Top 10 Keywords of China’s Economy in 2020

Keyword one: “double-loop”

“Double cycle” is undoubtedly one of the hottest new terms in China in 2020.

On May 14, a meeting of the Standing Committee of the Political Bureau of the CPC Central Committee proposed for the first time that it is necessary to give full play to my country’s ultra-large-scale market advantages and domestic demand potential and build a new development pattern that promotes both domestic and international cycles. On July 30, the Politburo meeting emphasized the need to accelerate the formation of a new development pattern in which the domestic cycle is the main body and the domestic and international dual cycles promote each other. On November 3, the “double-cycle” was written into the “Recommendations of the Central Committee of the Communist Party of China on Formulating the Fourteenth Five-Year Plan for National Economic and Social Development and Long-Term Goals for 2035.”

There are three reasons for the birth of the “double-cycle” concept. First of all, from an international perspective, after the 2008-09 financial crisis, the global economy has grown weak and the gap between the rich and the poor has increased. This year’s new crown pandemic has further fostered trade protectionism and populism. This adds uncertainty to external demand, one of the main driving forces of China’s economic growth.

Second, Sino-US relations have deteriorated in the past two years. With regard to trade issues, the United States has tried its best to suppress Chinese high-tech companies in an attempt to weaken China’s “late-mover advantage” in technological progress. Therefore, China urgently needs to speed up independent innovation, so that high-end manufacturing fields such as chips and operating systems can get rid of the hidden worries of “stuck neck”.

Third, China has the largest middle-income group in the world. In 2019, my country’s per capita GDP exceeded the US$10,000 mark for the first time. China’s future growth potential will inevitably shift from external demand to more tapping the domestic market, and enough middle-income people have laid the foundation for the formation of a hyper-scale consumer market.

Therefore, the “dual cycle” new development pattern is China’s take advantage of the current domestic and international situation, and it is also an inevitable choice for China’s economic development to a certain stage. What China needs in the future is a smooth “dual cycle”, which inevitably means the follow-up of a series of measures such as the reform of the income distribution system and the further promotion of urbanization.

Keywords two: six stability and six guarantees

In this year’s government documents and media reports, “six stability and six guarantees” is a term with a fairly high appearance rate.

“Six Stability” refers to stabilizing employment, stabilizing finance, stabilizing foreign trade, stabilizing foreign investment, stabilizing investment, and stabilizing expectations. In July 2019, the Politburo meeting of the CPC Central Committee first proposed the concept of “six stability”. A very important background is At that time, the downward pressure on the macroeconomic situation was rising, so the essence of the “six stability” was to stabilize economic growth.

In April of this year, on the basis of the “six stability”, the Party Central Committee put forward the “six guarantees”-ensuring employment, basic people’s livelihood, market players, food and energy security, industrial supply chain stability, and grassroots operations. To deal with the possible impacts of the spread of the new crown epidemic and the global economic recession.

This year’s government work report pointed out that the “six guarantees” are the focus of the “six stability” work. Maintaining the bottom line of the “six guarantees” can stabilize the economic fundamentals; promoting stability and seeking progress while maintaining stability can lay a solid foundation for building a well-off society in an all-around way.

Employment is the foundation of people’s livelihood. Like the “six stability”, employment ranks first in the “six guarantees” and is the top priority of work this year. A series of measures to ensure employees have been launched successively, from the work of stabilizing and expanding jobs for different employment groups such as migrant workers and university graduates, to reducing or exempting corporate taxes and allowing companies to defer payment of social insurance premiums.

Protecting market entities, especially small, medium, and micro enterprises with weak anti-risk capabilities, is another focus of the “six guarantees” task. According to statistics from Jiemian News, among the 39 executive meetings of the State Council held in the first 11 months of this year, at least 20 of the conference topics involved helping small, medium, and micro-enterprises. From ensuring the resumption of work and production of enterprises to reducing taxes and fees, and financial support, the work of helping enterprises has been running through. For example, in order to help the real economy that has been severely impacted by the new crown epidemic recover and develop, on June 17, the State Council executive meeting proposed “promoting the financial system to distribute 1.5 trillion yuan in profits to all types of enterprises throughout the year,” and for the first time set a specific scale for the distribution of profits. aims.

In addition, we have set up incentives for major grain and oil-producing counties to ensure food and energy security, arranged funds to support civil aviation transportation companies to stabilize the supply chain of the industry chain, and gradually increase the proportion of local fiscal funds retained to ensure grassroots operations, and “six guarantees” in various fields. The measures are too numerous to list.

With the continuous advancement of the “six guarantees and six guarantees”, China’s economy has taken the lead in getting out of the predicament. The International Monetary Fund (IMF) predicts that my country’s economy will grow by 1.9% in 2020, or the only major economy in the world that maintains positive growth.

Keyword 3: alleviate poverty

2020 is the final year of building a well-off society in an all-round way. A well-off society is the first goal of the “two centenary” goals proposed by the Communist Party of China. It is of great significance to achieve this goal on schedule. Among them, poverty alleviation is a key step in building a well-off society in an all-round way.

By the end of 2019, “three regions and three states” (“three districts” refer to Tibet, four states in southern Xinjiang and four provinces Tibetan areas; “three states” refer to Liangshan Prefecture in Sichuan, Nujiang Prefecture in Yunnan, and Linxia Prefecture in Gansu) The incidence of poverty in poor areas has dropped to 2%. At the last moment of the fight against poverty, the outbreak of the new crown pneumonia epidemic has undoubtedly brought difficulties and challenges to consolidating the results of poverty alleviation. Under the epidemic, migrant workers were hindered from going out to work, agricultural and livestock products were unsold, and the construction of rural infrastructure projects was suspended. For a time, people who had already escaped poverty returned to poverty in some areas.

In order to win the battle against poverty, the government has further increased its poverty alleviation efforts. The scale of poverty alleviation through consumption in the first to 10 months of this year has exceeded 300 billion yuan, which is twice the scale of the entire year of 2019. With the joint efforts of all parties in society, in the first half of the year, even under the influence of the epidemic, the net operating income of rural residents in poor areas increased by 4.9% over the same period last year, which was much higher than the GDP growth rate.

On November 23, Guizhou Province officially announced that the nine counties of the province had withdrawn from the poverty-stricken counties sequence. This marked that all 832 poverty-stricken counties in the country as determined by the State Council’s Poverty Alleviation Office had all been lifted out of poverty and the national poverty alleviation goal task had been completed.

The Fifth Plenary Session of the 19th Central Committee of the Communist Party of China made it clear that the consolidation and expansion of the results of poverty alleviation and the comprehensive promotion of rural revitalization are the main goals of economic and social development during the “14th Five-Year Plan” period. After winning the battle against poverty, it is necessary to consolidate and expand the achievements of poverty alleviation to effectively link with rural revitalization, continue to promote the comprehensive revitalization of rural areas in poverty alleviation areas, promote economic and social development, and improve people’s lives.

Keyword four: supply chain reshaping

The supply chain suspension caused by the new crown epidemic has forced countries to re-examine the risks of their own industrial chains and rethink and re-layout the global industrial chain. At the same time, thanks to effective epidemic prevention and control measures, China’s industrial chain advantages are undoubtedly highlighted in this epidemic.

Since the second half of this year, China’s exports have continued to accelerate, and the year-on-year growth rate in November reached a high of 21.5%. In addition to the recovery of external demand, the epidemic has dragged down the resumption of work and production of European and American manufacturing companies, thereby increasing the dependence of overseas markets on Chinese goods, which is an important factor that has led to the recent high growth in China’s exports.

In the early stage of the epidemic, some people worried that the epidemic would intensify the pace of adjustment of the supply chain of multinational companies and accelerate the removal of some industries from China. But in fact, the super-strong self-repair ability of China’s industrial chain in this epidemic has made multinational companies further realize the stability of China’s industrial chain.

According to the “2020 Business Confidence Survey” issued by the European Chamber of Commerce in China, 89% of the 626 companies surveyed still plan to continue investing in China, and only 11% of the respondents plan to invest in China currently or in the future. The investment is transferred to other countries or regions, and the latter is reduced by half compared with the 2011 survey. Most members of the European Chamber of Commerce in China still adhere to the principle of “In China, For China”. In the survey, 65% of companies ranked China as the top three future investment destinations, and about half (51%) of companies considered expanding their business in China.

However, it should also be noted that in several key areas of the manufacturing industry, there is still a big gap between China and the realization of autonomous production. Observers believe that under the current global industrial chain reshaping background, on the one hand, China must accelerate the optimization and upgrading of the industrial chain and supply chain, especially increase investment in basic scientific research, and effectively solve the “stuck neck” problem. Open the domestic market locally, create a more convenient and efficient business environment for global capital, and make preparations for undertaking the international transfer of high-end manufacturing.

Keywords five: food security

According to Xinhua News Agency, the NPC Standing Committee meeting in late December will review the draft anti-food waste law, aiming to speed up the establishment of a long-term mechanism for the rule of law and establish basic codes of conduct for catering and daily food consumption for the whole society.

The locust plague that broke out in East Africa at the beginning of the year led to a sharp drop in food production in some countries, and the spread of the new crown pneumonia epidemic accelerated deglobalization. Global food trade was hit by a huge impact. Some countries even imposed restrictions on the export of agricultural products. Concerns about food shortages, the United Nations has also warned of food crises many times. According to United Nations estimates, 130 million hungry people will be added this year, and 690 million people worldwide will be hungry.

For more than 40 years of reform and opening up, with the improvement of people’s material living standards, the term food saving seems to be outdated. However, under the severe situation this year, food security has once again become the focus of public attention and ensuring food security has also been listed as one of the “six guarantees” by the government. General Secretary Xi Jinping pointed out that although my country’s grain production has been harvested year after year, it must always be crisis-conscious in food security. The impact of the global new crown pneumonia epidemic this year has sounded the alarm for us. He specifically mentioned that the phenomenon of food waste is shocking and distressing!

In recent months, in response to the central government’s call for opposing food waste, various localities have introduced a series of measures to curb “beep waste”. For example, the Guangdong Provincial People’s Congress voted to pass the “Decision of the Standing Committee of the Guangdong Provincial People’s Congress on Stopping Food Waste”, which clearly requires catering operators not to set a minimum consumption amount, and to give appropriate preferential treatments and rewards to consumers who eat sparingly; production and dissemination are prohibited, Programs or audio and video messages that promote mostly eating, overeating, and other food waste.

According to Xinhua News Agency, in order to draft an anti-food waste law, in September this year, the Standing Committee of the National People’s Congress launched a special survey on cherishing food and opposing waste for more than a month. The draft anti-food waste law that is about to be unveiled, which issues will be regulated and how it will be regulated, is expected.

Keywords six: 2035 vision

From October 26th to 29th, the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China was held in Beijing. In addition to deliberating the 14th Five-Year Plan, the Fifth Plenary Session of the 19th Central Committee also put forward the “2035 Vision Goal”.

This is the first time after 25 years that the CCP has once again proposed a “long-term goal.” In 1995, the Fifth Plenary Session of the 14th Central Committee of the Communist Party of China put forward the “2010 Vision Goals”. One of the most well-known goals is to double the GDP by 2010 compared to 2000, in addition to controlling the population at 1.4 billion. Within this period, the people’s well-off life will be more prosperous and a relatively complete socialist market economic system will be formed.

The “2035 Vision Goal” contains nine aspects. Among them, the most discussed one is that “per capita GDP reaches the level of moderately developed countries”. There is no clear definition of “medium developed country level”, but domestic economists generally regard per capita GDP reaching 20,000 US dollars as the threshold for entry. In 2019, China’s per capita GDP is about 10,300 U.S. dollars, breaking the 10,000 U.S. dollar mark for the first time. If the per capita GDP exceeds 20,000 U.S. dollars by 2035, this means that China’s economic scale will double its current level in the next 15 years…

Compared with 25 years ago, the wording about doubling the size of the economy did not appear in the draft after the Fifth Plenary Session of the 19th Central Committee. According to the calculations of economists, if China’s economy is to double in the next 15 years, the average annual GDP growth rate will reach 4.7%. In the two decades of 2001-2010 and 2011-2020, the average annual growth rate of China’s economy was 10.6% and 6.8%, respectively.

However, it is “completely possible” that China’s total economic output or per capita income will double by 2035. It is only due to the fact that “the external environment will have more unstable and uncertain factors in the future”, so the “doubling” is not officially Listed as the “2035 vision”, but this is still an important guideline for planning.

Keyword Seven: RMB

There are actually two hot topics here, one is the appreciation of the renminbi and the other is the digital renminbi.

The strong performance of the renminbi in the second half of 2020 has attracted the attention of global investors. Even top investors such as the founder of Bridgewater Fund Ray Dalio (Ray Dalio) have repeatedly stood for renminbi bond platforms.

Wind data shows that as of December 3, the onshore RMB spot exchange rate against the US dollar has risen by 8.5% from the lowest point in May. Even for the whole year, the cumulative increase in the RMB exchange rate against the US dollar has reached about 5.8%, which has changed the past. Two consecutive years of decline.

Behind the appreciation of the renminbi is China’s economy taking the lead in getting out of the haze of the epidemic, and the continuous improvement of fundamentals has provided important support for the renminbi exchange rate. In the second quarter of this year, China’s gross domestic product (GDP) grew by 3.2% year-on-year, a 10% rebound from the first quarter. In the third quarter, the year-on-year GDP growth rate further rose to 4.9%, and the cumulative GDP achieved positive growth in the first three quarters. In terms of foreign trade, in the first 11 months of this year, my country achieved a trade surplus of nearly US$460 billion, an increase of 23% over the same period last year.

On the other hand, China has accelerated the pace of opening up its capital market and allowed more foreign investors to share China’s development dividends, which has also increased the attractiveness of RMB assets to a certain extent. For example, in September this year, the State Administration of Foreign Exchange announced the removal of investment quota restrictions for qualified foreign investors, which greatly improved the convenience for foreign investors to participate in the domestic financial market. According to data from the State Administration of Foreign Exchange, in October, the net inflow of foreign investment in securities under the capital and financial accounts reached US$21.3 billion, a record high.

Another topic on the renminbi is the digital renminbi. 2020 can be said to be the first year of the digital renminbi. After six years of research, my country’s legal digital currency has accelerated its pilot implementation this year.

In October, the Shenzhen Municipal People’s Government and the People’s Bank of China launched a pilot digital renminbi red envelope and distributed 50,000 “Luohu digital renminbi red envelopes” worth 10 million yuan to individuals in Shenzhen. This is the first large-scale digital renminbi pilot program. Open range test. As of the end of the event, a total of 47,573 people had received red envelopes, accounting for 95.15% of the total number of winners; 62,788 red envelopes were used to pay, and the number of red envelope payments was 8.764 million yuan. After Shenzhen, the central bank invested red envelopes in Suzhou. On December 5, the Suzhou digital renminbi red envelopes formally began to make appointments to distribute 20 million digital renminbi consumption red envelopes to eligible Suzhou citizens.

According to the information previously disclosed by the central bank, Xiong’an, Chengdu, and the future Winter Olympics scenes are expected to be the next areas for large-scale digital currency testing. In addition, the Hong Kong Monetary Authority is working with the Central Bank’s Digital Currency Research Institute to study the use of digital renminbi for cross-border payment technology testing, and make corresponding technical preparations.

It is worth noting that the Suzhou test also launched the “Offline Wallet Experience Program” for the first time, which means that participants can make offline payments without internet access. As the digital renminbi has the status of legal currency, we will wait and see what impact its rise will have on third-party payment institutions represented by Alipay and WeChat.

 

Keywords Eight: Delay the retirement age

The topic of retirement age delay has been discussed for many years. In 2020, this proposal was finally officially put on the agenda. After the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China, the “Proposals of the Central Committee of the Communist Party of China on Formulating the Fourteenth Five-Year Plan for National Economic and Social Development and Long-Term Goals for 2035” were issued, proposing to implement a gradual delay in the legal retirement age.

The current retirement age in my country is defined as 60 years old for men, 55 years old for female officials, and 50 years old for female workers. This regulation began in the 1950s. In recent years, the average life expectancy in our country has increased, the birth rate has fallen, and the aging of society has continued to deepen.

According to data from the National Bureau of Statistics, as of the end of 2019, there were more than 250 million people aged 60 and over in my country, accounting for 18.1% of the total population. According to the prediction of the China Population and Development Research Center, starting from the “14th Five-Year Plan” (2021-2015), the elderly population over 60 will enter a period of rapid growth. It is estimated that by 2055, the elderly population in China will exceed 500 million. The proportion is close to 40%. At the same time, my country’s fertility rate has been declining. Minister of Civil Affairs Li Jiheng wrote a few days ago: “At present, due to various influences, our country’s right-age population has low willingness to give birth. The total fertility rate has fallen below the warning line, and population development has entered a critical turning point.”

On the one hand, the aging population has increased, and on the other hand, the supply of labor has fallen. One of the direct consequences of the two is the rising pressure on pension payments. According to the “China Pension Actuarial Report 2019-2050” issued by the World Social Security Research Center of the Chinese Academy of Social Sciences, the cumulative balance of the basic pension insurance fund for urban enterprise employees across the country will reach a peak of about 7 trillion yuan in 2027, and then begin to decline rapidly until 2035. Deplete the accumulated balance.

In this case, delaying the retirement age is only a matter of time. At present, there are two main types of deferred retirement schemes recognized in the industry. One is to delay the retirement ages of men and women simultaneously, and the other is to unify the retirement ages of men and women first and then delay them. In addition, some experts suggest that delaying retirement age should have a certain degree of flexibility. Retirement benefits should be linked to retirement age, and the pensions that employees can receive should be calculated strictly according to the principle of actuarial balance so that employees can choose retirement age according to their own wishes and preferences.

How will this work be advanced? According to the “Fifth Plenary Session of the Nineteenth Central Committee of the Communist Party of China <Recommendations> Hundred Questions on Learning and Guidance” published in November, the state will “follow the idea of ​​walking slowly in small steps, implementing flexible implementation, and strengthening incentives, insisting on combining uniform regulations with voluntary choices. Make small gradual adjustments”.

Keyword nine: real estate regulation

Real estate is not only related to the overall development of the national economy but also affects and affects people’s living standards. “House” is an inevitable topic at all times. 2020 is another very special year with more flexible policy control.

Affected by the new crown epidemic at the beginning of the year, China’s economy faced greater downward pressure. The property market was once frozen. As part of the steady growth, the real estate industry has also become the target of the government’s rescue. Relief measures are mainly reflected in two aspects. On the supply side, lowering the threshold for land purchase, relaxing the pre-sale conditions, and alleviating the financial pressure of enterprises; on the demand side, lowering the threshold for settlement, reducing taxes and fees, and even granting housing subsidies.

Although the policy has been adjusted, the bottom line of “housing to live without speculation” is still there. Once a policy introduced by a city is considered to cause overheating of the market, it will be immediately stopped. According to incomplete statistics from Jiemian News, there were at least 12 cities where the “policy one-day tour” drama was staged in the first half of the year.

Starting from the second quarter, as the epidemic was brought under control, China’s economy stabilized and rebounded, and a relatively loose monetary policy was added, the real estate market rebounded rapidly. According to data from China Index Research Institute, the average price of newly built houses in 100 cities in the first half of the year showed a “V” shape, the lowest in February, and the increase gradually increased from March. The cumulative increase in the first half of the year was 1.27% year-on-year, an increase of 1.09 compared to the first quarter. Percentage points; The cumulative increase in the average price of second-hand houses in Baicheng was 1.72%, an increase of 1.11 percentage points from the second half of last year.

In the second half of the year, with the Politburo of the Central Committee reiterating the tone of “no speculation in housing and housing”, a new round of regulation began in response to the rapid rebound of the real estate market and local overheating. According to the incomplete statistics of Jiemian News, since the second half of the year, at least 17 major cities across the country have tightened relevant policies to fully encircle speculation in terms of purchase restrictions, loan restrictions, sales restrictions, and land price restrictions, in order to achieve stable land prices and house prices. Intended purpose. For example, Shenzhen has increased the purchase conditions by expanding the social security payment time before purchasing a house; Changchun, Yinchuan, and other places have increased the down payment ratio for second homes; Chengdu and Shenyang have extended the VAT exemption period for housing transfers; Shaoxing and Ningbo have started from land prices and strictly restricted residential land Price increase.

Through the above-mentioned control measures, the real estate market has cooled down significantly. According to data from the National Bureau of Statistics, in November, only 10 of the 70 large and medium-sized cities across the country increased second-hand housing prices from the previous month, and this data reached 43 in August.

Keyword ten: new infrastructure

In December 2018, the Central Economic Work Conference put forward the concept of new infrastructure for the first time, pointing out that it is necessary to “increase technological transformation and equipment update in the manufacturing industry, accelerate the pace of 5G commercial use, and strengthen the construction of new infrastructures such as artificial intelligence, industrial Internet, and Internet of Things. “. After that, artificial intelligence, 5G, and industrial Internet became the focus of the market.

At the beginning of 2020, the new crown epidemic broke out, restaurants closed, scenic spots closed, schools closed, and a large number of industries such as tourism, consumption, and movies were hit. At the same time, some industries are bucking the trend. Digital-related industries such as fresh food e-commerce, online education, short video, mobile social networking, etc. usher in explosive growth. It can be said that the epidemic has unintentionally played the role of “catfish” and “accelerator”, showing everyone the huge development potential of 5G, big data, artificial intelligence, and other fields.

On April 20, the National Development and Reform Commission clarified for the first time the three major areas of “new infrastructure”: information infrastructure, integrated infrastructure, and innovative infrastructure. At the local level, various localities have released new infrastructure investment plans represented by 5G and big data, and listed specific timetables and investment amounts. For example, the “Action Plan for Promoting New Infrastructure Construction (2020-2022)” issued by Shanghai proposes that the first batch of 48 major projects and engineering packages will be implemented in the next three years, with an estimated total investment of about 270 billion yuan; by the end of 2022, To promote the city’s new infrastructure construction scale and innovation level to the international first-class level.

Compared with the traditional “railway (road) public (road) aircraft (yard)“, the new infrastructure emphasizes the integration of technology and infrastructure, but no matter what kind of infrastructure, choosing the right project and making a reasonable layout is the key. China’s regional economic development is extremely uneven. For areas with weak infrastructure, the future should first be based on improving transportation, water conservancy, and other facilities. Only by making up for the shortcomings of “old infrastructure” can it bring trillions of dollars. The energy of economic development.

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