Foreign Trade = 180mln Jobs - China-Africa Space Ties - Xi Thought: High-Quality Growth & Supply Side Structural Reform - H2 Economic Direction - Cross-cycle Adjustments - Uphold Xi's Core Position

Here are the stories and pieces from the August 24, 2021, edition of the People’s Daily that I found noteworthy.

Page 1: Today’s front page isn’t terribly interesting, although there are a lot of stories there. First, Xi sent a congratulatory letter (English report) to the China-Shanghai Cooperation Organization Forum on the Digital Economy Industry and the Smart China Expo 2021, which opened in Chongqing. Basically, he talked about how China has been working towards ​​”digital industrialization and industrial digitization to push for deep integration between digital technologies and economic and social development,” and that he welcomes the SCO to work together in developing the digital economy. 

Then there’s a linked feature piece on the page about Chongqing’s digital economy development. It tells us that “as of 2020, the scale of Chongqing’s digital economy will reach 638.7 billion yuan, accounting for 25.5% of the regional GDP...In the first half of this year, the output value of Chongqing’s smart industry (智能产业) grew by 21.6% year-on-year, and the added value of high-tech manufacturing and strategic emerging manufacturing industries grew by 31.9% and 30.1%, respectively. 

Next, there’s a piece about Li Keqiang congratulating Ismail Sabri (English report) on assuming office as Malaysia’s new prime minister.

Next, there’s a longish feature piece on the grain industry in China, which the title says is moving towards “high-quality development.” This talks about the 中国好粮油, which I guess is the same as the “Healthy Grain and Edible Oil Action Plan” that was referred to in the 2019 Food Security white paper. The piece talks about standardising inputs, improved prices, branding support, storage, quality inspections, etc.

Page 2: First, heavy rains are expected to continue across parts of China. In Shaanxi, PD tells us that the authorities have launched a level-IV emergency response for disaster relief. 

Second, an interesting report from an SCIO press conference on economic issues yesterday. We learned that:

  • In 2020, the scale of China’s foreign trade reached 4.6 trillion US dollars, with an international market share of 14.7%. This is linked to the employment of about 180 million people. 2020年,我国外贸规模已达4.6万亿美元,国际市场份额达14.7%,创下历史新高,带动就业1.8亿人左右.

  • Since the 18th Party Congress, foreign trade has contributed 11% of total fiscal revenue, and foreign exchange reserves have been maintained at around $3 trillion.

  • Foreign-invested enterprises constitute only 2% of the overall market players engaged in foreign trade. But they lead to the employment of about 40 million people. They account for 1/10 of the country’s urban employment; 1/6th of China’s tax revenue and 2/5th of its imports and exports. 外资企业以占市场主体2%的比重,带动了约4000万人就业,占全国城镇就业人口的1/10,贡献了我国1/6的税收,2/5的进出口.

The piece then talks about the impact of poverty alleviation and rural revitalisation, before we get to BRI.

  • From 2013 to 2020, the total volume of trade in goods between China and countries along the route has reached $9.2 trillion.

  • From 2013 to 2020, China’s direct investment in countries along the route totaled $136 billion; 27,000 new enterprises were set up in China by BRI partner countries, with actual investment totaling about $60 billion.

Page 3: First, a short picture report, which informs that Hambantota port has carried out its first-ever ship refuelling operation. Second, we have a report based on MoFA’s spokesperson’s comments regarding COVID-19 origins, pointing fingers at the University of North Carolina's biological laboratory and Professor Ralph Baric. Bottom line of all of this from Wang Wenbin was that if you want to look at the lab-leak hypothesis, go look at American labs. This stuff is only going to get worse as we get closer to the US intelligence report on the issue.

Third, we stick to COVID-19 and this time PD does its own shenanigans, engaging in half-baked disinformation. So we are told that the US Department of Health and Human Services in a series of exercises that ran from last January to August titled Crimson Contagion and the Event 201 table-top exercises that focus on the threat of an outbreak of a novel zoonotic coronavirus. It then says that with the pandemic, many people are asking how come the pandemic broke out after these exercises? Why was the content of Event 201 so similar to the pandemic? Essentially, PD is channeling the good Eric Theodore Cartman.

Finally, a longish piece about China-Africa space cooperation. The piece highlights cooperation on import and export of satellites, the joint construction of space infrastructure, satellite R&D and production, the sharing of satellite resources, etc. The angle that the story takes by and large is about how this benefits people. For instance, we have the story of the launch of a new TV channel named El Maarifa (knowledge), which is dedicated to offering distance learning in the country. This came amid the pandemic in May 2020. It then talks about the 10,000 Villages initiative, which covers more than 20 countries in Africa and has connected more than 10,000 villages to satellite digital TV signals. Another example is about Star Times 四达时代 partnering with African University Alliance to open more than 100 free TV channels to broadcast education and popular science programs. 

Page 5: Today, we have the 27th piece in the Xi Jinping Thought series. The first question is about the shift from high growth to high-quality growth. After a bit of history that gets us past the 19th Party Congress, we get an explanation.

“High-quality development is development that can meet the people’s growing needs for a better life, development that embodies the new development concept, and development that has innovation as the driving force; it is development in which coordination becomes an endogenous feature, green becomes the universal form, the pathway adopted is openness, and sharing becomes the fundamental purpose.” 高质量发展,就是能够很好满足人民日益增长的美好生活需要的发展,是体现新发展理念的发展,是创新成为第一动力、协调成为内生特点、绿色成为普遍形态、开放成为必由之路、共享成为根本目的的发展.

“From the supply point of view, high-quality development should entail the realisation of a more complete industrial system, networked and intelligent production organization, strong innovation, demand capture, brand influence and core competitiveness, and high quality products and services. From the demand point of view, high-quality development should continue to meet the people’s individual, diversified and constantly increasing needs; this demand should lead to changes in the supply system and structure, and supply changes then continue to respond and adjust to new demand. From the input-output point of view, high-quality development should constantly improve labor efficiency, capital efficiency, land efficiency, resource efficiency, and environmental efficiency; constantly improve the contribution of scientific and technological progress, and constantly improve total factor productivity. From the perspective of distribution, high-quality development should realize return on investment, profit for enterprises, income for employees, and tax revenue for the government, and fully reflect the respective contributions according to market assessments. In terms of macroeconomic circulation, high-quality development should realize smooth circulation of production, circulation, distribution and consumption, a more reasonable proportional relationship and spatial layout of the national economy, and a relatively smooth economic development without major ups and downs. More specifically, high-quality development means changing from ‘having something or not’ to things ‘being good or not’.” 高质量发展,就是能够很好满足人民日益增长的美好生活需要的发展,是体现新发展理念的发展,是创新成为第一动力、协调成为内生特点、绿色成为普遍形态、开放成为必由之路、共享成为根本目的的发展。从供给看,高质量发展应该实现产业体系比较完整,生产组织方式网络化、智能化,创新力、需求捕捉力、品牌影响力、核心竞争力强,产品和服务质量高。从需求看,高质量发展应该不断满足人民群众个性化、多样化、不断升级的需求,这种需求引领供给体系和结构的变化,供给变革又不断催生新的需求。从投入产出看,高质量发展应该不断提高劳动效率、资本效率、土地效率、资源效率、环境效率,不断提升科技进步贡献率,不断提高全要素生产率。从分配看,高质量发展应该实现投资有回报、企业有利润、员工有收入、政府有税收,并且充分反映各自按市场评价的贡献。从宏观经济循环看,高质量发展应该实现生产、流通、分配、消费循环通畅,国民经济重大比例关系和空间布局比较合理,经济发展比较平稳,不出现大的起落。更明确地说,高质量发展,就是从“有没有”转向“好不好”.

Then we are told: “Promoting high-quality development is an inevitable requirement to maintain sustainable and healthy economic development, an inevitable requirement to adapt to the changes in the main contradictions of our society and the comprehensive construction of a modern socialist country, and an inevitable requirement of following the laws of economic development...Since 1960s, only a dozen middle-income economies in the world have become high-income economies. Those countries and regions that have achieved success have realized economic development from quantitative expansion to qualitative improvement after experiencing high-speed growth. Socialism with Chinese characteristics has entered a new era, and major changes have taken place in China’s social contradictions. The problem of insufficient and unbalanced development is more prominent, and the contradictions and problems in development are concentrated in the quality of development. At the same time, the new round of scientific and technological revolution and industrial transformation around the world are redrawing the global innovation map and reshaping the global economic structure, which presents a rare historical opportunity for China to promote high-quality development.” 推动高质量发展,是保持经济持续健康发展的必然要求,是适应我国社会主要矛盾变化和全面建设社会主义现代化国家的必然要求,是遵循经济规律发展的必然要求。经济发展是一个螺旋式上升的过程,上升不是线性的,量积累到一定阶段,必须转向质的提升。20世纪60年代以来,全球100多个中等收入经济体中只有十几个成为高收入经济体。那些取得成功的国家和地区,就是在经历高速增长阶段后实现了经济发展从量的扩张转向质的提高。中国特色社会主义进入新时代,我国社会主要矛盾发生了重大变化,发展不平衡不充分的问题更加突出,发展中的矛盾和问题集中体现在发展质量上.

The next question is about why supply-side structural reform remains a key issue. We are told that supply and demand are dialectically linked. 

“Demand-side management focuses on solving aggregate problems and short-term regulation, mainly by regulating taxation, fiscal spending, money and credit to stimulate or suppress demand and thus promote economic growth. Supply-side management focuses on solving structural problems and stimulating economic growth, mainly through optimizing factor allocation and adjusting production structure to improve the quality and efficiency of the supply system, and then promote economic growth.” 需求侧管理,重在解决总量性问题,注重短期调控,主要是通过调节税收、财政支出、货币信贷等来刺激或抑制需求,进而推动经济增长. 供给侧管理,重在解决结构性问题,注重激发经济增长动力,主要通过优化要素配置和调整生产结构来提高供给体系质量和效率,进而推动经济增长.

Then the piece tells us that China faces both demand and supply-side challenges, the main challenge is related to the supply side.  For example, some industries have serious overcapacity, while a large number of key equipment, core technologies, and high-end products still rely on imports. It also says that “facts have proved that China's demand is not insufficient, but rather demand has changed, and the products supplied have not changed accordingly; the quality and service has not kept up. This is one of the key aspects of supply side reform.

The piece then talks about three structural imbalances facing the economy, namely, “the structural imbalance between supply and demand in the real economy, the imbalance between finance and the real economy, and the imbalance between real estate and the real economy.” 概括起来,主要表现为“三大失衡”,即实体经济结构性供需失衡、金融和实体经济失衡、房地产和实体经济失衡.

So what needs to be done with regard to supply-side structural reforms. 

  • It talks about the eight-character policy of “consolidating, enhancing, upgrading and smoothing.” “巩固, 提高, 提升, 畅通”

  • It talks about the three eliminations, one reduction and one subsidy - 三比一, 一减, 一补 - this refers to the asks of eliminating excess capacity and inventory, deleveraging, along with cost reduction and making up for shortcomings in infrastructure and other fields.

  • Enhance the vitality of various market players, establish fair, open and transparent market rules and a business environment ruled by law, promote positive incentives and survival of the fittest, and develop more high-quality enterprises. 增强各类市场主体活力,建立公平开放透明的市场规则和法治化营商环境,促进正向激励和优胜劣汰,发展更多优质企业.

  • Improve the modernisation level of industrial chain and supply chain, pay attention to the use of technological innovation and scale effect to form new competitive advantages, and cultivate and develop new industrial clusters. 提升产业链供应链现代化水平,注重利用技术创新和规模效应形成新的竞争优势,培育和发展新的产业集群.

  • accelerate the construction of a unified, open and competitive modern market system, improve the ability of the financial system to serve the real economy, and form a virtuous circle of the domestic market as the main body…

We are then told that despite COVID-19-related pressures on the economy, there is no shift in the approach to supply side structural reform.

Finally, we have this: 

“General Secretary Xi Jinping pointed out: ‘The supply-side structural reform we are talking about not only emphasizes supply but also pays attention to demand. It not only highlights the development of social productive forces but also pays attention to improving production relations. It not only gives play to the decisive role of the market in resource allocation, but also better plays the role of the government. Focus on the current and based on the long-term.’ This reveals the essential difference between our supply-side structural reform and western schools of thought.” 习近平总书记指出:“我们讲的供给侧结构性改革,既强调供给又关注需求,既突出发展社会生产力又注重完善生产关系,既发挥市场在资源配置中的决定性作用又更好发挥政府作用,既着眼当前又立足长远。”这揭示了我们的供给侧结构性改革同西方供给学派的本质区别.

Page 9: The lead piece on the Theory page is about the economy in the second half of the year. This one’s by Wang Changlin and Guo Liyan from the China Academy of Macroeconomic Research. In a nutshell, it says that “in the second half of the year, macroeconomic policies should be more proactive, make cross-cycle adjustments, maintain continuity, stability and sustainability of macroeconomic policies, stimulate and release stronger endogenous power, and keep economic operation in a reasonable range.” 

Bloomberg explains this bit about cross-cycle adjustments to say that:

“A cross-cyclical approach suggests authorities are considering economic performance over a longer time period when deliberating policy tools, according to Zhang Xiaojing, deputy director of the National Institution for Finance & Development, a state think tank under the Chinese Academy of Social Sciences. “Policy makers will look past volatility at present, and aim to make sure the economy stays on track over the next two to three years,” said Zhang. That’s reflected by the slower pace of local government borrowing so far this year. An acceleration toward the end of the year will help drive the economy when momentum further weakens at the beginning of next year. A longer-time horizon also explains why China has recently cracked down on Internet platforms and after-school tutoring firms, and why it’s pushing ahead with policies to reduce carbon emissions, boost births and increase urbanization. Authorities will make more forward-looking adjustments to the economy, like cutting the RRR to provide liquidity even before economic data showed a slowing momentum, according to Zhong Zhengsheng, chief economist at Ping An Securities Co. Ltd., who consulted with Premier Li Keqiang last year...Authorities will cut their reliance on large-scale fiscal and monetary stimulus, and “use smaller quantities of policy to achieve the goal of smoothing out economic cycles,” said Zhong...Unlike in previous downturns, authorities probably won’t relax tight curbs on the property sector, nor drop their focus on reducing local governments’ off-balance sheet debt, said Zhong.”

Page 10: First, the SPP has ordered the arrest of Song Liang, former vice governor of Gansu Province, for suspected bribe-taking. 

The big piece on the page is from the Central and State Organs Working Committee’s Theory Learning Center Group. It talks about the “extreme importance of adhering to the Party’s leadership”; and says that:

“We must resolutely safeguard General Secretary Xi Jinping as the core of the CPC Central Committee and the core position of the whole Party, and resolutely safeguard the authority and centralized and unified leadership of the CPC Central Committee as the highest political principle and fundamental political rule, and always maintain a high degree of consistency in ideological and political actions with the CPC Central Committee with Comrade Xi Jinping as the core to ensure the realization of the Party’s leadership.” 要坚决维护习近平总书记党中央的核心、全党的核心地位,坚决维护党中央权威和集中统一领导,将其作为最高政治原则和根本政治规矩,始终在思想上政治上行动上同以习近平同志为核心的党中央保持高度一致,确保党的领导的实现. 

It tells us that...

  • In upholding the Party’s leadership, one must have a “comprehensive” approach.

  • One must be “persistent”, i.e., continuously strengthen and improve the party’s leadership so that the party’s leadership can better adapt to times and practice. 

So what does Party leadership refer to? The piece says:

“Party leadership reflects the political insight, political decisiveness and political leadership of General Secretary Xi Jinping; the judgment, decision-making and action of the Party Central Committee with Comrade Xi Jinping at its core; and the political judgment, political comprehension and political execution of Party members and cadres.” 党的领导力体现习近平总书记的政治洞察力、政治决断力、政治领导力;体现以习近平同志为核心的党中央的判断力、决策力、行动力;体现党员干部的政治判断力、政治领悟力、政治执行力.

The next bit tells us that the “fundamental purpose of strengthening the Party’s development is to adhere to the Party's leadership, consolidate the Party’s ruling position and achieve the Party’s ruling mission.” 加强党的建设,根本目的就在于坚持党的领导,巩固党的执政地位、实现党的执政使命. 

Then we have some priorities outlined:

  • put the party's political construction in the first place

  • deepen theoretical armament

  • build strong grassroots party organizations

  • strengthen the anti-corruption campaign

  • adhering to the party’s overall leadership involves self-development for the party’s leadership -- So, working committees of the central and state agencies should strengthen their political responsibilities, focus on strengthening the Party’s leadership over Party-building of the central and state agencies, promote the improvement of the leadership system and mechanism of Party-building work in agencies…