Fighting for Prosperity Amid Uncertainties

In coping with the disruptions from the novel coronavirus disease （COVID-19） epidemic and global economic slowdown， Chinas leadership has emphasized the need to steer the worlds second-largest economy.

It has called for quicker establishment of a new development pattern which gives full play to the advantages of a huge domestic market， so that domestic and foreign markets can reinforce each other. It also said the domestic market should be the mainstay， emphasizing the need to tackle challenges.

“Many problems we face are long- and medium-term，” the Political Bureau of the Communist Party of China （CPC） Central Committee said in a meeting on July 30 where arrangements for the economic work for the second half of the year were made.

Although this new development pattern puts more emphasis on self-sufficiency， its improper to interpret it as a policy shift to less opening up or less active engagement with foreign markets.

A commentary run by Peoples Daily， the CPC fl agship newspaper which local authorities tend to take as a reference for policy interpretation， said that taking the domestic market as the mainstay is “absolutely not an operation behind closed doors.” It is there to exploit the potential of domestic market demand to facilitate better connectivity between domestic and foreign markets for more resilient and sustainable growth.

The new development pattern， or dual circulation， is more of a solution proposed by China in tough times to boost both its own economic resilience and that of the world.

As overseas demand is expected to remain subdued due to the global pandemic， the political bureau meeting urged efforts to keep expanding domestic demand， counteract the impact of COVID-19， boost final consumption and create conditions for consumption upgrade.

If the demand in the countrys 1.4-billion-people market （and its 400 million middle-income earners in particular） is properly unleashed and well met， it is expected to provide forceful support for Chinas economic recovery. A solid recovery of the Chinese economy will in turn help boost global morale in pursuing post-pandemic growth.

On the supply side， China has taken multipronged measures， from tax and fee cuts to targeted fi nancing support， to protect the supply chain from succumbing to epidemic shocks and retain the vitality of market entities.

If the Chinese economy manages to rebound steadily， analysts say more spillover effects can be expected across the world.

Instead of being distracted by short-term disruptions， the Chinese leadership has been steadfast in grasping the current development opportunities to approach major issues concerning Chinas development from a longerterm， strategic and systematic perspective， said Zhang Zhanbin， head of the School of Marxism at the Party School of the CPC Central Committee.

In October， the CPC Central Committee will meet to outline the 14th Five-Year Plan covering the period from 2021 to 2025， as well as a longer-term vision for 2035. In the near term， a range of development milestones， from poverty alleviation to completing building a moderately prosperous society， needs to be accomplished.

Dong Yu， Executive Deputy Dean of the China Institute for Development Planning at Tsinghua University， agrees with adopting a combination of short-term responses and longterm planning for the economic work for the rest of the year and beyond.

“On the one hand， in coping with the possible economic fallout of COVID-19， more consideration should be given to difficulties and challenges. On the other hand， solid foundations need to be laid for future social and economic development，” he said.

To fulfill targets and tasks， the political bureau meeting added emphasis on the full implementation of macro policies， calling for pursuing a more proactive and effective fiscal policy that delivers solid outcomes， and a more flexible and appropriate monetary policy that targets sound results.

It sent a clear signal that China will further ease the burden on market entities and promote the development of the real economy， said Zong Liang， chief researcher of the Bank of China. “With the policies more targeted and robust， the economy will continue to develop within the appropriate range，” he said.

Shortly after the meeting， the authorities began to hold their mid-year work conferences to transform the top leaderships arrangements into detailed policies.

The Peoples Bank of China， for instance， said on August 3 that it will promote full implementation of the foreign investment administration model of pre-establishment national treatment plus a negative list， advance the internationalization of the renminbi and capital account convertibility and soundly， and unify the foreign exchange management policies applied in opening up Chinas bond market.

It will also be deeply involved in global fi nancial governance and safeguard multilateralism， the central bank said.

The China Securities Regulatory Commission said in a statement that it would continue to open up markets， industries and products to foreign investors， while simultaneously stepping up oversight to forestall risks.

Looking forward to the next fi ve-year plan， Zhang was impressed by the “five musts”stressed at the meeting， which involves upholding and optimizing the mechanism of the Party in governing economic and social development， serving the people， implementing new development concepts in all sectors， advancing reform and opening up， as well as improving prospective thinking， overall planning， strategic layout and integrated implementation.

“These five musts represent the valuable experience of Chinas economic development， which stresses optimizing economic governance from a holistic approach， and striking a dynamic equilibrium among multiple targets，”he said.

In its encounter with COVID-19， China has so far delivered a better-than-expected performance， with its GDP growing by 3.2 percent year on year in the second quarter， following a 6.8 percent contraction in the first three months. Investment， consumption， industrial output and manufacturing have all showed an improved outlook.