II. Requirements, Objectives, and Policies for Economic and Social Development in 2017
2017 is an important year in implementing the 13th Five-Year Plan (2016-2020) and in carrying out further supply-side structural reform. 2017 will also witness the convocation of the 19th National Congress of the CPC, an event of far-reaching significance. So it is of paramount importance for us to effectively carry out our economic work over the coming year.
1. General Requirements
The requirements for 2017 are as follows:
-- uphold the leadership of the CPC Central Committee with Comrade Xi Jinping at its core
-- hold high the great banner of socialism with Chinese characteristics
-- fully implement the guidelines from the 18th National Party Congress and from the third, fourth, fifth, and sixth plenary sessions of the 18th Party Central Committee
-- follow the guidance of Deng Xiaoping Theory, the Theory of Three Represents, and the Scientific Outlook on Development
-- put into practice the guiding principles from General Secretary Xi Jinping's major addresses and his new concepts, thoughts, and strategies on the governance of China
-- promote coordinated economic, political, cultural, social,and ecological progress and balanced implementation of the Four-Pronged Comprehensive Strategy*
-- seek progress while keeping performance stable
-- build a strong understanding of and put into practice China's new development philosophy
-- adapt to, approach in the right way, and steer the new normal in economic development
-- take strengthening the quality and benefits of development as a core priority
-- ensure macro policies are stable, industrial policies are targeted, micro policies are flexible, reform policies are practical, and that social policies ensure basic needs are met
-- focus on supply-side structural reform
-- expand aggregate demand as appropriate
-- better guide expectations
-- ensure development is increasingly innovation-driven
-- work to keep growth stable, promote reform, make structural adjustments, improve living standards, and guard against risks
-- maintain stable and sound economic development as well as social harmony and stability
Fulfilling these requirements should ensure that we greet the 19th National Party Congress with outstanding achievements.
2. Main Objectives
Keeping the above requirements in mind and fully considering both what is necessary and what is possible, we have set the following objectives for economic and social development in 2017:
-- Economic growth within an appropriate range
GDP is projected to grow by 6.5% approximately; however in practice, we will strive for better. In setting this objective, we have taken the following into account:
First, the projected GDP growth rate is in keeping with conditions in China. Our country is in a new normal in economic development, having shifted from a high to a medium-high growth rate. In 2016 China's aggregate economic output exceeded 74 trillion yuan; and this year's projected growth rate of around 6.5% will result in a larger increase in economic output than last year's increase resulting from a 6.7% growth rate. Moreover, a growth rate of 6.5% is much higher than most major economies.
Second, the projected growth rate is in line with the goal of finishing building a moderately prosperous society in all respects. China's economy grew by 6.7% in 2016, so an average growth rate of around 6.5% over the next four years would be sufficient to accomplish the objective set out in the 13th Five-Year Plan to ensure that China's GDP in 2020 is double what it was in 2010.
* To make comprehensive moves to finish building a moderately prosperous society in all respects, deepen reform, advance the law-based governance of China, and strengthen Party self-governance.
Third, a 6.5% growth rate is needed to achieve the employment objective. All efforts to keep the economy growing at an appropriate rate and to promote economic development are for nothing more than to address the problems which are of most concern to the public.
Fourth, this rate of growth is conducive to fostering healthy public expectations. Facing complex and volatile situations at home and abroad in 2017, we need to provide guidance to all sectors of society so as to focus efforts on improving the quality and benefits of development and promoting structural improvement and upgrading, ensure a proactive response to the impact arising from various uncertainties, and create a favorable environment for supply-side structural reform.
Figure 9. GDP and Growth Rate
-- Overall stable employment
Over 11 million new urban jobs will be created, 1 million more than the projection for 2016, and the registered urban unemployment rate should stay within 4.5%. In setting these objectives, we have taken the following into account:
First, employment pressure is mounting. About 15 million new workers will enter the job market in 2017, and there will also be a slightly larger number of laid-off workers that need to be reemployed in other industries due to the scaling-down of overcapacity; on the other hand, we will see jobs opening up in urban areas as a result of retirements. Taking these factors into consideration, we need to create around 11 million new urban jobs this year.
Second, employment capacity continues to increase. Due to adjustments in the structure of industry, particularly in terms of entrepreneurship and innovation and the development of the service sector, China's employment elasticity has risen considerably. A growth rate of around 6.5% should ensure that we fulfill our employment target and will allow us to work toward exceeding it.
Third, we need to ensure increases in personal income are basically in step with economic growth. These objectives are a reflection of the Party and government's vision of people-centered development as well as the governance principle that the people's wellbeing comes first and ensuring employment is a top priority. They are also conducive to ensuring stable public expectations and strengthening people's confidence in development.
-- Overall stable prices
The CPI is projected to increase by around 3%. In setting this objective, we have taken the following into account:
First, the carryover effect from the CPI increase in 2016 will be 0.6%, which is basically the same as that of the year before.
Second, the producer price index (PPI) shifted from negative to positive territory in September 2016 and has remained there ever since, and the deflationary pressure on manufacturing has eased to some extent. However, as the effects of the PPI increase are transmitted to downstream industries and toward end consumption, and as the prices of imported goods and international commodity prices rise, new factors will emerge to push up prices.
Third, such a CPI increase leaves us with room to undertake price reform.
-- A basic balance in international payments
We will continue to promote a steady rise in the trade of goods, rapid growth in the trade of services, stability in the use of foreign investment, and the healthy development of outbound investment. In setting these objectives, we have taken the following into account:
First, a turnaround in global economic and trade growth is unlikely in the short term. However, as the policy for promoting steady growth and structural adjustment in foreign trade continues to have an effect, the volume of trade in goods is expected to pick up again.
Second, as the export of high-value-added services such as telecommunications, computers, and information continues to increase rapidly, the structure of trade in services will improve.
Third, significant efforts will be made to create a fair, transparent, and predictable law-based market environment so as to ensure foreign investment remains stable and improves in quality.
Fourth, outbound investment will be robust. In order to avoid irrational investment which may give rise to operational or debt risks, growth in this area should be promoted in an orderly and prudent manner.
-- Improved quality and benefits in development
The contribution of consumption to economic growth will increase. The foundation of agriculture will be further strengthened; solid progress will be made in cutting overcapacity; the development of emerging strategic industries will be accelerated; and increases in the contribution of the value-added of the service sector to GDP will be sustained. More will be spent on research and development and there will be an increase in the contribution of scientific and technological progress to economic growth. Energy consumption per unit of GDP will be reduced by at least 3.4%, carbon dioxide emissions per unit of GDP will be cut by 4.0%, reductions in the emissions of major pollutants will continue, and air and water quality will be further improved. In setting these objectives, we have taken the following into account:
We need to put into practice the philosophy of innovative, coordinated, green, open, and shared development; see that industries are transformed and upgraded, that their quality and performance improves, and that the quality of all products and services increases; and ensure that energy conservation, environmental protection, and ecological improvement efforts are strengthened. These objectives are in line with the efforts to advance supply-side structural reform, and can help to create new growth areas, increase the potential for economic growth, and ensure the economy maintains a medium-high growth rate and moves toward the medium-high end.
Figure 10. Contribution to GDP by the Primary, Secondary, and Tertiary Industries
-- Improvements in living standards
The number of people living in poverty in rural areas will be reduced by at least 10 million, and 3.4 million people will be relocated from inhospitable areas so as to help them shake off poverty. The percentage of registered urban residents will increase by more than 1 percentage point. Urban residency will be granted to an additional 13 million people with rural household registration living in urban areas and other permanent urban residents. Access to basic public services such as education, health, and culture will become more equitable. The retention rate of compulsory education and the gross enrollment ratio for senior secondary education will continue to rise. The social security system will be further improved with more beneficiaries receiving coverage and an appropriate increase in benefits. Per capita government subsidies for basic medical insurance for rural and non-working urban residents will increase to 450 yuan, while the level of financing for the major disease insurance scheme will also be raised. The natural population growth rate will be about 7.5 thousandths. In setting these objectives, we have taken the following into account:
We must fully implement our vision of people-centered development and work for further progress in ensuring that the Chinese people enjoy the rights to education, employment, medical treatment, old-age care, and housing.
Figure 11. Urban and Rural Personal Income: Increases and Comparisons