Measures against poverty
epending on what conditions of poverty the people live in Xi says they should adopt these measures. 1st by boosting the economy with local resources and job opportunities. 2nd relocate those that absolutely cannot escape poverty. 3rd provide ecological jobs to the poverty stricken. 4th improving education. 5th improve social security for those that cannot work or can only partially work.
Xi also emphasizes that there needs to be transparent management of funds in order to reduce embezzlement and misuse. He also emphasizes that the poor need to rely on their own hard work.
Poverty alleviation is explained in even greater detail. Xi starts by pointing out how the hierarchy works. Central leadership makes the plans, provincial authorities take the responsibility and municipalities and counties take charge of implementation.
Xi points out that they need to set reasonable goals. Areas of extreme poverty are unlikely to catch up to the cities, but they are guaranteeing basic needs will be met, including: food, clothing, safe housing, medical care and education.
2nd, increase input. Government investment should play a guiding and coordinating role in encouraging investment from other financial sources.
3rd, concentrate all strength to fight poverty. Not all poverty can be fought the same way and so poverty alleviation must proceed from the material circumstances of the area. Xi wants to upgrade run-down villages with infrastructure, and develop their economies, in addition to relocating people, create eco-jobs like forest rangers, provide more healthcare and support, and guarantee social security for those that can’t escape poverty.
4th, targeted poverty alleviation is the major mission of regional development. Xi notes that not all development will actually eliminate poverty but do the opposite by increasing the wealth gap of rich and poor. Accordingly, they must be careful to only give support to businesses and development that does eliminate poverty.
5th, get all sectors to give more support for poverty alleviation. This is more or less Xi’s advice to the different areas of China on how they can support poverty alleviation. The specific advice isn’t relevant to the larger picture.
6th, motivate the impoverished to eliminate poverty. This almost sounds like Xi saying they should pull themselves up by their own bootstraps, but he explains what he means. There are some people that just wait for handouts, but Xi affirms that while the government is willing to help, they will ultimately remain poor if they rely solely on external aid. He says that they should be trained to develop skills to find employment or to open businesses. Xi says that they should change their approach from simply handing out funds to handing out subsidies for hard work
7th, improve organization and leadership. When fighting poverty, they must stress actual results.
8th, enhance supervision of poverty alleviation. This sort of ties into the last point, but they are not going to allow fake poverty reduction or “reduction only in figures.” Fraud, falsification, embezzlement and misappropriation will be punished.
Xi concludes by saying that if what they are doing does not work, that they must study the problems and work out new solutions.
Guide development with new concepts
Xi says that development will change in accordance to changing material realities. Five kinds of development are put forward: Innovative, green, coordinated, Open and inclusive.
Xi asserts that innovation is the driving force of growth, and so they must build an environment that fosters innovation or risk lagging behind.
Coordinated development means that they must solve imbalanced development. If ignored, it will increase social conflict.
Green development, as the name implies, aims to conserve resources and protect the environment.
Open and inclusive development prioritizes interactions between china and the international community. They are open to the world, now the priority is to increase connectivity. The Belt and Road initiative serves as a prime example.
Shared development underpins social equality and justice. The benefits of development must be shared by the people and social inequality must be addressed.
A deeper understanding of the new development concepts
Xi asserts again that innovation is the driving force of development. From here he begins to run through the history of the world and explains that the US managed to obtain hegemonic rule of the world because it led in science and industrial progress.
Next, he emphasizes the importance of coordinated development by quoting Mao’s metaphor of playing the piano with all ten fingers.
In regard to green development, Xi cites Engels’ Dialectics of Nature. The conclusion he draws from this is that protecting the environment is equal to protecting the productive forces. All officials must discard plans that damage or destroy the environment.
Speaking about opening up, Xi recalls the history of globalization, first from its earliest form in colonization and concludes at the end of the cold war and the fall of the soviet union. He compares this global development to China’s own history. What he draws from this is that if China continues driving global trade liberalization, they will grow stronger and will be able to lead global development.
From here: Xi pivots to several risk factors. He says that power structures in various countries are beginning to change, and so is the western dominated global governance system. Additionally, western countries are emerging from the financial crisis through re-industrialization, but despite emerging markets, the global economy doesn’t have an engine for full recovery. China has also grown significantly in both the world economy and global governance. He specifically says that they need to turn their economic strength into international institutional authority.
Xi refocuses on development and how it should be people centric. The fruits of development should be shared by everyone. Economic, cultural, social, ecological, and political development should all be in the interests of the people. People should take part in and actively participate in development and share the sense of achievement. Development should not proceed either too fast or too slow. Xi compares development to a cake, which will grow bigger and bigger and be shared fairly to represent the strength of socialism.
Economic work should be adapted to the new normal
Xi notes that outside observers have noticed that China’s growth rates have slowed down. Xi responds to this by pointing out that several trends in China’s economy have changed, and so they must now adapt to the “new normal.” He then details each of these changing trends and how to respond to them.
- People are no longer following the latest fad, but they must continue allowing consumption drive development
- Investment in traditional areas has reached capacity and they must find new areas to invest in and to eliminate barriers in investment
- Global trends have changed and there is not as much desire for China’s exports, so they must “foster new comparative edges”
- Production capacity has exceeded demand, and so they should promote concentration of production, and specialized production will be a new feature
- The labor field is shrinking and the working population getting older, so they should increase quality of human capital and pivot to innovation driven growth
- The market, which used to promote quantity and cheapness is now shifting away towards quality and product differentiation. Xi says that they must drive even deeper reform to create conditions for better market competition under these circumstances
- Xi notes that they have taken a heavy toll on the environment and as a result its carrying capacity has reached its limit. In response they should promote an eco-friendly, low carbon development model
- There have also become an accumulation of risks from things like debt and shadow banking. Xi says that they must find correct prescriptions for both the symptoms and root causes of these risks in order to defuse them.
- The ninth problem is the hardest to summarize because it pertains to their concept of resource allocation and model of macro-economic control. Basically, they used to have huge demand, but now they have an oversupply of goods. Xi says that they must intervene when necessary to invigorate the market and create a favorable environment. (Xi elaborates on this later)
In addition to the solutions Xi offers, he says that just because the growth rate slows, it does not mean the economy is bad, and conversely high growth does not make it good. These are symptoms that China’s economy is evolving to something more advanced and better structured.
Promote supply-side structural reform
Despite what the name might imply, this is not a policy advocating neoliberalism. Xi explains that with supply side economics, supply creates its own demand, and so supply is the key to economic development, in addition of course to tax cuts, improving saving and investment. Of course, in order to supply these tax cuts, Xi explains that they are premised on reducing government expenditure and restricting monetary supply in order to stabilize prices. Xi refutes this model for ignoring demand and the role of the government in the market.
His solution for the problems inherent in supply side economics is “Supply Side Structural Reform.” “The key to our supply side structural reform is to release and develop productive forces, to adjust structures through reform, to reduce ineffective and lower-end supply, to make supply structure more adaptive and flexible to changes in demand and to increase total factor productivity.”
The goal is to improve the country’s supply capacity to meet the people’s needs, which are becoming more extensive, individualized and sophisticated.
He says that Supply and Demand are opposite and unified and interdependent.
Demand Side management focuses on short term macro regulation, and propels growth mainly by adjusting taxation, and money supply to stimulate or restrain demand.
Supply Side management tackles structural problems creates growth drivers and boosts growth mainly by optimizing the allocation of production factors and by adjusting the structure of production to improve the quality and efficiency of the supply system.
I’m going to go on a bit of a tangent here because after doing some cursory research, it does not look like this is a model that has been adopted by any other country and is so far completely unique to China. This system is derived from the contradictions of demand and supply side economics to essentially achieve the best of both worlds. This is what I can only describe as a dialectical approach to their economic problems that otherwise had no obvious answer. I think it also stands to reason that when Supply Side Structural Reform no longer works for China, they will cast it aside and adopt another model, either already existing or of their own invention.
Healthy development and diverse forms of ownership
They should uphold the basic socialist economic system where public ownership is dominant, but other forms can develop side by side. Public ownership will continue to grow and contribute to reform, opening up and modernization. The public and private sectors should be mutually reinforcing with no need for conflict. Those in the private sector should also want to be involved in building socialism. Finance should benefit the economy and society. Supervision should be strengthened to defuse risks.