Xi's 'Extraordinary' Vision & Leadership in Devising the New Development Pattern - China's Sci-Tech Drive - Li: No More Vanity Projects - Improve Basic Economic System for Common Prosperity
Before we begin, I’d like to wish you all a very happy Diwali! The Indian holiday season is truly a wonder, with festivals from October through December.
Anyway, here are the stories and pieces from the November 4, 2021, edition of the People’s Daily that I found noteworthy.
Page 1: Much of the first half of the page is dedicated to a ceremony in Beijing to honour distinguished scientists, engineers and research achievements. Xinhua English has a detailed story on this. We are told that:
“Gu Songfen is an aircraft designer at the Aviation Industry Corporation of China, Ltd., the nation’s leading aircraft maker. Born in 1930, Gu is an academician at both the Chinese Academy of Sciences (CAS) and the Chinese Academy of Engineering. Wang Dazhong, born in 1935, is an internationally reputed nuclear scientist. A CAS academician and former president of Tsinghua University, he has dedicated himself to the research and development of advanced nuclear energy technologies. Wednesday’s ceremony was attended by approximately 3,000 people and honored 264 projects, with 46 winning the State Natural Science Award, 61 the State Technological Invention Award, and 157 the State Scientific and Technological Progress Award. Eight foreign experts and one international organization won the International Science and Technology Cooperation Award for their collaboration with Chinese scientists.”
Li Keqiang spoke (Full Speech on Page 2) on behalf of the Central Committee. Some noteworthy bits from Li’s comments:
He said that innovation has a central role in China’s modernisation drive and it was important to raise the country’s sci-tech innovation capacity.
He wants sci-tech workers to focus on the major strategic needs of the country, accelerate breakthroughs in key and core technologies, and promote major sci-tech projects.
“The deeper the roots of basic research, the more the tree of scientific and technological innovation will flourish.” 基础研究的根扎得越深，科技创新之树就越枝繁叶茂. He promised increased government spending in this regard and long-term and stable policy support encouraging enterprises to increase investment too. Part of this will be deeper tax breaks/subsidies with regard to R&D expenditure.
He said the country shall continue to strengthen its basic research, respect the laws of science, combine free exploration with problem-orientated research, strengthen long-term and stable support, encourage enterprises and private capital to increase input for basic research, deepen basic education reform and strengthen basic disciplines in universities. Also, in this support for basic research, Li wants there to be “resolve and patience.”
An open competition mechanism to select the best candidates for important sci-tech programs shall be promoted to give opportunities to those who are willing to innovate, dare to innovate, and are able to innovate.
The premier added that a sound scientific research ecosystem shall be fostered to encourage innovation and tolerate failure, and to support researchers to make more original achievements.
He said that China has a workforce of 900 million and 220 million people with higher education. It is important to foster an environment conducive to innovation so that more businesses and innovation will take root, blossom and bear fruit.
Li highlighted the leading role of enterprises in innovation, more inclusive policies to encourage innovation, the concentration of innovation resources in enterprises, and the deeper integration of enterprises, universities and research institutes. He also promised to tackle red tape hindering innovation.
Vice Premier Han Zheng also spoke at the meeting. He called on science and technology workers to follow the example of the laureates and work toward accelerating the realisation of high-level science and technology self-reliance. He also wants them to rally around the CPC Central Committee with Comrade Xi Jinping at its core, unswervingly follow the path of independent innovation with Chinese characteristics, and strive to build China into a world power in science and technology and realise the Chinese dream of great national rejuvenation.
Next, let’s look at the “key choices” piece for today. This one talks about the decision to pursue a new development pattern. We are told that standing at the intersection of the two centenary goals and looking at the goal of the rejuvenation of the Chinese nation and the major changes unseen in a century taking place in the world, the Central Committee with Xi at its core has taken a “strategic decision” to accelerate the construction of a new development pattern/dynamic. This essentially refers to dual circulation.
“This is a strategic choice in keeping with the times in order to upgrade the level of China’s economic development, while cultivating new advantages in international economic cooperation and competition.” 这是与时俱进提升我国经济发展水平的战略抉择,也是塑造我国国际经济合作和竞争新优势的战略抉择.
Then we are told that moving in this direction, or holding the flag and steering the ship, requires “extraordinary strategic determination, superb strategic thinking and scientific strategic decision-making.” And, of course, Xi Jinping has “personally planned, deployed and promoted” efforts to this end, owing to which “a magnificent picture of accelerating the construction of a new development pattern is being fully rolled out in China.” 举旗定向、领航掌舵，需要非凡的战略定力、高超的战略思维和科学的战略决策。习近平总书记亲自谋划、亲自部署、亲自推动，一幅加快构建新发展格局的壮美画卷正在神州大地全面铺开, 引领中国经济在新征程上阔步前行.
The piece takes us back to 2020. We are told that early in the year “China’s economy was in a critical stage of transforming its development model, optimising its economic structure and transforming its growth drivers. The prospects of economic development were promising, but the economy was also confronted with difficulties and challenges brought about by the interwoven structural, institutional and cyclical problems, as well as the impact of the pandemic.” 时钟拨回到2020年初，一场百年不遇的疫情汹汹袭来。彼时，中国经济正处在转变发展方式、优化经济结构、转换增长动力的攻关期，经济发展前景向好，但也面临着结构性、体制性、周期性问题相互交织所带来的困难和挑战，加上疫情冲击，经济运行面临较大压力.
Within this backdrop, Xi outlined the new development pattern. This refers to Xi’s speech at the seventh meeting of the Central Financial and Economic Affairs Commission on April 10, 2020 (CSET’s translation here), when he spoke about the concept of dual circulation. The speech had been made public only in November 2020.
The piece then quotes Xi as having summarised the situation as:
“The world today is experiencing unprecedented changes unseen in a century. The COVID-19 pandemic has accelerated the evolution of this great change. Economic globalisation is encountering counter-currents, protectionism and unilateralism have risen, the world economy is facing a downturn, international trade and investment have contracted sharply, the international economy, science and technology, culture, security and political patterns are undergoing profound adjustments; the world has entered a period of turbulent change.” 这是对世界百年未有之大变局的深刻把握：“当今世界正经历百年未有之大变局，新冠肺炎疫情全球大流行使这个大变局加速演进，经济全球化遭遇逆流，保护主义、单边主义上升，世界经济低迷，国际贸易和投资大幅萎缩，国际经济、科技、文化、安全、政治等格局都在发生深刻调整，世界进入动荡变革期.”
His strategy amid this was:
“China is in a critical period of realising the great rejuvenation of the Chinese nation, and its economy has changed from a stage of rapid growth to a stage of high-quality development. The main contradictions in our society have changed; there are greater requirements related to the people’s desire for a better life; the economy has enjoyed long-term growth; China’s market is vast and its development is highly resilient. A new pattern of development is emerging in which domestic circulation is the mainstay and both domestic and international circulation reinforce each other.” 这是对中华民族伟大复兴战略全局的统筹谋划：“我国正处于实现中华民族伟大复兴的关键时期，经济已由高速增长阶段转向高质量发展阶段。我国社会主要矛盾发生变化，人民对美好生活的要求不断提高，经济长期向好，市场空间广阔，发展韧性强大，正在形成以国内大循环为主体、国内国际双循环相互促进的新发展格局.”
We then get more comments from other Xi speeches about dual circulation. These emphasise the strategy enhancing China’s competitiveness, security and self-reliance. This is followed by this praise for Xi for having foresight, the ability to review and assess situations as they develop, have profound insight and accurate grasp of the overall situation, and take decisions accordingly. 一个个高瞻远瞩的判断、一次次审时度势的决策、一句句掷地有声的话语，凝结着大党大国领袖对发展全局的深刻洞察与准确把握. -- The idea here is that these are the attributes that a major country’s leader must have. And who but Xi, I guess?
After this we are told that at the 5th Plenum, the new development pattern was adopted as a strategy to be placed in the 14th FYP. It is an active, long-term strategy and not a passive decision based on expediency. And it must be followed through. After this, there is much newsprint spent to reinforce the message about Xi’s personal leadership and the significance of dual circulation. There’s a comment from an earlier Xi speech in support of entrepreneurs, and there is a discussion about innovation and supporting domestic demand.
Quick thought: The rest of the piece offers details and information about interactions, which are fine but not the crux of the piece. To me, the point of the piece was to emphasise that this is China’s future economic direction, and more importantly, this is a product of Xi’s visionary leadership. There are unique qualities that he possesses, which have allowed him to chart this course of China during a turbulent period. I guess then he must also continue to steer the ship while charting this course. Finally, this is now linked to his legacy; don’t expect reversals.
Anyway, there’s also a commentary on the page about the new development pattern decision. This is much more emphatic and dramatic in its praise for Xi. It underscores how 2020 was an “unusual year in human history.” It talks about China’s unique developmental circumstances and the impact of the pandemic accelerating global changes. Amid this, a strategic decision on the new development pattern was taken by Xi. It praises Xi for having a “correct understanding of the historical position and development stage of the cause of the Party and the people” which formed the “the fundamental basis for the Party to define its central tasks at different stages and formulate its line, principles and policies.” 正确认识党和人民事业所处的历史方位和发展阶段，是我们党明确阶段性中心任务、制定路线方针政策的根本依据.
The last paragraph says that:
“Entering a new stage of development, guided by a new development concept and a new development pattern, China is committed to high-quality development and is striving to achieve higher quality, more efficient, fairer, more sustainable and more secure development…” In charting this course, Xi Jinping, the piece says, has “won the heartfelt love and trust of the whole party, the army and the people of all ethnic groups.” In creating this strategy, Xi has demonstrated “political wisdom, strategic determination, sense of responsibility, affection for the people, and leadership behoving the leader of a major party and country, boldness, foresight, vision of a Marxist politician, being rock solid amid stormy waves and strategising in the face of risks and challenges.” 迈入新发展阶段，以新发展理念为指引，以构建新发展格局为路径，坚定高质量发展的中国正努力实现更高质量、更有效率、更加公平、更可持续、更为安全的发展，展现出一幅气势恢弘的壮美画卷。在新时代中国特色社会主义事业砥砺奋进中，习近平总书记以马克思主义政治家的恢弘气魄、远见卓识、雄韬伟略，惊涛骇浪中坚如磐石，风险挑战中运筹帷幄，充分展现了大党大国领袖的政治智慧、战略定力、使命担当、为民情怀、领导艺术，赢得了全党全军全国各族人民的衷心爱戴和高度信赖.
And then:
“Firmly safeguarding General Secretary Xi Jinping’s core position of the CPC Central Committee and the whole Party, and firmly safeguarding the authority of the CPC Central Committee’s centralized and unified leadership are the fundamental guarantees for winning new victories in building a socialist modern country in an all-round way. On the way forward, with General Secretary Xi Jinping as the core of the CPC Central Committee and the core of the whole Party at the helm, and with the whole Party, the whole army and the people of all ethnic groups working together and tenaciously, we will certainly be able to overcome all kinds of difficulties and obstacles and move from victory to new victory.” 实践再次证明，重大历史关头，重大考验面前，领导力是最关键的条件，党中央的判断力、决策力、行动力具有决定性作用。坚定维护习近平总书记党中央的核心、全党的核心地位，坚定维护党中央权威和集中统一领导，是夺取全面建设社会主义现代化国家新胜利的根本保证。前进道路上，有习近平总书记作为党中央的核心、全党的核心领航掌舵，有全党全军全国各族人民团结一心、顽强奋斗，我们就一定能够战胜各种艰难险阻，不断从胜利走向新的胜利.
Finally, let’s look at the weekly State Council meeting. This talks about inspections having been carried out across 16 provinces (autonomous regions and municipalities) to assess the implementation of the requirements of the Central Economic Work Conference and the government work report. The review is generally positive, from what I gather. But going ahead, the piece calls for
Measures to help market players to alleviate their difficulties. This entails tax breaks and fee reduction, controlling commodity prices, etc.
Measures to address livelihood issues, covering education, health, renovation of old communities, ensuring food supply and security and energy supply through the winter.
Ensure better use of government funds to support market players and protect basic people's livelihood. Li wants to put an end to vanity projects, and work on substantive initiatives. So no more 面子 but rather focus on 里子.
Li also was critical of “formalism and bureaucratism” and inaction, and wants action to address people’s problems.
The next part of the meeting focussed on rural revitalisation. This is covered in this English report.
Page 2: Just one report to note talks about the internet industry’s growth.
“The revenue of Internet enterprises above designated size reached 1,163.3 billion yuan, up 25.4 percent year on year, with an average growth rate of 19.4 percent in the past two years. Operating profit reached 96.6 billion yuan, up 16.8% year on year. In the first three quarters, the R&D expenses of China’s Internet industry grew steadily, with the growth rate maintaining double digits. The investment in R&D was 52.9 billion yuan, up 11.9% year-on-year; the growth rate dropped by 2 percentage points compared with the first half of the year,. However, it is still 0.7 percentage points higher than the same period of last year...In the first three quarters, the revenue from Internet platform services reached 418.1 billion yuan, a year-on-year increase of 41%.” 数据显示，今年1—9月，我国互联网和相关服务业呈平稳发展态势，业务收入和营业利润持续较快增长。规模以上互联网企业完成业务收入11633亿元，同比增长25.4%，两年平均增速为19.4%。实现营业利润966亿元，同比增长16.8%。前三季度我国互联网产业研发费用增长平稳, 增速保持两位数。投入研发费用529亿元，同比增长11.9%，增速较上半年回落2个百分点, 仍高出去年同期0.7个百分点...三季度，互联网平台服务完成收入4181亿元，同比增长41%.
Page 3: There’s a long piece bylined Guo Jiping, which is a curtain-raiser to the 4th China International Import Expo. Xi will be speaking at the expo. Basically, the author argues that amid the turbulent changes taking place in the world, “China firmly believes that the general trend of opening up and cooperation among countries has not changed and will not change. Standing on the right side of history and on the side of human progress, China has declared to the world with firm determination and practical actions: China's pace of promoting a higher level of opening up will not stop!”
There are many data points and examples mentioned in the piece to talk up China’s economic potential, external economic engagement, its economic capacity, ease of doing business, speed of execution, etc. For instance, the piece says that the Starbucks coffee innovation hub in Suzhou was set up in just 8 months after the signing of the contract. Or in terms of the financial sector, there have been many firsts: the first foreign-owned securities company in China, the first foreign-owned life insurance company, and the first foreign-owned public fund. The RCEP will come into force next year, and China has applied to CPTPP.
Page 9: The lead piece on the theory page is bylined 政武经, but no details about the author’s designation are provided. The author talks about China’s basic economic system and common prosperity. The argument is that over the course of the past 100 years, the basic economic system has evolved.
In the pre-PRC period, the agenda was to “eliminate exploitation, emancipate the toiling masses, and enable the Chinese people to be truly masters of their own affairs.” This also entailed overthrowing the three big mountains of imperialism, feudalism, and bureaucrat-capitalism.” Then the pre-reform period laid the foundation by “establishing an independent and relatively complete industrial system and the national economic system.” During this time, the Party also “accumulated important experience in socialist construction in China.”
In the reform era then, the Party “reviewed both positive and negative historical experience and realised that poverty is not socialism. Based on national conditions and the international environment, Comrade Deng Xiaoping clearly proposed that ‘some people and some regions should get rich first so as to stimulate and help backward regions’.” 在改革开放历史新时期，我们党深刻总结正反两方面历史经验，认识到贫穷不是社会主义。邓小平同志立足国情世情，明确提出“让一部分人、一部分地区先富起来，以带动和帮助落后的地区”.
The author then talks about different measures taken throughout the reform era, which then brings us to the 18th Party Congress, which is when socialism with Chinese characteristics “entered a new era.”
The 18th National Congress of the Communist Party of China (CPC) proposed to ‘ensure equal access to factors of production, fair participation in market competition and equal legal protection for economic entities under all forms of ownership’. The third plenary session of the 18th Central Committee opened up a new stage of deepening reform. It clearly said that the market should play a decisive role in allocation of resources and emphasised the importance of the public and non-public sectors. The fourth Plenary Session of the 18th CPC Central Committee proposed to ‘improve the property rights protection system with fairness as the core principle, strengthen the protection of the property rights of economic organizations under various forms of ownership and natural persons, and eliminate provisions of laws and regulations that violate fairness’. The fifth Plenary Session of the 18th CPC Central Committee emphasised ‘encouraging private enterprises to enter more fields in accordance with the law, calling on non-state-owned capital to participate in the reform of state-owned enterprises, and better stimulating the vitality and creativity of non-public economy’. The 19th CPC National Congress stressed that ‘we must uphold and improve China’s basic socialist economic system and distribution system’, and put ‘two unwavering’ into the basic policy of upholding and developing socialism with Chinese characteristics in the new era, which was further defined as a major policy of the Party and the State. The fourth plenary of the 19th Central Committee further developed and deepened the connotation of the basic socialist economic system, with public ownership as the mainstay, various forms of ownership developing side by side; distribution according to work as the mainstay and various modes of distribution coexisting; and the socialist market economy as the basic socialist economic system. Ownership arrangement is very important in the basic economic system. It is the key foundation for establishing and perfecting the distribution system and the socialist market economic system. The distribution system is determined by the ownership arrangement, and the common development of various ownership economies is based on the coexistence of various distribution modes. The effective operation of both cannot be separated from the guarantee of the socialist market economic system. 党的十八大以来，中国特色社会主义进入新时代。党的十八大提出“保证各种所有制经济依法平等使用生产要素、公平参与市场竞争、同等受到法律保护”。党的十八届三中全会开启了全面深化改革的新阶段，明确提出“围绕使市场在资源配置中起决定性作用深化经济体制改革”，强调“公有制经济和非公有制经济都是社会主义市场经济的重要组成部分，都是我国经济社会发展的重要基础”。党的十八届四中全会提出“健全以公平为核心原则的产权保护制度，加强对各种所有制经济组织和自然人财产权的保护，清理有违公平的法律法规条款”。党的十八届五中全会强调“鼓励民营企业依法进入更多领域，引入非国有资本参与国有企业改革，更好激发非公有制经济活力和创造力”。党的十九大强调“必须坚持和完善我国社会主义基本经济制度和分配制度”，并把“两个毫不动摇”写入新时代坚持和发展中国特色社会主义的基本方略，作为党和国家一项大政方针进一步确定下来。党的十九届四中全会进一步对社会主义基本经济制度的内涵作出重要发展和深化，将公有制为主体、多种所有制经济共同发展，按劳分配为主体、多种分配方式并存，社会主义市场经济体制都作为社会主义基本经济制度。所有制安排在基本经济制度中至关重要，它是分配制度和社会主义市场经济体制建立完善的重要基础；分配制度由所有制安排决定，多种所有制经济共同发展又以多种分配方式并存为基础，二者的有效运行都离不开社会主义市场经济体制的保障。
The next paragraph offers a defense of/support for the private economy. After this, the author argues that while much economic success has been achieved, it is now incumbent upon the Party to move towards common prosperity. This is an “essential requirement of socialism and the unswerving goal of our Party.” But “to achieve common prosperity, we must adhere to and improve the socialist basic economic system, transform the advantages of the basic economic system to significantly enhance the efficiency of economic governance, and support the private economy to play a greater role in the journey of common prosperity in the new era.” 实现共同富裕，必须坚持和完善社会主义基本经济制度，将基本经济制度优势转化为经济治理的显著效能，支持民营经济在新时代共同富裕的征途中发挥更大作用. -- In a nutshell, the system has worked well, and while it doesn’t need to be junked, things need to change.
So what needs to be done? Well the author says that we need:
Promote hard work and innovation
Push for high-quality development, by making the pie bigger and sharing it better. 要在高质量发展中促进共同富裕，在不断做大蛋糕的基础上分好蛋糕.
Support the private sector, particularly small and micro businesses and individual businesses. It is important to help these entities “overcome difficulties in terms of market access, business environment, tax and fee cuts, technological innovation and financial services.”
Reform the income distribution system and create an olive-shaped structure.
Deepen market-oriented reform of factors of production, and ensure that labor, capital, land, knowledge, technology, management, data and other factors of production are appropriately valued.
Deepen reform of the fiscal and taxation systems, make redistribution more equitable, improve the social security system, open up channels for upward mobility, and create a development environment in which everyone participates.
Promote tertiary distribution and charities
Ensure better remuneration for workers, especially front-line workers.
The author also writes that “as of 2020, tax paid by the private sector accounted for 60 percent of national tax revenue, becoming important support for stabilising national tax revenue and an important force for improving the mechanism for adjusting redistribution. Supporting the development of the private economy will help form the olive-shaped distribution structure. Private enterprises should actively embrace common prosperity and seize the opportunity of this era.” 2020年，民营经济缴纳税收占全国税收比例达60%，成为稳定全国税收的重要支撑，是完善再分配调节机制的重要力量。支持民营经济发展，有助于形成中间大、两头小的橄榄型分配结构。民营企业要积极拥抱共同富裕，把握好这一时代机遇.
The author then reiterates that common prosperity will be achieved gradually and not overnight or simultaneously for all. This is particularly the case, given China’s developmental imbalances. It is, therefore, important to “follow the laws of economic and social development, promote common prosperity in stages, provide targeted guidance on a specific basis, and explore effective paths through demonstration reforms.” It is important to focus on encouraging those who work hard, operate legally, and dare to start their own businesses to get rich, and support those who get rich first and then create pathways for/support others in becoming well off. The example given in this context is of the 130,000 private enterprises participating in the poverty alleviation campaign. 实现共同富裕是一个动态发展的过程，不可能一蹴而就，也不可能齐头并进。当前，我国发展不平衡不充分问题仍然突出，要对共同富裕的长期性、艰巨性、复杂性有充分估计，遵循经济社会发展规律，分阶段促进共同富裕，做到分类指导、精准施策，通过改革示范探索有效路径。重点鼓励辛勤劳动、合法经营、敢于创业的致富带头人，支持先富带动后富.
The last paragraph also has some interesting bits:
It calls to “stimulate entrepreneurship”
But entrepreneurs should nurture patriotism, innovation, integrity and social responsibility, while also having an international perspective.
The government should be a “maker of market rules and the defender of market fairness.” 政府是市场规则的制定者，也是市场公平的维护者.
It is important to “continue to foster cordial and clean relations between government and business, provide more quality public services, and improve a unified, open, competitive and orderly market system...”要持续构建亲清政商关系，更多提供优质公共服务，完善统一开放、竞争有序的市场体系，支持企业家心无旁骛、长远打算，以恒心办恒业，扎根中国市场，深耕中国市场.