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China’s 2020 Economic Agenda

Maintaining Stability Amid Flux

The article below was originally published in China Brief (Volume: 19 Issue: 22) on December 31, 2019. We are grateful to its Editor for permission to republish it here.

In the intervening month since its publication, Wuhan Coronavirus has become a serious threat to China’s economic prospects with major ramifications for industries, supply chains, and transport networks. Indeed, the disease outbreak has made the challenging agenda examined below even more imposing.

Yun Jiang and Adam Ni


China’s top annual economic policy gathering, the Central Economic Work Conference (中央经济工作会议), or CEWC, was held between December 10 and 12 in Beijing. This year’s CEWC focused on the theme of “achieving developmental progress on the basis of first ensuring stability” (稳字当头, 稳中求进)—thereby continuing a theme stressed during the meeting of the National People’s Congress in March of this year. Given increasing economic risks and political challenges, both domestic and international, the party-state’s focus on the supremacy of stability is unsurprising. Importantly, the CEWC reiterates that the goal of achieving a “moderately prosperous society” (小康社会) by the end of 2020 is “a priority among priorities” (重中之重).

This article examines the key outcomes of the 2019 CEWC, which set the overall direction of China’s economic policy agenda for 2020. In doing so, we highlight a central underlying tension: on the one hand, the Chinese Communist Party (CCP) wants to keep a steady ship at a time of economic and strategic flux; on the other, maintaining strong economic growth requires ambitious developmental goals and economic reform imperatives, which have added pressure for bold policy actions. How well Chinese policymakers can navigate this tension in 2020 has important ramifications for both China’s national development and the CCP’s political legitimacy.

The Ritual of the “Three-Step” Dance

Started in 1994, the annual CEWC is China’s most authoritative economic policy conference. It is usually attended by all members of the Politburo Standing Committee, as well as virtually all party-state actors with economic responsibilities—including central and provincial party and state organs, the military, and state-owned enterprises. This year’s conference was no exception. The conference serves three functions: to evaluate the economic policy work of the current year; to analyze and present the CCP Central Committee’s view on the current economic situation facing China; and to plan economic policy work, including macroeconomic policy and key economic development tasks, for the following year.

As per past patterns, this year’s conference was held close to the end of the year, and like previous years it was preceded by two other annual economic policy work meetings. The first was the annual CCP Central Committee-hosted forum (held on December 4) seeking “comments” and “suggestions” on economic policy from select representatives from outside the CCP (党外人士). These non-CCP groups and individuals are all closely vetted, and most are effectively controlled or co-opted by the CCP United Front Work Department. They include the eight minor non-communist parties (民主党派), the All-China Federation of Industry and Commerce (全国工商联), and non-party aligned personalities (无党派人士). This meeting is a forum for political ritual and theater, rather than genuine policy consultation.

The second event was the Politburo meeting (held on December 6) that provided high-level guidance and set the tone for the CEWC that occurred a few days later. Like in 2018, this year’s Politburo meeting preceding the CEWC also provided direction for the next year’s party discipline, integrity and anti-corruption work.

Stability and Managing Risk

Economists have long expected that China’s rapid economic growth will eventually taper off. Since Chinese economic reform started in 1979, GDP growth has averaged almost 10 percent per year. In the last decade, growth has moderated. Indeed, the slowdown is perhaps faster than expected—there are doubts whether China can reach its target growth of between 6 and 6.5 percent in 2019. While the CEWC did not specify economic growth targets for 2020, it did state the need to “ensure a reasonable economic growth and steady improvement in [growth] quality”. This “reasonable” rate is likely to be around 6 percent.

In the long term, demography is one of the most serious challenges to China’s continued economic rise. Beijing is clearly concerned about its economic implications. The relaxation of the “one-child policy” to the “two-child policy” (二孩政策), as well as the social campaigns to stigmatize late marriages for women, are examples of government responses. Yet social policies to address this demographic challenge—such as delaying retirement age—can negatively affect the career prospects of the incoming workforce, potentially adding to existing resentments in the labor market.

While the CEWC did not address the economy-related demography challenges, it did focus in on three categories of risks: financial, environmental, and external. Financial scandals and environmental degradation have proved to be potentially destabilising forces. Public protests have erupted due to investors falling victim to dodgy financial schemes, or environmental concerns such as water contamination. Given the theme of stability, it is no surprise that the CEWC repeatedly drew attention to financial and environmental risks. Wealth inequality and labor issues, which were not directly addressed by the CEWC, are also sources of destabilizing discontent. On external risks, the headline-grabbing trade conflict with the United States did not get an explicit mention, apart from the rather vague “sources of global turbulence and risks”. Instead, the focus was on the slowing of global growth, which in turn likely means a reduction in the demand for Chinese exports.

Reform and Work Priorities

This year’s CEWC identified six areas of priority for China’s 2020 economic policy agenda:

  1. Promoting the “New Development Concept” (新发展理念), characterized by innovative, balanced, and high quality development.
  2. Fighting the “three major battles” against poverty, pollution and financial instability.
  3. Guaranteeing the livelihood of people, especially those in poverty. This covers quality of jobs, adequate pensions for the old, and housing price stability.
  4. Proactive fiscal policy and prudent monetary policy. This includes the cost of financing, especially for small-and-medium enterprises (SMEs), and guiding investments towards areas such as advanced manufacturing and infrastructure.
  5. High quality development and improving overall competitiveness through innovation and reform. This covers issues such as the commercialization of research, state-owned enterprise (SOE) innovation, strategic industry policy, business operating costs, “zombie firms”, the digital economy, care for the elderly, infrastructure, telecommunications, and disaster resilience.
  6. Economic system reform to accelerate the development of a high-standard market system. This includes reforms for SOEs, the intellectual property regime, the tax system, and the financial system; protections for foreign investment; and active participation in global economic governance and WTO reform.

The priorities identified are comprehensive, covering a wide spectrum of economic issues. An emphasis on “quality” and “balance” in economic development is evident. On the one hand, Beijing wants the economy to continue to grow at a reasonably fast pace. This is necessary as economic growth and improved living standards are important for legitimizing the Party’s monopoly on political power. On the other hand, further sustainable growth requires further reform, which affects the material interests of a multitude of party, state, and military actors, and hampers the Party’s ability to distribute economic rents to its favored clients.

Beijing sees innovation as a way of addressing structural constraints on the economy. China is catching up with advanced economies across a range of industries—in some it is already leading the world. This means that further growth in those industries can only be achieved with innovation and better technology. Promoting innovation is a theme running throughout the six priority areas, and there is a sense that Beijing sees innovation as a panacea for achieving sustainable growth while not giving up levers of state control.

Technology transfer and diffusion has been a sticking point between China and advanced economies. This is unlikely to change for the foreseeable future, even if China further strengthens intellectual property protection. An increasing number of countries and companies are grappling with rising geopolitical tension; national security concerns over the use of Chinese technology products; the relationship between the party-state and Chinese companies; and concerns over dual-use technology.

Looking outwards, China will attempt to exert more influence on global economic governance, including with respect to the WTO reform process. This will again pit China against developed economies, including the United States, the European Union, and Japan. These three economies have very different ideas from China as to what reforms are needed to maintain the efficacy of the WTO. However, China may find allies for its reform proposals among developing economies, including among the other “BRICS” (Brazil, Russia, India, China, South Africa) countries.


Stability is the key theme of China’s economic policy direction for next year. In fact, the Mandarin Chinese word for “stability” (稳) appeared a staggering 29 times in the official Xinhua report on this year’s CEWC. Given the rising economic challenges domestically and an expected turbulent global environment next year, stability is necessary to ensure Party legitimacy and to avoid political unrest stemming from economic troubles. The Party will surely celebrate achieving a “moderately prosperous society” at the end of 2020 to remind the Chinese people of its role in poverty alleviation and improving living standards.

Balancing sustained economic growth with increased financial and environmental risks will not be easy. Beijing is putting its faith in its New Development Concept centered around “quality growth”. However, given the severe economic challenges that it faces, Beijing may redouble its efforts to push an “ethnonationalist” ideology for legitimization. In the international community, China’s focus on innovation and its efforts aimed at increasing influence over global economic governance institutions may find support among some developing economies; however, it will likely lead to more friction with developed economies, including the United States, the European Union, and Japan.