Xi Jinping introduced the New Development Concept, alternatively translated as the New Development Philosophy, to guide China’s development strategy in an age of declining growth rates. Presented shortly before the Thirteenth Five Year Plan in 2015, the express aim of the New Development Concept is to reorient Chinese economic planning away from narrow GDP growth targets and towards what Xi Jinping calls “high quality development” [高质量发展]. From a macroeconomic perspective, the New Development Concept aims to boost China’s economic growth on the long run by addressing the structural challenges inherent in China’s development model; from a social perspective, it aims to temper popular discontent with pollution, inequality, and other negative byproducts of growth pursued at all costs; and from a geopolitical perspective, it aims to transform China into the global leader in science and technology, paving China’s ADVANCE TOWARDS THE CENTER OF THE WORLD STAGE.
The roots of the problem set tackled by the New Development Concept stretch back to the early Reform Era. Shortly after the death of Mao Zedong many party leaders concluded that economic growth was the key to restoring China’s national strength, the Party’s international standing, and the loyalty of the Chinese people. After more than a decade of experimentation proved the value of this logic, General Secretary Jiang Zemin would codify it as the Party’s “basic line” during the “INITIAL STAGE OF SOCIALISM,” declaring in his 1997 Political Report to the 15th National Congress that “We have no choice but to make economic construction the central task of the entire Party and the whole country. All other work is subordinated to and serves this task.... The key to the solution of all of China's problems lies in our own development” (Jiang 1997). For two generations the entire machinery of the Chinese party-state served the demands of this mantra.
The results of the Party’s unfaltering pursuit of development were extraordinary: the living standard of the average Chinese person increased by twenty-six times in real terms during the four decades between 1978 and 2018, while China’s share of the global economy climbed from 2 percent to 16 percent over the same period (Yao 2020). The main drivers of the fantastic growth of this era were government investment in fixed capital assets and strong foreign demand for cheap Chinese goods. This meant that despite its undeniable achievements, the growth model of the Reform Era came with a prepackaged expiration date. Chinese economists long predicted that climbing Chinese wages would eventually price China out of many export markets. They also understood that there are limits to the number of roads, sewers, skyscrapers, and railways any country—even a country as large as China—can build before additional capital investments provide diminishing returns. It was only a matter of time before China would be forced to either adopt a new growth model or accept economic stagnation.
The Great Recession marked this transition point: the financial crisis lowered global demand for Chinese goods, forcing the Chinese state to power through the emergency with a massive stimulus spending spree. This spending package saved China from recession at the cost of stagnating returns on capital investments and a sharp accumulation of debt on local government balance sheets. To make matters worse, a shrinking surplus labor pool pushed up production costs in China, making Chinese goods less competitive in the global market just as global demand began to recover. Henceforth the Chinese economy would require new sources of growth if China was to attain the long-term development goals that party leaders had set for it.
Unbalanced, uncoordinated and unsustainable development remains a big problem. We are weak in scientific and technological innovation. The industrial structure is unbalanced and the growth mode remains inefficient. The development gap between urban and rural areas and between regions is still large, and so are income disparities (Xi 2014, p. 78).
The key to surmounting these challenges, Xi maintained, was widespread recognition that the Chinese economy had entered a “new normal” [新常态]. The halcyon days where Chinese economic planners could rely on high-speed growth were over; medium-high speed growth must be the new norm. This would require China to adjust its economic strategy. At the Central Conference on Economic Work in 2014, Xi warned cadres that in this new environment “economic restructuring will be painful but is unavoidable.” He assured cadres that restructuring would mark the beginning of a what he called a New Development Stage [新发展阶段] where China would transition to “to a [development] model that is more advanced, better structured, and with a more complicated division of labor” (Xi 2017, p. 255).
The New Development Concept was introduced to guide development planning in this new stage. Presented in 2015 in tandem with the Thirteenth Five Year Plan, the concept directs cadres to prioritize five qualitative outcomes over quantitative measures of growth: economic development must be innovative [创新], coordinated [协调], green [绿色], open [开放], and shared [共享]. Scientific and technological innovation lay at the center of this new development approach. The New Development Concept presumes that the global economy sits on the cusp of a technological revolution. Whichever nation invents, introduces, and controls these emerging technologies will determine the course of global economic development in the decades to come. However, “inadequate capacity for innovation is [China’s] Achilles’ heel,” Xi remarked during a study session of the Thirteenth Five Year Plan. “Innovation-driven growth has become the pressing demand for China’s development. Therefore, I stress repeatedly that innovation is development; innovation is the future” (Xi 2017, p. 223). In response to this call the PRC rolled out multiple techno-industrial policies—the most famous being “Made in China 2025”— between 2015 and 2017. All attempted to push the industrial foundations of the Chinese economy up the global value chain.
Parallel to this push towards the technological frontier was a drive to cut away unproductive parts of the existing industrial base. The stimulus package that powered China through the Great Recession also saddled the Chinese economy with wasteful overcapacity in state-run industries like steel and coal. Reforming the Chinese growth model meant taking the axe to these industries—and stomaching the costs of a short-term GDP slowdown to do so. The Center signaled its willingness to stomach those costs in a 2016 series of People’s Daily articles penned by an “authoritative personage” (rumored to be Liu He, then head of the highest economic policymaking body, the Central Economic and Financial Leading Group) outlining the “supply side reforms” [供给侧改革] required by the New Development Concept.
In reference to the growing debts incurred by local governments and state owned enterprises, the People’s Daily wrote that “a tree cannot grow to the sky; high leverage carries high risks.” The old growth playbook no longer worked: “economic stabilization relies on the old method, which is investment-driven, and fiscal pressure in some areas has added to possibilities of economic risks” (Wright 2023). To reduce these risks the State Council passed a series of measures for supply-side structural reform. The primary target of these reforms were so-called “zombie enterprises,” state-owned enterprises that were not generating enough profits. Parallel measures sought to reduce financial risks posed by a poorly regulated banking sector and crackdown on industries responsible for large-scale industrial pollution.
Up until 2018 or so, the New Development Concept could be understood primarily in these terms. The concept would guide China towards a growth model driven less by state investment in infrastructure and more by domestic demand for Chinese goods. It would do this through an industrial policy tailored to support Chinese firms working on the technological frontier while slowly diminishing the role that unproductive sectors of the economy, which relied on lax regulation or expensive state subsidies to survive, played in China’s future development. However, under the pressure of a grueling trade war, the threat of foreign export controls, and a global pandemic, both the stated aims and means of the New Development Concept began to shift. Party leaders began framing the New Development Concept in terms of China’s “economic security” [经济安全]. Security concepts previously associated with the TOTAL NATIONAL SECURITY PARADIGM began to be deployed alongside those associated with the New Development Concept. The Central Committee officially endorsed this marriage of Chinese economic and security strategy in the 5th plenum of the 19th Party Congress. The plenum readout declared that “the integrated planning of development and security” [统筹发展和安全] should henceforth be recognized as a core tenet of development planning (Central Committee 2021). Today it is common for party leaders to not only call for innovative, coordinated, green, open, and shared development, but “secure” development as well.
Now the stated aim of the New Development Concept is to guide the Chinese economy towards what Xi Jinping has dubbed a NEW DEVELOPMENT PATTERN. This is a schema of self-sufficiency: if successful, the Party leadership will rely on domestic consumers to power the Chinese economy and on a homegrown scientific-industrial complex to power China’s technological advance. This will prevent Chinese development from being held hostage by HOSTILE FORCES. These goals are not too far afield from the original aims of the New Development Concept—what has changed is less the ultimate aims of Xi’s development program than the urgency with which the Party must pursue it. What was once a strategy for making China wealthier, more equal, and less polluted is now described to cadres as a strategy that will “decide our state’s capacity for survival” (Office of the Central National Security Commission 2022).
See also: ADVANCING TOWARDS THE CENTER OF THE WORLD STAGE; GREAT REJUVENATION OF THE CHINESE NATION; INITIAL STAGE OF SOCIALISM; NEW DEVELOPMENT PATTERN; SOCIALISM WITH CHINESE CHARACTERISTICS; TOTAL NATIONAL SECURITY PARADIGM;
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