China should rely on advanced manufacturing and technology and cultivate talent to drive future growth, President Xi Jinping has told a meeting discussing the country’s development strategy.
The country should “focus on the real economy” – meaning the production and sale of physical goods and services – instead of areas such as finance and property that may lead to bubbles, Xi told a meeting of the Central Financial and Economic Affairs Commission on Friday.
He also highlighted the importance of talent, which is essential to China’s ongoing efforts to upgrade the economy as it faces US efforts to contain it and a growing demographic challenge, a report by state news agency Xinhua said.
“[We need to] push for the transformation and upgrading of traditional industries, instead of letting them retreat to become ‘low-end industries’,” the meeting heard.
The report signals that Beijing’s stimulus effort will be highly focused on the advanced manufacturing sector and non-financial elements of the economy.
“[We should] focus on improving the overall quality of the population and strive for an appropriate birth rate and population size,” the commission concluded in its first meeting since the Communist Party leadership reshuffle in October that confirmed Xi in an unprecedented third term as party chief.
It stressed that industrial security is “the priority among priorities”, and urged businesses to innovate.
Shao Yu, chief economist at Oriental Securities, said “industrial security”, meant Beijing wanted to maintain control of the complete industrial chain rather than allowing others to control key areas.
“The emphasis on this is largely the result of the current geopolitical environment,” he said.
China’s annual economic work conference late last year also stressed the importance of development and security for its industries.
“Improving human resources is another key issue as there’s no more population dividend for China now,” Shao added.
India has overtaken China as the world’s most populous nation, the United Nations said last month, after China recorded its first population fall in six decades last year, down 850,000 to 1.41 billion.
This means the number of working-age people – who powered its growth in previous decades – will fall in the coming years.
Huang Wenzheng, a demographer who has written extensively on China’s birth rate, said the country needs stronger policies to deal with a looming population crisis.
“Existing policies may not be able to stop the birth rate from falling further, let alone raising it to the population replacement level,” he said.
“The number of people is the basis of quality. A low birth rate not only brings a shrinking population size, but also an ageing population and falling number of talents. It’s a double whammy.”
Huang added: “As the West decouples from the Chinese economy, it’s becoming harder for China to enjoy a scale effect from the external environment, which makes maintaining its large population more important.
“The Western system dominated by the US is a billion-person economy that absorbs talent from across the world. It’s enjoying greater benefits from the population than China in terms of finance, market, industrial technology and even language and culture.
“Raising the birth rate above replacement level and maintaining the population size are key issues for not just the Chinese economy and competitiveness in science and technology, but also the entire nation’s power and people’s living standards.”
Officials at Friday’s meeting vowed to cultivate modern human resources with “good quality, sufficient quantity, an optimised structure and reasonable distribution” to support China’s modernisation.
The ageing Chinese town where the one-child policy worked too well
They also pledged to speed up efforts to build a “fully fledged, advanced and secure” modern industrial system, which will help China “to maintain strategic advantages in future development and international competition”, Xinhua said.
The meeting also called for the opening up of international industrial and supply chains.
“We should make great efforts to foster world-class enterprises, cherish and value outstanding entrepreneurs and cultivate great craftsmen,” the meeting said.
The officials also vowed to tighten the Communist Party’s control over the Chinese economy in line with Xi’s previous comments that the party should have “centralised and unified leadership”.
He has since moved to increase the party’s influence by setting up committees to oversee areas such as financial markets and technological development.
Those attending the meeting included Premier Li Qiang, the finance commission’s deputy director, Xi’s chief of staff Cai Qi and vice-premier Ding Xuexiang.
Source : SCMP