How China’s Economy Works?

By Zhang Xiaoying

(President & Chief Editor of Economic Daily)

The world’s second largest economy, the largest industrial country, the largest goods trader, and the country with the largest foreign exchange reserves! The world’s largest consumer market backed by the largest middle-income population, the world’s largest tourism market, and the major trading partner of more than 130 countries; contributing one third of world economic growth, and gaining merit as the source of a driving force and anchor of stability… The dream of strength and prosperity cherished by countless patriotic Chinese for over 100 years has now come true. This all has been achieved in China!

This has also been accompanied by constant gloom and doom in international forecasts about China’s economy. To the world’s surprise, China’s economy has been booming despite the whirlpools of global economic recession, and China has ascended to the forefront of the world’s diplomatic and economic domain, occupying a pivotal position. The “China collapse theory” has itself collapsed in the face of the mighty “China response.” What has made China’s economy continue to grow with its “impossible miracle”? What has enabled the Chinese people to forge ahead in the face of various crises and challenges? What has made socialist China “the country that breaks the rules of economics textbooks”? In short, the big question of “how China’s economy works” looms large in many a mind.

“Reform and opening-up has been a key measure in determining the fate of contemporary China, and in realizing 200-year-old goals and the great rejuvenation of the Chinese nation.” Forty years ago, the Chinese Communist Party, proceeding from China’s realities and from the will of the people, sounded the clarion for a historic turning point by “emancipating minds, seeking truth from facts, and looking forward in unity,” unleashing vital sources for China’s development and progress. Hundreds of millions of Chinese have welcomed with open arms this new spring of science and education. There has been a surge of enthusiasm for innovation and creativity. China is opening wider and wider to the outside world. Countless entrepreneurs have matured to take part in worldwide competition. The Chinese nation has made great strides to catch up with and lead the times. The secrets of “how China’s economy works” lie in a great logic throughout the past 40 years.

The greatest logic is to seek truth from facts and put people first. This constitutes the solid core of socialism with Chinese characteristics.

Seeking truth from facts enables us to grasp scientific laws and creatively promote institutional change. The greatness of the Chinese Communist Party (CPC) lies in the combination of a genuine Marxist perspective of seeking truth from facts and the courage to emancipate minds. The situational analysis of “China’s socialist society as continuing in the primary stage for a long time” has laid the foundation for the introduction of a market economy from the viewpoint of historical materialism. The criteria of “whether it is conducive to the development of the productive forces of a socialist society, whether it is conducive to the enhancement of the overall national strength of a socialist country, and whether it is conducive to the improvement of the people’s living standards” have enabled people to shift their focus from empty talk to actual results. Both the market and planning are ‘means’ that have torn away the ‘capitalist’ label that had been stuck on the market economy for a long time, thus successfully interpreting the theme of a socialist market economy. In the last 40 years of practice in China, through continuous amplification of the role of the market in resource allocation, efficiency has been improved, wealth increased, and productivity greatly liberated and developed. To this day, socialism has not yet been fully “peacefully evolved” by the market economy, but has shown unprecedented vigor and vitality in the process, evidenced by market prosperity and economic leaps. Undeniable facts have repeatedly confirmed the firm judgment: “If China does not take this path, there is no other choice. This is the only path to affluence and prosperity.”

Putting people first has enabled us to get through thousands obstacles on the road with the greatest power engine. In the past 40 years, every innovation and breakthrough has been confronted with the dilemmas of inheritance and development, current circumstances and long-term considerations, gradual progress and breakthrough. There have been further political, economic, international environment and natural disaster risks and challenges. The reason why we have made it through every challenge is that China has recognized its main power from the very beginning of the reform process. Hundreds of millions of Chinese people have been awakened from over-rigidity. They have forged their vision and courage, broadened their horizons and minds, and accumulated confidence and aspirations. Numerous entrepreneurs have matured to become the most dynamic core of China’s economy. Only when the fruits of reform and development benefit all the people in a more equitable way, and the overall social situation has stabilized in the midst of profound changes, will the Party and the country be able to steer the correct course in the face of all kinds of storms. It is precisely the reliance on the people and people-centeredness in the reform process that has stimulated the powerful engine of socialist China’s vitality and maintained its surging power. The energy of hundreds of millions of Chinese people has become the driving force of the Chinese economy. To this end, along with New World Press, we have jointly planned this publishing project of a high-quality book series entitled,“How China’s Economy Works.” ......