Supply and demand side

In the next stage of work, we must adhere to the word stability, adhere to the policy framework of macro policy stability, micro policy liveliness, and social policy underpinning, and improve the forward-looking, targeted, and effectiveness of macro-control. In order to cope with the long-term economic growth shifts caused by changes in the structural factors at the supply side, as well as the weak cyclical effective demand caused by various factors, policies should be applied on both sides of supply and demand. The supply side will deepen reform and opening up, improve the efficiency of resource allocation, and stimulate the vitality of potential economic growth and total factor productivity; from the demand side, we must highlight the "six stability", adhere to active and appropriate counter-cyclical adjustments, and stabilize short-term economic operations.

From a macro perspective, dealing with the medium and long-term contradictions and short-term downward pressure of the Chinese economy is a process of policy management starting from two different ideas of the supply side and the demand side. The supply side mainly stimulates the potential for endogenous growth of economic factors by deepening reform and opening up, rationalizing institutional mechanisms; demand management aims to smooth out short-term economic fluctuations. It should be recognized that the mid-to-long-term growth and shifting of the economy does not mean the disappearance of small economic cycle fluctuations. From a short-term perspective, when the economic cycle goes down, demand management should be adopted to avoid short-term economic operation that is below the potential growth level that is still possible to achieve, and free up space and time for deepening reform.

The Central Economic Work Conference continued to emphasize that stable economic operation was within a reasonable range, injecting firm confidence into market expectations. First, the importance of short-term macroeconomic management has been clarified. The structural and long-term problems in the economy must not be taboo about the stable growth policies necessary for short-cycle management. The second is to show that the target of doubling the total economic scale and the per capita income of residents in 2020 compared with 2010 is still to be achieved, and the "13th Five-Year Plan" and the first century-long goal will be completed.

Looking forward to next year, the actual price level of China is expected to continue to fall in 2020, showing a more moderate trend than this year. In fact, China ’s core inflation and industrial product prices have continued to slump since this year. The high level of the CPI value is only due to the supply shock caused by the single pork commodity. With the restoration of the current pig inventory, the actual price in the current period is generally difficult to have a high demand. Basically, PPI will still be in a low-level operating situation in 2020. Prices will not only hinder macro policies, but will provide evidence for the need for counter-cyclical adjustments.

Structural changes in economic growth

The meeting pointed out that China is in the tackling phase of transforming the development mode, optimizing the economic structure, and transforming the driving force for growth. Structural, institutional, and cyclical issues are intertwined. The impact of the "three-phase superposition" continues to deepen and the downward pressure on the economy is increasing. The current world economic growth continues to slow down and is still in the period of deep adjustment after the international financial crisis. The characteristics of accelerated changes in the world ’s great changes are becoming more obvious, and the sources of global turbulence and risk points have increased significantly. Adhere to the general tone of progress in stability, adhere to the new development concept, adhere to the main line of supply-side structural reform, and use reform and opening up as the driving force to promote high-quality development.

In recent years, China's economy has entered a new normal state of medium and high speed growth, marking a structural change in economic growth. How to better achieve high-quality development in the medium and high-speed growth stage is an important issue facing the current historical stage of the Chinese economy. At this new stage, the large-scale expansion of the manufacturing industry is about to end. The factors that support the development of the industry have changed profoundly. The problem of high cost pressure and insufficient innovation capacity of enterprises has emerged, and the constraints of resources and environment on industrial development have continued to strengthen. The economic development has shifted from the scale expansion that mainly depends on production capacity to the more value-added industrial value chain and product value-added. China urgently needs to combine the new round of scientific and technological revolution and new trends of industrial transformation, cultivate new driving forces for innovation-driven industrial upgrading, improve the business environment and financial infrastructure suitable for the development of new formats, and promote the industry to move towards the mid-to-high level.

We should objectively and comprehensively understand the long-term structural causes and short-term cyclical influences of China's economic slowdown, properly arrange the short-term and long-term policy mix, and actively promote supply-side structural reforms to boost the efficiency of resource allocation and stimulate the long-term potential of economic growth; At the same time, the short-term demand-side macroeconomic management is proactive and moderately proactive, and the medium- and long-term stable operation of the Chinese economy in the medium-to-high-speed growth range of 5% to 6% is conditional and realized.