division of labor, more actively shaping international industrial, supply, and value chains, and improving global resource allocation capabilities amidst cooperation and competition—can we broadly build consensus, carry out deep cooperation, and cultivate new advantages in the face of the world's changes unseen in a century, thereby winning strategic initiative through open development.
The Construction of the New Development Pattern is Advancing Solidly and Achieving Results
Under the scientific guidance of Xi Jinping Thought on Economy, we have proactively constructed a new development pattern. Ideological consensus has continuously coalesced, capacity and levels have continuously improved, the foundation of work has been steadily consolidated, and policies and institutions have been continuously refined. The leading role of the domestic cycle has been further strengthened, and the virtuous interaction and mutual promotion of the domestic and international dual circulation have accelerated. This has effectively supported the steady, healthy, and sustainable development of China's economy, laying a solid foundation for achieving high-quality development.
First, consumer demand continues to be released. In recent years, by enhancing consumption capacity, improving consumption conditions, and creating consumption scenarios, China's consumption potential has been released at an accelerated pace, and the role of consumption in driving the economic cycle has continued to manifest. China has become the world's second-largest consumer market, with total retail sales of social consumer goods reaching 44 trillion yuan in 2022. The consumption structure is upgrading rapidly; bulk consumption such as automobiles is flourishing, service consumption is expanding and improving in quality, and new consumer demands such as online and green consumption are being effectively stimulated. During the 2023 Spring Festival, sales revenue in consumption-related industries nationwide increased by 12.2% year-on-year, domestic tourism revenue increased by 30% year-on-year, and movie box office receipts exceeded 6.7 billion yuan, ranking second in the history of China's Spring Festival box office. While consumer demand continues to be released, China's consumer prices have maintained a steady trend; over the past decade, the growth of the consumer price index has remained stable at a low level of around 2%, creating favorable conditions for expanding consumption.
Second, effective investment continues to expand. Focusing on high-quality development and comprehensive improvement of quality and efficiency, China's total investment has maintained steady growth, and the investment structure has been continuously optimized. In 2022, despite a 10% year-on-year decline in real estate development investment, China's fixed-asset investment increased by 5.1% year-on-year, exceeding 57 trillion yuan. Within this, investment in manufacturing grew by 9.1% year-on-year, and investment in high-tech manufacturing grew by 22.2% year-on-year, achieving dual improvements in both investment scale and quality. Infrastructure construction has proceeded in an orderly manner, with major projects like the Wudongde and Baihetan hydropower stations put into operation, and major engineering projects such as the Sichuan-Tibet Railway and "East Data, West Computing" [6] being fully implemented, exerting the leading role of investment in the economic cycle. Driven by the reform of the investment and financing system, the investment environment has been continuously optimized, and investment confidence has been further strengthened.
Third, solid steps have been taken toward self-reliance and strength in science and technology. China's technological prowess is transitioning from quantitative accumulation to qualitative leaps, and from individual breakthroughs to systemic capacity enhancement. Overall technological strength has increased significantly, and the ranking in the Global Innovation Index has risen continuously, jumping to 11th in the world in 2022. Investment in science and technology has increased substantially, with total R&D expenditure exceeding 3 trillion yuan, firmly ranking second in the world. R&D intensity has risen to 2.55%, approaching the average level of OECD countries. The strategies of invigorating China through science and education and strengthening the nation through personnel are being solidly advanced, with the total number of R&D personnel firmly ranking first in the world. The innovation platform system has been continuously refined, national key laboratories have seen accelerated construction, and Beijing, Shanghai, and the Guangdong-Hong Kong-Macao Greater Bay Area have entered the top 10 global science and technology clusters. Reforms of the science and technology system have deepened, and innovation mechanisms have been perfected. We have proactively designed and led international "Big Science" plans and projects, established technology partnership programs, and the "circle of friends" [7] for open cooperation in technological innovation has continued to grow.
Fourth, the modernized industrial system is becoming increasingly complete. The pace of high-end development, digital empowerment, and green transformation in China's industry has accelerated, and the industrial base capacity and level of industrial modernization have improved rapidly. In 2022, the value-added of high-tech manufacturing and equipment manufacturing grew by 7.4% and 5.6% year-on-year respectively, with their leading role in the transformation and upgrading of manufacturing social productivity continually strengthening. The digital economy is developing with strong momentum; industrial digitalization and digital industrialization are accelerating, and the Industrial Internet has been applied to 45 major categories of the national economy, covering R&D design, production and manufacturing, and marketing services. The "green content" of industrial development has increased significantly, with green industries becoming new drivers of economic growth. The total installed capacity of renewable energy has exceeded 1.2 billion kilowatts. The new energy vehicle industry has seen explosive growth, with production and sales ranking first in the world for eight consecutive years.
Fifth, the pace of coordinated urban-rural and regional development has accelerated. The outcomes of poverty alleviation have been consolidated and expanded in an effective transition toward rural revitalization. The two-way flow of urban and rural factors has become smoother, and the income gap between urban and rural residents continues to narrow. The regional coordinated development strategy, regional major strategies, and the functional zoning strategy are being solidly advanced. The carrying capacity of economically advantaged regions, such as central cities and city clusters, has been further enhanced, and a regional economic layout of complementary advantages and high-quality development is quickly taking shape. In 2022, the total GDP of the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the nine mainland cities of the Guangdong-Hong Kong-Macao Greater Bay Area reached 49.5 trillion yuan, accounting for over 40% of the national total, playing an important role as the "ballast stone" of the national economy and the power source for high-quality development. The results of the comprehensive ecological restoration of major rivers have become further evident. Urbanization with the county seat as an important carrier is being solidly carried out, and a "1+N+X" policy system for addressing weaknesses and strengthening shortcomings in county seats has preliminarily formed.
Sixth, the construction of a unified national market is accelerating. The basic market institutions have been continuously refined; opinions on accelerating the construction of a unified national market have been issued and implemented. The negative list system for market access has been comprehensively implemented and updated, and the reform of the commercial system has continued, leading to a continuous reduction in institutional transaction costs for market entities. The "separation of permits from business licenses" reform has achieved full coverage, and various regulations and practices that hinder a unified national market and fair competition are being cleared away and abolished. The pace of market-based allocation of factors has significantly quickened; the registration-based IPO reform for stock issuance has been fully implemented, a unified urban-rural market for construction land is quickly forming, and the reform of the household registration (hukou) system is continuously advancing. Significant progress has been made in the construction of a modern circulation system, the national backbone circulation network is being gradually improved, and the ratio of total social logistics costs to GDP continues to decline.
Seventh, high-level opening up has achieved significant results. Facing a more complex and severe external environment, China's foreign trade has demonstrated strong resilience and vitality, and the linkage effect of the domestic and international dual circulation has continuously enhanced. The scale of trade has reached a new level; in 2022, China's total trade in goods hit a record high of 42.1 trillion yuan, maintaining its position as the world's largest trader in goods for six consecutive years. Total trade in services was approximately 6 trillion yuan, a year-on-year increase of 12.9%. The trade structure has been continuously optimized, with the proportion of general trade steadily rising, and exports of capital- and technology-intensive products growing rapidly. Against the backdrop of sluggish global cross-border investment, foreign investment in China has grown against the trend, with actual utilized foreign capital rising from 144.37 billion USD in 2020 to 189.13 billion USD in 2022. The Regional Comprehensive Economic Partnership (RCEP) has entered into force and implementation, the innovative demonstration role of Free Trade Zones has been continuously enhanced, and the construction of the Hainan Free Trade Port has accelerated. International train services have achieved multi-directional connectivity, with China-Europe freight trains continuing to grow—operating 16,000 trips and sending 1.6 million TEUs in 2022—and the "New Western Land-Sea Corridor" trains growing rapidly. Especially during the pandemic, China-Europe freight trains served as an important stable channel for unblocking Asia-Europe trade in goods, becoming a major achievement and highlight of the Belt and Road Initiative.
Eighth, the capacity for secure development has been significantly enhanced. Facing increased uncertainty and unpredictable factors in the international environment, as well as intensified fluctuations in the global supply of primary products, China has persisted in coordinating development and security, focusing on its own production of primary products. We use the certainty of stable domestic production and supply to respond to the uncertainty of the external environment. We have firmly held the "red line" of 1.8 billion mu [8] of arable land, with grain output reaching over 1.3 trillion jin [9] for eight consecutive years. Domestic energy production guarantee capacity has continuously improved, and we have vigorously developed a diversified clean power supply system. In 2022, the production of major energy products—such as coal, oil, gas, and electricity—by industrial enterprises above designated size all maintained growth, and dependence on foreign oil and gas decreased. By coordinating the "addressing of shortcomings" and "strengthening of advantages," we have implemented projects to rebuild the industrial foundation and actions to reinforce and supplement manufacturing chains, continuously improving the resilience and competitiveness of industrial and supply chains. Since the onset of the pandemic, relying on a complete industrial system and strong mobilization and conversion capabilities, China rapidly formed a powerful production and supply capacity for epidemic prevention materials in a short period. Our industrial and supply chains demonstrated strong resilience during the "stress test" of the pandemic's impact.
Constructing a new development pattern requires deepening our understanding and highlighting key priorities.
All great achievements are the result of continuous struggle, and all great causes must be advanced by building on past successes to open up new vistas. Summarizing experience and deepening understanding are important "magic weapons" [10] for continuous struggle. In practice, we have felt even more deeply the great strategic significance of constructing the new development pattern for comprehensively building a modern socialist powerhouse, and have grasped even more profoundly its major practical significance for responding to the changes unseen in a century [11].
First, we must firmly grasp the key of smoothing out circulation. The key to constructing the new development pattern lies in the unimpeded circulation of the economy. If "clogging points" or "break points" appear in the process of economic circulation, circulation will be obstructed. At the macro level, this manifests as declining growth rates, increasing unemployment, accumulation of risks, and imbalances in international payments; at the micro level, it manifests as overcapacity, declining corporate efficiency, and falling household incomes. We must resolve the clogging points in various links such as production, distribution, exchange, and consumption within the domestic macro-circulation. We must focus on breaking down local micro-circulations and smoothing out the domestic macro-circulation, coordinating the expansion of domestic demand with the deepening of supply-side structural reform to improve the compatibility of supply and demand, and effectively strengthening the endogenous power and stability of the domestic macro-circulation. At the same time, based on changes in comparative advantages, we should dynamically adjust the key areas and methods of our participation in international circulation, focusing on improving its quality and level. This will form an interactive relationship where supply and demand match, and domestic and international circulations promote each other, continuously promoting a virtuous cycle of the national economy that repeats in a spiral ascent.
Second, we must correctly grasp the dialectical relationship between internal and external circulation. It must be recognized that whether it is coordinating development and security or participating in international competition and cooperation, internal and external circulations promote each other and neither can be neglected. In the process of constructing the new development pattern, we must take the domestic macro-circulation as the mainstay and continuously strengthen its leading role, persisting in placing the development of the country and the nation on the basis of our own strength, and using a solid domestic foundation to enhance our ability and confidence to respond to various risks and challenges. Simultaneously, we must unswervingly implement the basic state policy of opening up to the outside world and create a new system for a higher-level open economy. To achieve the mutual promotion of domestic and international dual circulation, we must comprehensively leverage the demand advantages of a super-large market and the supply advantages of a complete industrial system to attract and converge high-end global factors and resources, creating a "gravitational field" for global resources. We must attract and utilize foreign investment with greater intensity, while also steadily "going out" [12], strengthening service, supervision, and risk prevention for overseas investment.
Third, we must persist in a problem-oriented approach and the "systems concept." Persisting in a problem-oriented approach and the systems concept is an important methodology of Xi Jinping Economic Thought. In persisting with a problem-oriented approach to construct the new development pattern, we should focus on major risks and challenges, identify key links in priority areas, and work on smoothing clogging points, leveraging advantages, patching up shortcomings, and strengthening weak links. We must focus on turning crises into opportunities and create conditions to improve the quality and level of economic circulation. In persisting with the systems concept, we must recognize that the economic system is a complete and continuous whole in time and space, and a complex system in constant motion and interconnection. We must strengthen forward-looking thinking, overall planning, strategic layout, and holistic advancement. We should improve policy coordination, using breakthroughs in key areas to drive overall progress, and using overall progress to achieve breakthroughs in key areas, striving to ensure that the whole and the parts are coordinated and that gradual progress is combined with decisive breakthroughs.
Fourth, we must guard against cognitive misunderstandings and deviations in action. Constructing the new development pattern is a complex piece of systematic engineering. In practice, some misunderstandings and deviations still exist and must be corrected promptly. Cognitively, we must avoid one-sided understandings that emphasize only internal or only external circulation; we must also avoid the erroneous perception of treating the long-term task of constructing the new development pattern as a short-term emergency measure; and we must avoid interpreting technological self-reliance and strength as "closed-door" repetitive construction aimed at being "small but complete." In action, we must prevent "each fighting their own battle" [13]—considering only the small market of one's own locality or region and engaging in one's own micro-circulation. We must also prevent departmentalism, where actors believe that constructing the new development pattern has little to do with their own department and only look after their own "one-third of an acre of land" [14], failing to form a combined force for work.
Resolutely Unifying Understanding and Action with the Decision-Making Deployments of the Party Central Committee
The report to the 20th Party Congress pointed out that the new development pattern should be formed by 2035. We must profoundly comprehend and accurately grasp the decision-making deployments of the Party Central Committee. With a firmer ideological consciousness, a work spirit of "true grasping and actual doing" [15], and precise and pragmatic policy measures, we must effectively incorporate the work of our own regions, departments, and fields into the planning and promotion of the new development pattern. We must focus on smoothing out the domestic economic macro-circulation, promoting the virtuous interaction of domestic and international dual circulation, and effectively enhancing the security and initiative of development.
First, we must accelerate the formation of a complete system of domestic demand to achieve a higher-level dynamic balance. We must persist in the strategic basis of expanding domestic demand, expanding the demand system according to the entire chain of production, distribution, circulation, consumption, and investment-reproduction. We must clear the clogging points and difficulties constraining economic circulation—such as insufficient effective supply capacity, large income distribution gaps, low modernization of the circulation system, unsound consumption systems and mechanisms, and the need to optimize investment structures. We must focus on expanding consumer demand supported by income, investment demand with reasonable returns, and financial demand constrained by principal and debt. We must tap the potential of domestic demand, promote consumption upgrading, and expand investment space. We must focus on optimizing market structures, improving market mechanisms, stimulating market vitality, and enhancing market resilience to further enlarge and strengthen the domestic market, continuously improving its attractiveness and allocation capacity for global resource factors.
Second, we must accelerate the pace of technological self-reliance and strength to shape new advantages in domestic and international dual circulation. We should improve the new-type whole-nation system [16], strengthen national strategic technological forces, and coordinately promote the construction of international and regional technological innovation centers to enhance the overall efficiency of the national innovation system. We must deepen the reform of the science and technology system, reinforce the primary position of enterprises in technological innovation, form basic institutions that support innovation, and optimize the allocation of domestic and foreign innovation resources. We must strengthen basic research, implementing a batch of forward-looking and strategic national major science and technology projects in frontier fields such as artificial intelligence, quantum information, and brain science, while accelerating the breakthrough of "chokepoint" [17] technologies in important fields. We should promote the effective linkage of the strategy for invigorating China through science and education, the strategy on developing a quality workforce, and the innovation-driven development strategy. Led by high-level technological self-reliance and strength, we must integrally advance education, technology, and talent work to achieve the deep integration of the innovation chain, industrial chain, capital chain, and talent chain.
Third, we must accelerate the construction of a modernized industrial system and enhance our status as a global manufacturing center. We must place the focus of development on the real economy, solidly advancing new-type industrialization, and accelerating the construction of a manufacturing powerhouse, a quality powerhouse, a space powerhouse, a transportation powerhouse, a cyber powerhouse, and a Digital China. We must actively promote "supplementing the chain" for weak areas, "extending the chain" for advantageous industries, "upgrading the chain" for traditional industries, and "building the chain" for emerging industries. We should accelerate the high-end, intelligent, and green development of the manufacturing industry. We must promote the integrated and clustered development of strategic emerging industries, cultivating new growth engines such as next-generation information technology, artificial intelligence, biotechnology, new energy, new materials, high-end equipment, and green environmental protection. We should build a new system for high-quality and efficient service industries, promoting the deep integration of modern services with advanced manufacturing and modern agriculture, as well as the deep integration of the digital economy and the real economy. We must build a modernized infrastructure system and strengthen the security guarantee for food, energy resources, and important industrial and supply chains.
Fourth, we must solidly promote the coordinated development of urban and rural areas and regions to expand the vast and deep space for circulation. We must solidly promote the implementation of major urban-rural and regional strategic deployments, enhancing the integrity and coordination of development. This provides multi-gradient growth, diversified development, and strong resilient momentum for constructing the new development pattern. We must deeply implement the rural revitalization strategy, accelerate the construction of an agricultural powerhouse, and the pace of agricultural and rural modernization. We must deeply promote "people-centered" new-type urbanization, promoting urban-rural integrated development, smoothing the urban-rural economic circulation, and increasing the coverage of the domestic macro-circulation. We should establish and improve mechanisms for cross-regional linked development, improve regional cooperation and benefit adjustment mechanisms, and optimize the layout of major productive forces. We should focus on enhancing the functions of the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Guangdong-Hong Kong-Macao Greater Bay Area as power sources leading high-quality development. We must also strengthen the guarantee capabilities of major agricultural production areas, key ecological functional zones, energy and resource-rich areas, and border areas, promoting the deep integrated development of the regional coordinated development strategy, major regional strategies, and the main functional zone strategy, building a regional economic layout and territorial space system characterized by complementary advantages and high-quality development.
Fifth, we must comprehensively deepen reform and opening up to enhance the power and vitality of internal and external circulations. We should advance the market-oriented reform of factors such as land, labor, capital, technology, and data, promoting the autonomous and orderly flow of factors and improving factor allocation efficiency. We must break through the key clogging points constraining economic circulation and accelerate the construction of a national unified large market that is efficient, standardized, fair in competition, and fully open. We should strengthen the construction of the business environment, improve basic market economy institutions such as property rights protection, market access, fair competition, and social credit, and strengthen anti-monopoly and anti-unfair competition efforts. We must steadily expand institutional opening up in terms of rules, regulations, management, and standards; innovate mechanisms for the development of trade in services; accelerate the construction of the Hainan Free Trade Port; and implement the strategy to upgrade pilot free trade zones. We should promote the high-quality development of the Belt and Road Initiative, expanding new spaces for cooperation in fields such as health, green development, digital economy, and innovation. We must promote the stability of scale and optimization of structure in foreign trade, and increase the intensity of attracting investment in key countries and manufacturing sectors.
(The author is the Director of the Xi Jinping Economic Thought Research Center)