Depth report

　　

On October 18th, Xi Jinping gave a report at the 19th National Congress of the Communist Party of China to gather global attention. In view of the substantial increase in China's global influence in the past five years, China's policy orientation in the next five years may have a more profound impact on the global market and development.

Looking at the report of Xi Jinping's 19th National Congress of the Communist Party of China, it can be divided into two main lines. One is a summary of the achievements of the past five years; the other is an explanation of the policy program for the next five years.

Five years of achievements across the initial stage

    In the past five years, China's global influence has been increasing. Even after the financial crisis, developed economies have generally experienced economic downturns, and there has been a trend of overtaking developed countries on corners. There is no doubt that the great achievements of the past five years have enabled China to leapfrog the primary stage of socialism and move towards the intermediate stage.

    As mentioned by Xi Jinping in the report of the 19th National Congress of the Communist Party of China, China is firmly ranked as the second largest economy in the world and has contributed more than 30% to the world economy. The Belt and Road Initiative, the Asian Infrastructure Investment Bank, the G20 Summit, and the BRICS Leaders Summit have demonstrated international influence. Power, etc., all reflect the important achievements in the economic field in the past five years.

    According to the author's observation, China's global competitiveness has also improved significantly, which is reflected in the following: First, the global share of exports has increased significantly. The author once fully elaborated on this in the earlier column "Three Reflections on the Tenth Anniversary of the Financial Crisis". In my opinion, although China’s exports were once sluggish due to the financial crisis, in a global comparison, competitiveness has increased. In ten years, China’s export share rose from 8.1% in 2006 to 14.3% in 2016. . In contrast, the performance of major developed countries has been bleak. The United States’ share of global exports has basically stabilized at around 9%, and the shares of Germany and Japan have even declined.

    The second is that China's consumer market unleashes its potential and becomes the world's largest retail market. From the perspective of the retail market, China’s market share was only US$1 trillion a decade ago, which is a quarter of the US market share. Last year, China’s retail market was already about US$5 trillion, close to the US market share. With the depreciation of the U.S. dollar this year and the growth trend of China’s retail market, China is expected to become the world’s number one retail market this year. This makes any country cautious about launching a trade war with China. After all, once a trade war occurs, missing the Chinese market may eventually suffer The most influential is the interests of the trade protection countries.

    The third is a substantial increase in international influence. Thanks to the strengthening of China's economic competitiveness, China's voice in finance and global governance has greatly increased in the past five years. For example, the reform of China’s exchange rate system has increased its impact on the global financial market, and its spillover has been taken into consideration in the trend of U.S. monetary policy; and initiatives such as the Belt and Road Initiative and the Asian Infrastructure Investment Bank have been proposed, the G20 meeting and the BRICS Leaders’ Meeting have been held. , As well as the decline in credibility after Trump in the United States took office, Europe is deeply troubled by refugee issues and Brexit issues, and China has exerted an increasingly strong leadership in global governance.

    The fourth is to fight corruption and improve economic efficiency. Xi Jinping mentioned in the report that the five years of unswervingly "fighting tigers", "swinging flies", and "hunting foxes" have made the goal of not daring to be corrupted have been initially achieved. The cages that cannot be corrupted are getting stronger and stronger, and the dams that do not want to be corrupted are being The overwhelming momentum of the anti-corruption struggle has been formed and consolidated and developed.

    Fifth, the emergence of new economic momentum. Xi Jinping’s report at the 19th National Congress of the Communist Party of China mentioned that the more than 1,500 reform measures introduced in the past five years have helped China’s economy be better than expected this year. The upturn in China's economy has exceeded expectations. It is not only supported by traditional infrastructure and real estate, but also related to new momentum.

    In recent years, China's high-speed rail, mobile payment, sharing economy, and online shopping have become China's four new inventions. These leading areas of China's development have well explained this judgment. On the one hand, China's investment in infrastructure investment is leading the world. As of the end of 2016, China's high-speed rail mileage reached 23,000 kilometers, accounting for more than 60% of the world's total high-speed rail mileage. The rapid development of the Internet, big data, and artificial intelligence is also the world's leader. China's mobile payment accounts for 77%, which is higher than that of developed countries such as the United States, Germany and Japan. It has generated new growth points in high-end consumption, sharing economy and other fields.

New requirements towards the intermediate stage of socialism

    The most striking thing in the report of the 19th National Congress of Xi Jinping is that for the first time, “the main contradiction in our society has been transformed into a contradiction between the people’s growing need for a better life and unbalanced and inadequate development”. Under this framework, future economic policies may pay more attention to the settlement of income distribution problems, environmental problems, and real estate problems. These are a huge change from quantity to quality, and they are also new requirements for the intermediate stage of socialism.

    First of all, income distribution is one of the reasons for the imbalance. With the development of China’s economy, China’s Gini coefficient is also rising. Xi Jinping’s report at the 19th National Congress of the Communist Party of China emphasized that in the future, more attention will be paid to encouraging diligence and law-abiding wealth, expanding middle-income groups, increasing the incomes of low-income people, regulating excessively high incomes, and banning illegal incomes. In the author's view, it is to adjust the contradiction caused by the current excessive income gap.

    The second is to focus on green development. The problems of disease and environmental pollution in big cities have been an important focus of policies in the past two years. The reason behind this problem is that the extensive development has overdrawn the tolerable range of resources and the environment. In the report, Xi Jinping emphasized that “promote green development and focus on Solving prominent environmental problems and increasing the protection of ecosystems", etc., reflect the greater emphasis and strength on environmental protection in the future. The integration of Beijing-Tianjin-Hebei, especially the construction of the Xiongan New Area, may become an important breakthrough in creating a new growth model.

    The third is the establishment of a long-term real estate mechanism. Xi Jinping mentioned in the report that “adhere to the positioning of houses for living, not for speculation, and speed up the establishment of a multi-subject supply, multi-channel guarantee, and rent-purchase housing system, so that all people can live there." It seems that the several rounds of the real estate market in China in the past ten years have exacerbated the unfair distribution. Since last year, the government’s attitude towards the regulation of the real estate market has been very clear. It is expected that in the future, the introduction of long-term real estate mechanisms will accelerate. Taxation will also be coordinated with the acceleration of fiscal and taxation reforms, which is expected to accelerate the implementation.

    In short, Xi Jinping’s report to the 19th National Congress of the Communist Party of China outlines the policy agenda and blueprint for the next five or even thirty years, and puts forward new requirements for China’s economic development, including international aspects, and pays more attention to the formulation of international rules and exerting global influence. On the domestic front, it has shifted from excessive pursuit of economic development speed in the past to higher-quality growth and more balanced distribution.