20th Party Congress Report: What it Means for Business, the Economy, and Social Development
In this article, we look at how the report sheds light upon China’s development trajectory across five key areas: foreign investment and market opening, technological development, green development and climate targets, social welfare and development, and COVID-19.
The long-term goal set forth in the report is to “comprehensively build a powerful modern socialist country”. This goal is to be achieved in two phases: basically achieving modern socialism from 2020 to 2035 and building a great modern socialist country that is “prosperous, strong, democratic, culturally advanced, harmonious, and beautiful” from 2035 to 2050.
The report provides a more granular explanation for the 2035 target. Below, we have summarized the targets that relate to economic and industry development:
By 2035, China’s overall development targets include:
Achieve a per capita GDP level of a moderately developed country;
Achieve high-level scientific and technological self-reliance and be at the forefront of innovative countries;
Build a modern economic system, form a new development pattern, and basically realize new industrialization, informatization, urbanization, and agricultural modernization;
Build a strong country in education, science and technology, talent, culture, sports, and healthy China, and significantly enhance China’s soft power;
Increase the per capita disposable income of residents, significantly increase the proportion of middle-income groups, make basic public services equal, and ensure rural areas have access to modern living conditions;
Form green production and lifestyles, stabilize and decrease carbon emissions after reaching peak emissions (in 2030), and fundamentally improve the ecological environment.
The report also provides general goals for the next five-year term. The targets are not concrete in nature and generally are steps toward achieving the 2035 targets. They include:
Improving self-reliance in science and technology;
Matching the growth of residents’ income with economic growth;
Matching the increase in labor remuneration with the increase in labor productivity;
Making basic public services more equal;
Taking a step toward completing the multi-level social system; and
Significantly improving the urban and rural living environment.
Foreign investment and market opening
The report makes a few references to foreign investment, businesses, and market opening, and though it does not provide new information on related policies, it still underscores China’s basic position of continued market opening. It also underlines that foreign investment and businesses will continue to have an important role in China’s future development in a few key ways.
First, the report calls for implementing a “more active opening strategy”. This will include building a network of high-standard free trade zones (FTZs) and accelerating the construction of pilot FTZs and the Hainan Free Trade Port (FTP).
The report also states that China has become the largest trading partner for over 140 countries and regions and is the number one destination for foreign direct investment (FDI) in the world, clearly illustrating the importance of foreign trade and investment to the country.
Second, the report makes it clear that foreign investment and business will be a core tenant of the country’s “high-quality development”, which in itself was an important component of the report.
The report mentions the role of foreign investment and business in the scope of China’s “dual circulation” strategy, through which China will strive to “attract global resources with the domestic cycle, enhance links between domestic and international markets, and improve the quality and level of trade and investment cooperation”.
Other proposed measures to promote foreign trade and investment mentioned in the report include:
Steadily expanding the institutional opening of rules, regulations, management, and standards; and
Optimization and upgrading of trade in goods, innovating the development mechanism of trade in services, developing digital trade, and accelerating the construction of a trade powerhouse.
The report reiterates efforts to improve the investment environment for foreign businesses and investors, with measures including:
Reasonably reducing the negative list for foreign investment access;
Protecting the rights and interests of foreign investors in accordance with the law;
Creating a market-oriented, legalized, and international first-class business environment;
Accelerating the construction of the Hainan FTP and expanding the global network of high-standard FTZs; and
Promoting the internationalization of the RMB.
Another aspect of achieving “high-quality development” is to improve the business environment more generally, which in turn will also benefit foreign investors and businesses. Though only briefly mentioned, the report calls for “deepening the reform of streamlining administration and delegating powers, combining delegating power with regulation, and optimizing services”. This is essentially a pledge to continue with the fangguanfu campaign to reduce administrative red tape and delegate more decision-making abilities to lower-level governments.
Along similar lines, the report also calls for the continuation of other efforts and campaigns to optimize the business environment, including more support for small and medium-sized enterprises, improving intellectual property rights (IPR) protection, fair competition, and strengthening China’s anti-monopoly and anti-unfair competition capabilities.
Finally, the report stresses the importance of “high-quality opening”, which means actively encouraging foreign investment in areas that will help China achieve its core development goals. These, as we discuss in more detail below, include improving China’s scientific and technological self-reliance and innovation capabilities, as well as rebalancing development across different regions. Foreign companies and investors that are active in these areas, in particular, if they seek to invest in inland areas in the west and northeast, will continue to be welcome.
Read More at https://www.china-briefing.com/news/20th-party-congress-report-what-it-means-for-business/