China Net: In 2024, China saw an economic growth by 5%. How to further stimulate the new engines of China’s economic growth at the key juncture of the convergence between the 14th Five-Year Plan and the 15th Five-Year Plan? How to deal with external technology blockade and global industrial chain reconstruction? How can the road of high-quality economic development in China be stable and far-reaching? This program is an exclusive interview to Yu Miaojie, a Deputy to the National People’s Congress, President of Liaoning University and a Fellow of the International Economics Association.
China Net: Hello, President Yu!
Yu Miaojie: Hello, Miss Bai!
China Net: According to the data released by the National Bureau of Statistics, the GDP in 2024 exceeded 134.9 trillion CNY, reaching a growth rate of 5%. This growth rate also showed that the trend of stable economic foundation, strong resilience and long-term improvement in China remained unchanged. What do you think are the main drivers of China’s economic growth?
Yu Miaojie: My judgment on the long-term improvement of China’s economy is consistent. Why do I make such a judgment? Because China’s economy has four pillars.
The first pillar is the comparative advantages of the whole industrial chains. Compared with the hollowization of industries in European and American countries, China has a complete industrial system with 41 categories, 207 middle categories and 666 sub-categories. At the same time, it has formed the characteristics of industrial agglomeration, benefiting from the effectiveness of supply-side reform.
The second pillar is the advantages of domestic demand. With the continuous improvement of the unified domestic market in China and as the second largest economy in the world, China has always been an important investing destination for international capital from the long-term perspective of safe development and attracting foreign investment.
The third pillar is China’s talents. By promoting the integrated development of science and technology, education and talents, a large number of talents have been trained for economic development. In other words, China’s talent dividend is particularly obvious, which is conducive to the sustained economic growth of China.
The fourth pillar is China’s unique institutional advantages, especially the institutional advantages as a big country. This enables China to concentrate on doing great things by pooling strengths together and ensure that all policies can be comprehensively and thoroughly implemented.
These four pillars are the unique advantages of China’s economy. Compared with other countries, which may have only one or two advantages, China has formed systematic support in all four dimensions. Such a structure is not only a development foundation, but also a significant advantage, which explains why China’s economy can be stable and far-reaching.
China Net: Looking forward to 2025, how do you judge the performance of China’s economy and which industries or fields will be more prominent?
Yu Miaojie: I personally think that it is no problem for China’s economy to maintain an economic growth rate of around 5% in 2025. We have such a potential.
I said so based on two judgments. The first judgment is that the long-term comparative advantages of those aspects we just talked about still exist and they will not be weakened by 2025. On the contrary, they will be strengthened. Second, we also face some challenges, but we have more policy tools to deal with them.
To achieve a 5% economic growth, I personally think that this year’s focus should be on active macro policies, in which the most important ones are proactive fiscal policies and relatively easing monetary policies. From the perspective of fiscal policies, we usually maintain a deficit of 3%, and then use financial deficit as the engine to boost the economy. Many countries have also adopted a deficit ratio like 3% before, but 3% is not an eternal indicator. In fact, we can also see that many countries have also exceeded 3%.
Therefore, I think that if we want to further the growth this year, it is not necessary to have to maintain 3%. In fact, we can consider 4% of deficit ratio, which was 4.06 trillion CNY last year. This year, I think it will be around 5.6 trillion CNY, a more scientific indicator.
The second point is that we can issue special treasury bonds or ultra-long-term special treasury bonds and local special bonds to give more impetus to the economy. In addition to the proactive fiscal policies, it is necessary to implement moderately easing monetary policies at the same time, including interest rate cuts, RRR cuts and expanding open market operations. By doing so, I am confident that it will be no problem for the economy to achieve the goal of 5% economic growth in 2025. From the perspective of expenditure methods, the drivers of economic growth can be divided into three major areas, namely consumption, investment and foreign trade.
By taking this opportunity, I would like to briefly explain the prediction of foreign trade this year. Despite the current uncertainties, such as the rise of international trade protectionism, I am confident about the overall level of China’s foreign trade in 2025. According to the data, the total foreign trade volume of China is estimated to be about 43 trillion CNY in 2024, and it is expected to reach 45 trillion CNY by the end of 2025, based on the 5% growth rate.
Why do I have such an expectation? First of all, it is because of China’s continued adherence to the new pattern of all-round opening up to the outside world. Although some countries have implemented trade protectionism and high tariff policies, Chinese products are irreplaceable in the global market. Even if there is a trade diversion effect, the actual impact on exports is still under control. Secondly, through diversified measures such as expanding emerging markets, these measures can ensure the growth of 45 trillion CNY.
China Net: We just said that the positive aspects of China’s economy remain unchanged. In fact, as General Secretary Xi Jinping said, difficulties and challenges occur every year. We have always forged ahead in winds and rains. Can you give us an analysis of the main difficulties and challenges in economic development in 2025?
Yu Miaojie: So, the resilience of China’s economic growth is long-term, but we also see that there may be some challenges in the short term due to some international shocks. First, economic and trade uncertainty. Some countries have adopted trade protectionism, which is of course an unfair or incorrect policy and other countries will take countermeasures from their own perspective.
Will there be a version of Trade War 2.0 in the world? How does China’s foreign trade cope with the impact? It is necessary to build a new pattern of all-round opening up to the outside world. That is to say, our goal is to build a new pattern of all-round opening up to the outside world on a larger scale, in a wider scope and at a deeper level.
On the other hand, we can also see that the implementation of trade protectionism has led to the rupture of the supply chains or the uneven distribution of the value chains.
Thirdly, we should take precautions.. As early as the first China-US trade war, it was suggested that Chinese enterprises should diversify their export destinations and not put all their eggs in one basket. In addition to targeting mature markets in Europe and America, it is also important to export goods to emerging industrial countries and southern countries.
In addition, from the perspective of management, we should further promote supply-side reform and cultivate new quality productive forces. In terms of reform and opening up, we should also emphasize opening up to the outside world and opening up internally, which is to build a unified domestic market and eliminate barriers between regions.
China Net: The unified national market is an important strategic measure to promote the high-quality development of China’s economy. In recent years, China has also issued a series of relevant policy documents, especially the Guidelines for the Construction of the Unified National Market (Trial) on January 7, which has been released to the public and defined some specific goals and requirements. Could you please tell us about the current implementation of the work? In particular, what progress has been made in eliminating market barriers, optimizing resource allocation and promoting coordinated regional development?
Yu Miaojie: We can see that building a unified domestic market is a very important task. Objectively speaking, the progress of in this regard is booming. As you mentioned just now, great progress has actually been made.
Specifically, I think that to build a unified domestic market, we should work on three aspects. The first aspect is to form a unified domesticmarket on factors (capital, land, talents, energies and transportation). For example, to build a unified market on capital means that private enterprises can get the same interest rate and the same capital cost when lending as state-owned enterprises do. Of course, there is also a very important factor, that is, a unified market on data. In addition to infrastructure, another very important task is to build a digital government in which departments can share data together. The building of a unified market of factors is a starting point. The focus is a unified market on products and services, which has been basically completed.
In my opinion, the most brilliant thing for the unified domestic market in the past year is the decline of transaction costs. Transaction costs include invisible transaction costs and explicit transaction costs. For explicit transaction costs such as logistics costs, we can see that the logistics costs have dropped rapidly and the logistics is also very smooth. In China, online shopping is basically by post, but in the United States, the cost is very high, even reaching about 10% to 20% of the product.
Last year, the most important achievement was that the political ecology of various places was constantly optimized. As the business environment was constantly improving, it became easier to do business and everyone dared to invest to other places. The Liaoning Provincial Government published a booklet called ‘Doing Things without Asking for Help’, which was distributed to the people free of charge. This is a concrete measure to improve the business environment.
China Net: Private economy is also a very important force to promote China’s economic development, especially in stabilizing growth, bettering residents’ lives and improving employment. On February 17, General Secretary Xi Jinping at the meeting with private enterprises stressed that ‘in the new era, the private economy is enjoying a brighter future.’ In your opinion, how should we better stimulate the innovation of private enterprises, especially promote private enterprises to play a greater role in technological innovation, green development and industrial transformation?
Yu Miaojie: General Secretary Xi Jinping cares about the private economy and private enterprises very much. Especially at the meeting, he stressed that the attitude towards the private economy and private entrepreneurs had never changed and it is consistent.
On the one hand, we should unswervingly enlarge and strengthen state-owned enterprises to enhance their creativity, control, influence and competitiveness. On the other hand, we should unswervingly develop the private economy and guide the private economy to play a greater role.
In fact, the private economy has been not only a beneficial supplement to the national economy, but also an important part. It is very important to the economic development of China.
How to further develop the private economy? First, build up confidence, which is more precious than gold. There might be some noises before and it is undoubtedly wrong to think that private economy and private enterprises are not valued. After General Secretary’s convening of a meeting with private entrepreneurs, the reaction of the whole market is particularly positive. Everyone is thinking that the spring breeze is coming again. In fact, the spring breeze has always been there.
Second, specific measures, including two aspects. One is market access. The Central Economic Work Conference held in December last year as well as the Third Plenary Session both emphasized market access. On the other hand, it is hoped that private enterprises and state-owned enterprises can enjoy the same factor price.
Third, a healthy and feasible exit mechanism. We can see that from the Third Plenary Session, the Central Economic Work Conference as well as the meeting with private enterprises, we all attach importance to the support of private economy.
China Net: We know that regional cooperation is also an important engine to promote China’s economic development. Last year, Liaoning Province actually led Northeast China in the growth rate of foreign capital utilization. Under the trend of deepening China-Russia ‘Northeast-Far East’ cooperation, as an expert in revitalizing Northeast China, what do you think of Liaoning’s advantages in building a new hub for opening up in Northeast Asia and what areas should be focused on?
Yu Miaojie: I come from Liaoning University. General Secretary Xi Jinping’s speeches have pointed out the direction for the comprehensive revitalization of Northeast China. He noted that the two most important points for the comprehensive revitalization of Northeast China are reform and opening up. For reform, the most important thing is to build a unified domestic market and integrate it into the unified national market. For opening up, the opening up of Northeast China has a unique role and unique advantages in the building of a new pattern of opening up to the outside world.
For the three major initiatives, namely the Development Initiative, the Security Initiative and the Civilization Initiative, the important starting point is the promotion of the Belt and Road Initiative in various countries, Northeast China playing a unique role in the process. I have always believed that the Land Silk Road and the Maritime Silk Road should develop differently. The focus of the Land Silk Road should develop eastward and the focus of the Maritime Silk Road should develop northward. Considering many geopolitical reasons westward along the Land Silk Road, it is unrealistic to encourage entrepreneurs to invest in these places. The focus should be on strengthening economic and trade cooperation with Russia, especially the Far East region. This is the first point.
Why should the Maritime Silk Road develop northward? After joining RCEP at the end of 2020, our next goal is to join CPTPP (Comprehensive and Progressive Trans-Pacific Partnership Agreement). In CPTPP, Japan and South Korea are two very important trading partners to China in the early stage. We import intermediate products from Japan and South Korea and export final products to all parts of the world after assembly and processing.
If the Land Silk Road goes eastward and the Maritime Silk Road goes northward, the junction is in Northeast China, so the Land-sea Corridor in Northeast China naturally becomes a national strategy.
Second, speed up economic and trade cooperation with Russia. On the one hand, we should import raw materials from Russian, including oil and natural gas, transforming it from an ‘economic corridor’ into a ‘corridor economy’. Boosting the local economy in the process of freight transportation is also important.
In addition, there is much to be done in building Liaoning Free Trade Zone. Shenyang is positioned as an internationally central city of Northeast Asia, reflecting its importance under the national strategy of opening up to the north. Liaoning University is a place to cultivate talents. We will promote cooperation with the Far East Federal University and strive to get the support of the Ministry of Education or other ministries. We will launch ‘2+2’ bachelor’s programs or ‘1+1’ master’s programs and organize entrepreneurs to learn about the Far East region and Vladivostok so that people may invest later.
The Far East region, with 6.5 million square kilometers, has only about seven million people. The region actually has a very rich resource advantage and good strategic value. In the process of China’s opening up to the north, we believe that Liaoning, as a pacesetter, will certainly be able to become the leading hub for opening up in Northeast Asia.
China Network: While promoting the high-quality development of China’s economy, in fact, our country is also facing the challenges brought by the uneven global economic recovery. As we all know, China is a very important link in the global supply chains, so how should we maintain our position in the global supply chains? Especially in 2025, how can some of our advantageous industries, such as new energies and photovoltaics, break through the carbon barriers in Europe and America through the export of technical standards and realize the re-layout of the global value chains?
Yu Miaojie: The comparative advantages of the whole industrial chains and the advantages of industrial agglomeration are the unique advantages of China. Under the risk of global economic fragmentation, how to ensure our core competitiveness is particularly important.
First of all, develop new quality productive forces and emerging industries such as AI, IT, new energies, new materials, high-end equipment, biomedicine and quantum technology. The first capital must be accessible to enterprises and the government should build platforms and provide infrastructure support for high-risk industries. Whether a project can be done or not, the enterprise itself should have its judgement and social capital and public capital should be involved for more R&D.
Secondly, in addition to emerging strategic industries, we should also carry out in-depth transformation and upgrading of traditional industries to enhance their competitiveness through digitalization and intelligence.
Going back to a core question just now, what should we do now in the face of the impact of carbon tariffs from the European Union? I think the most important thing is to set standards and integrate them into the development of our standard system. Just now, I talked about building a new pattern of all-round opening-up on a larger scale, in a wider scope and at a deeper level. The deeper level is to transform from factor-based openness to institutional openness. The key to institutional openness is to set standards. In the future, the focus of our efforts is to formulate global standards through the promotion of the right to speak in the industrial system.
China Net: Thank you very much for your wonderful interpretation.
