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Villagers and agrotechnicians from an agricultural company in a new orchard, part of a poverty reduction program in Wuying, a village on the border of Guizhou Province and Guangxi Zhuang Autonomous Region on March 29, 2018 (XINHUA)

One day after the celebration of the 40th anniversary of reform and opening up, the Central Economic Work Conference, China's annual meeting to set the agenda for the economic development, was convened on December 19-21, 2018. It reviewed the economic performance in 2018 and outlined major tasks for 2019. The conference focused on ensuring stable growth and further reform and opening up.

A statement issued after the conference said economic growth remained steady despite increasing downward pressure and mounting uncertainties, both at home and abroad, in 2018. In 2019, China will see a more open market with a favorable business environment, more innovation-oriented manufacturing, stronger domestic demands and higher living standards, it added. Moreover, 2019 is a crucial year for building a moderately prosperous society in all respects by 2020.

"As the statement suggests, China will combine macro, structural and social policies and continue making efforts to ensure steady operation of the economy and financial system to serve the 2020 goal," Xu Hongcai, Deputy Chief Economist with the China Center for International Economic Exchanges, told ChinAfrica.

A stronger market

As the domestic market grows, consumption has become a key pillar of China's economic growth. In 1978, final consumer expenditure contributed only 38.3 percent to economic growth. But in 2017, the figure rose to 58.8 percent and to 78 percent in the first three quarters of 2018.

According to the conference, domestic demand needs to be boosted by developing the service industry and increasing household disposable income. As part of the government's income-boosting efforts, special individual income tax deductions for expenditures including children's education, health treatment for serious diseases, housing loan interests, rent and elderly care took effect on January 1, 2019, following an increase in the threshold of personal tax payment from 3,500 yuan ($513) to 5,000 yuan ($725) per month in October 2018.

To meet people's new demands, industries need to embrace hi-tech innovation such as artificial intelligence, industrial Internet and the Internet of Things, to edge toward the high end of the manufacturing chain. As the digital revolution emerges around the globe, China is ready to tap more possibilities created by technologies such as 5G. According to a plan issued in August 2018, the commercial use of 5G technologies in China will take off in 2020 as the country moves faster to deploy the new-generation wireless networks.

In 2018, the Shanghai Stock Exchange launched a science and technology innovation board to spur innovation-oriented development. "The move can introduce more private capital to the technological industry to promote innovation," Chen Baoming, Director of the Research Institute of Comprehensive Development of the Chinese Academy of Science and Technology for Development, told ChinAfrica.

A workshop of SIASUN, a robot and automation company in Shenyang, northeast China's Liaoning Province (XINHUA)

Investment role

Apart from consumption, investment is another driver of the economy. The conference stressed that investment contributes to the upgrading of the manufacturing industry and should be consolidated.

According to the National Bureau of Statistics, investment in the manufacturing industry saw a 9.5-percent growth year on year from January to November in 2018. The growth rate increased 5.4 percentage points over the corresponding period in the previous year.

"More guidance should be introduced for targeted investment in industries with great growth potential," Shi Lei, Director of the Public Economic Research Center at Fudan University in Shanghai, said.

According to Xu, the central bank needs to launch countercyclical adjustments by reducing the required reserve ratio for commercial banks and using monetary policy instruments more flexibly to maintain market liquidity at a reasonably ample level.

He also suggested deeper cuts in taxes and fees and the issuing of special-purpose local government bonds to expand investment in infrastructure.

Improving people's well-being

The conference signaled that employment will be promoted to enhance people's well-being. "The most important part of social policies is to ensure an improvement in peoples' basic living, so employment should be given primary importance to," Zhang Liqun, a researcher with the Development Research Center of the State Council, told ChinAfrica.

According to a blue paper released on December 25, 2018, the number of employed people in China reached a record high in 2018. By the end of the third quarter of the year, the registered urban unemployment rate had stood at 3.82 percent, a historical low. Targeted poverty alleviation remains among the key tasks on the economic agenda in 2019 as well. Steady efforts in 2018 have seen many examples of successful poverty alleviation mainly by developing tourism and agriculture. Liu Yongfu, head of the State Council Leading Group Office of Poverty Alleviation and Development, said at a news conference on December 13, 2018 that the number of rural residents considered impoverished had been reduced by over 85 percent that year.

Still, the government needs to boost the rural economy to ensure that people rescued from poverty do not slide back into it, the conference said.

Opening up

The year 2018, marking the 40th anniversary of China's reform and opening up, saw the Chinese market open up further despite rising uncertainties caused by the China-U.S. trade friction and slow global economic growth. A white paper titled China and the World Trade Organization (WTO), released by the State Council Information Office in June 2018, highlighted China's contribution to the world economy since its accession to the WTO in 2001. It said the Chinese economy has become a major driver of global economic recovery, contributing 30 percent to global growth on average since 2002.

On July 28, 2018, a new negative list of exceptions for foreign investment was released, marking a key effort to lower the market threshold and improve China's business environment. The first China International Import Expo held in Shanghai in November 2018 marked another Chinese initiative to boost global trade. The success of the initiative can be gauged from the fact that the value of intended deals made at the event reached $57.8 billion.

China is also pushing ahead with the Belt and Road Initiative, tapping the potential of the domestic market by improving both imports and exports. In addition, more efforts will be made to introduce international standards into the domestic market, according to the conference.

Meeting challenges

"While growth is moderating, China's economy continues to perform well," the World Bank said on December 20, 2018 in its new China Economic Update.

According to Zhang, the impact of the China-U.S. trade friction on China's exports could become more prominent in 2019, leading to a decrease in the growth of overseas market demands.

The growth of the Chinese market is also seeing a slowdown with reduced purchasing power. However, to stimulate the economy, China has room to shift government spending to health, education and social security, according to the World Bank.

Xu said stable economic growth can still be ensured by combining a proactive fiscal policy, a prudent monetary policy and structural reform. "The year 2019 is a new start, furthering the reform and opening up, and deserves more confidence and expectations," he said.

(Comments to niyanshuo@chinafrica.cn)​​​​