By: Syed Ali Nawaz Gilani
The Communist Party of China (CPC)’s 19th National Congress has pioneered a new wave of change in this era–which is one that builds on the achievements of the past, continues with the relentless efforts for a better tomorrow and guides the people into a flourishing future. The next four years are of greater importance to China, and the lead-up to the zero hour will show how China is turning the last page to the fruitful chapter of its revolution. But what is so special about the year 2021?
“Moderately Prosperous Society” or “Xiaokang society” is the new catchphrase in China nowadays, with it being frequently overheard during speeches of Chinese officials, in media reports, and think tank papers. “Xiaokang” appeared for the first time in the oldest existing collection of Chinese poetry, that is Classic in nature. It was used to indicate moderate prosperity, in reference to a well-off society that encapsulates the dreams of Chinese people for a better life. The 18th CPC National Congress proposed the idea of completing “the building of a ‘Xiaokang’ society in all respects” in 2020, with doubling China’s 2010 levels of GDP and per capita income for both urban and rural residents as one of the main criteria that would be a leap-forward in their journey of progress and growth.
Mr. Xi Jinping the Chinese President and General Secretary of CPC has mentioned the concept of “two centenary goals” over 100 times in speeches and articles since the 18th CPC National Congress in 2012. In his speech to the opening session of the 19th Party Congress on October 18 this year, he recapped the greater importance of achieving the two goals.
The first goal is to build a moderately prosperous society in all respects by 2021, the year that marks the 100th anniversary of the CPC’s founding. The second is to fully build a “modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious and beautiful” by 2049, to celebrate the 100th anniversary of the founding of the People’s Republic of China.
The main aim of a moderately prosperous society is to allow the Chinese population to live comfortable and affluent life with a progressive mindset to move forward and pave the way for future generations. The concept invokes increasing the per capita income and realizing a better, fairer and more equal distribution of wealth resulting from the economic growth. But while upping living standards for all Chinese lies at the heart of the concept, a “Xiaokang” society is by no means a strictly economic notion.
“Xiaokang” society has been called the Chinese equivalent of “middle class.” One estimate puts the number of middle-class households in China at 440 million after the country achieves the goal, and a Brookings Institution report predicted that the country will add 850 million to its middle class by 2030 – in other words, the middle class will make up 73 percent of the population which no doubt is the backbone and lynchpin of greater China. China plans to set its real economic growth target at about 8% for 2021, several government sources say, the country nears and will succeed from a full recovery from the coronavirus pandemic it suffered this year.
China’s gross domestic product is estimated to have increased just about 2% this year due to the pandemic. But the government expects the economy to bounce back in full force next year on strong exports and a recovery in private-sector investment. “Exports are expected to stay strong in 2021, so we can achieve growth of around 8% even with less government spending,” a government source said.
GDP could jump 19% in January-March from a year prior, when the country logged its first quarter of negative growth on record, the Chinese Academy of Social Sciences predicts. The 8% target was likely approved at the Central Economic Work Conference, China’s annual economic planning meeting that ended recently.
The administration of President Xi Jinping will also work to prevent the economy from overheating and to keep debt levels under control, the sources say, by carefully reining in fiscal and monetary measures deployed to help the Chinese economy overcome the coronavirus. The plan is to also build up capital at banks so that they can dispose of nonperforming debt. Chinese President Xi Jinping said the new development paradigm will enable China to fully unlock its market potential and create greater demand for other countries. “As China’s economy grows, our people naturally want to lead an even better life. This will create more demand for a greater variety of quality products, technologies and services from across the world,” he said. “From next year (2021) on, China will embark on new journey toward fully building a modern socialist country,” 67-year-old Xi said while addressing the Asia-Pacific Economic Cooperation (APEC) CEO Dialogues via video link recently.
“We will foster a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other,” he said. “The new development paradigm is a strategic decision we have made based on the current stage and conditions of development in China and with full consideration given to economic globalization and changes in the external environment,” he said. Last month, a key conclave of the ruling Communist Party of China (CPC) headed by Xi adopted his proposals for the formulation of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035. While the 14th Five-Year plan envisages a massive overhaul of the country’s domestic market to boost consumption in order to reduce China’s reliance on shrinking exports markets, the Vision 2035 visualizes a long-term plan, reflecting the developmental vision of the President Xi Jinping..
Keeping in view these ground realities China pulled further ahead of other major economies in November as industrial output and retail sales strengthened, reinforcing expectations of healthy growth in 2021. Industrial production rose 7% in November from a year earlier, while retail sales expanded 5% in the period. Fixed-asset investment grew 2.6% in the first 11 months of the year from the same period in 2019. The data matched the median estimates in a Bloomberg survey of economists.
China’s control over the pandemic is widening its divergence with other major nations, many of which are now re-imposing virus restrictions amid new waves of cases. After an early reliance on state-led investment to spur the economy, the latest figures show China’s recovery has broadened out to consumers, with spending on goods like cosmetics and jewelry picking up strongly. Oxford upgraded its estimate for China’s 2021 growth to 8.1% from 7.8% based on recent data. Economists surveyed by Bloomberg predict growth will accelerate to 5.9% in the current quarter and reach 2% for the whole of 2020.
While the strong recovery has given the central bank reason to reassess its policy stance, it isn’t withdrawing support just yet amid a spate of corporate defaults that have roiled debt markets. The People’s Bank of China added liquidity on recently Tuesday to ease financing pressures, $145 billion of one-year cash via the medium-term lending facility, more than offsetting the amount maturing in December.
The solid activity reduces the need for the People’s Bank of China to cut interest rates in the near future, but it doesn’t mean the PBOC will be able to withdraw policy support quickly. We expect the central bank to take steps to smooth corporate funding as it begins the long process of policy normalization. China is benefiting from its status as manufacturer to the world. Exports have skyrocketed in recent months as new virus restrictions in many of China’s biggest markets fueled demand for medical equipment and work-from-home electronic devices.
Still, the recovery has some way to go. Retail growth remains below the 8%-plus pace reached last year, and for the first 11 months of 2020, sales were still down 4.8% year-on-year. Restaurants and catering declined 0.6% in November from a year ago, suggesting that consumers are still somewhat nervous about eating out. China`s President Xi Jinping and senior members of his team have signaled they’re considering further measures to boost household incomes and spending, with the ruling Communist Party’s Politburo, it’s top decision-making body, last week promising “demand-side reform.” Incomes may also get a boost from a tightening labor market, with Tuesday’s data showing the urban unemployment rate dropping slightly to 5.2% in November.
According to Fu Linghui, a spokesman for the National Bureau of Statistics projected “relatively fast” expansion in 2021 driven by consumption. Goldman Sachs Group Inc. also upgraded its growth forecasts based on Tuesday’s report, raising this year’s to 2.4% from 2% and next year’s to 8% from 7.5%. Fixed-asset investment growth slowed slightly in November from the previous month, but remained well above levels seen in recent years. Manufacturing investment grew 10.8% year-on-year in November, up sharply from October in a trend driven by export growth, Goldman Sachs analysts said in a report. Infrastructure investment growth moderated slightly, while property investment growth remained at high levels.
The data suggested that private sector sentiment is improving, with fixed asset investment by privately-owned companies up 0.2% in the 11 months through November, the first positive reading this year.
“The impressive export growth in 2020, by helping to boost the V-shaped recovery in the domestic economy since the second quarter of 2020, has for the past couple of months reduced the government’s need to ramp up infrastructure spending,” Nomura Holdings Inc. economists led by Lu Ting wrote in a note. “That said, we expect manufacturing investment growth to remain elevated in coming quarters.” The US and Europe have seen a massive rise in imports from a resurgent China, causing serious distortions in their economies and raising possible threats to their security. They now appear keen on getting out of a Chinese embrace, or becoming excessively dependent on China.
China is said to have accounted for more than half of all global AI investment over the last five years and in just the next three years alone Beijing expects a tenfold increase in the advancement of AI within a few years. “The hype around China’s investment in AI is definitely the highest in the world,” The huge AI investment is all part of what Beijing calls “Made in China 2025”
President Xi Jinping’s Government knows this. It sees AI as an economic game-changer, something that will “profoundly change human social life and the world”.
“By 2030, we shall make artificial intelligence theory, technology, and application at the world’s leading level,” the Chinese Government said in its top-level AI plan. “[China will] be the major artificial intelligence innovation Centre of the world.” AI in real life will directly be related to the Social media feeds, Smart phones, Voice recognition, Language translation, Facial recognition, Email filters, Defense systems like drones, Medical diagnoses, Fraud prevention in banking and Internet browsing. China’s AI industry attracted 60 per cent of the world’s funding for AI between 2013 and 2018 and ranked first in the quantity and citation of research papers. Moreover, the world is yet to see the newly introduced technology and a wave of change by the Communist Party in China. Overall, China is on the road to a consistent growth in terms of a homogeneous society, strong and robust economy, increased use of technology in economic and infrastructure development both at micro and macro levels and more importantly political stability are the indicators of a highly progressive society as well as country.
-The writer is Secretary-General Pakistan-China Friendship Association Khyber