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New growth drivers crucial to development

By Guo Lei | China Daily | Updated: 2020-12-21 09:32
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[CAI MENG/CHINA DAILY]

Participants at a leadership meeting of the Communist Party of China on Dec 11 urged efforts to emphasize demand-side reform while underscoring the importance of intensifying supply-side structural reform.

The meeting of the Political Bureau of the Communist Party of China Central Committee, presided over by Xi Jinping, general secretary of the CPC Central Committee, analyzed the plan for economic work to be undertaken in 2021.

The combination of supply-side structural reform with demand-side management is a crucial part of China's new dual-circulation development pattern, and expanding domestic demand is the strategic basis of demand-side management, as we can see from the analysis made by Vice-Premier Liu He in an article published in People's Daily on Nov 25.

China should adhere to the deepening of supply-side structural reform. The principal contradiction facing the Chinese economy for the current and future periods is that the supply-side structure does not adapt to changes in the demand-side structure. The types and quality of products and services do not meet multilayered, diversified market demand, Liu said in the article.

Therefore, China must improve the capability of the supply system to meet domestic demand and create innovation-driven new demand led by high-quality supply. The country should attach great importance to demand-side management and integrate the expansion of domestic demand with the deepening of supply-side structural reform, he said.

Demand-side management is a component of the dual-circulation development pattern. Although the principal contradiction of economic operation still lies in the supply side, we should also place great importance on demand-side management, whose strategic basis is the expansion of domestic demand.

The transition from supply-side structural reform to a linkage of supply side and demand side in the new development pattern aims to adapt to new features at the current stage of China's development, while the country is facing major changes in the global political and economic environment. The new development pattern is not only a progressive deepening of supply-side structural reform but also an integration and enhancement of China's development strategies in the past.

Based on changes in the domestic and international situations, the CPC Central Committee made a judgment that China's economy had entered a "new normal", featuring medium-high growth, upgrading of economic structure and innovation. The central leadership has proposed the major strategic thought of promoting supply-side structural reform since the 18th National Congress of the Communist Party of China in November 2012 and effectively improved the relationship between supply and demand.

Facing major changes in the global political and economic environment, the central leadership later proposed the establishment of a new development pattern where domestic and foreign markets can boost each other, with the domestic market as the mainstay. The new strategy has great practical as well as profound historical significance.

How to carry out supply-side structural reform? As far as we understand, China will give full play to its strengths as a super-large-scale economy, accelerate the fostering of a complete system of domestic demand, and improve the policy support system for the expansion of domestic demand.

The country will strengthen the basic role of consumption and allow investment to play a pivotal role during the process. Building modern metropolitan areas and forming new drivers of growth will become an important link of the reform, which will not only create huge demand but also increase effective supply.

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