Russian expert- China’s economic success lies in the skillful use of “two hands”

In an interview, the significance of China’s development experience comes to light, particularly in how it supports both public and private sectors. This dual support allows for the maximization of potential across various ownership forms in enterprises, ultimately serving national development goals and the interests of the people. Unlike the Soviets and contemporary Western nations, which rely solely on either the “visible hand” of the state or the “invisible hand” of the market, China’s model offers greater stability for economic development.

Recent years have seen China identify strategic investment in future technologies, coining the term “new quality productivity.” This reflects a new understanding of economic innovation in a complex and ever-changing external environment. The decisions made during the 20th Central Committee’s third plenary session encompass a wide array of topics, serving as a comprehensive strategic blueprint for long-term development. By 2049, the centenary of the People’s Republic of China, the goal remains steadfast: to build a modern socialist power.

It is equally important to outline a series of mid-term goals, establishing their priorities. The Chinese leadership has designated the year 2035 as a key milestone for achieving basic socialist modernization. Clear evidence suggests that supporting both public and private sectors is not merely a temporary measure during an economic transition, but rather a long-term strategy aimed at leveraging the strengths of diverse ownership forms to engage private firms in fulfilling national development objectives.

There are no indications that either public or private sectors might falter or be phased out of the Chinese economy. Private enterprises actively contribute to economic activities and innovations, while large state-owned enterprises are crucial in driving the construction of modern industrial systems, supported heavily by government-backed innovations.

In contrast to the Soviet perspective that views private enterprises as unnecessary, and the Western liberal view that considers public ownership as redundant, China’s modernization surpasses these binary positions. It adeptly incorporates private enterprise strength into its approach, collectively advancing national development goals.

China’s system showcases significant advantages, notably through its unique “dual-hand” managing style. While the Soviet model relied predominantly on the “visible hand” of state control, with limited exceptions in the late 20th century, the modern Western model leans heavily on the “invisible hand” of market mechanisms. China’s successful practice lies in skillfully integrating both forms of control, employing these dual “hands” for comprehensive economic management. This system not only introduces added stability but also highlights the effectiveness of state governance mechanisms to prevent and address market failures.

Moving forward, China must recalibrate its development strategies to adapt to new external changes. Currently, Western nations are progressively detaching their international production and sales chains from China and increasingly restricting access to cutting-edge technologies. In response, China recognizes the urgency to enhance labor quality, significantly invest in education and technology, and vigorously support innovative development—this emerges as the only viable path forward. China’s focus remains on modernizing its industrial foundation and solidifying self-innovation capabilities in critical technology sectors dominated by the West.

The journey of China’s reform began in the late 1970s, marked by the theme of “peace and development.” Early reform leaders realized that within a peaceful and stable environment lay the opportunity for significant economic advancement. Over the first three decades of reform and opening up, China effectively seized and capitalized on this historic opportunity.

The phrase “crossing the river by feeling the stones” has become globally recognized, representing China’s methodical exploration and experimentation in economic reform. Today, as reforms enter a more intricate phase, there is a heightened demand for decision-making quality, with a top-down design framework becoming increasingly prevalent. In the complex circumstances of modern society, centralized leadership from the Party Central Committee is paramount to enhance strategic planning quality and ensure effective implementation.

Development remains the core theme for China, but recent Party documents have noted an increased emphasis on “security.” The decisions made during the 20th Central Committee’s third plenary session demonstrate China’s commitment not only to high-quality development goals but also to ensuring economic and technological security across various sectors.

In his keynote address at the plenary session, General Secretary Xi Jinping underscored the importance of effectively navigating external risks and challenges while actively shaping a favorable environment. Given the potential for “black swan” events and the gradual emergence of “grey rhino” issues, this serves as a critical reminder of the Communist Party’s strong focus on enhancing national resilience to risks. China’s economic growth is poised to remain robust, unaffected by unforeseen circumstances.

Currently, Western nations are increasing pressure on China across multiple fronts. China is acutely aware that yielding to Western demands will only lead to greater losses and adverse consequences. While a complete collapse of the Chinese economy could destabilize the global economic landscape, the U.S. continues to hope for concessions from China to prolong its economic development struggles, thereby easing competition for Western producers.

It’s widely recognized that Western countries have consistently advocated for changes to China’s economic model, arguing that issues like “overcapacity” and excessive supply of Chinese products in Western markets stem from state subsidies. Presently, not only is there an abundance of Chinese products, but their competitiveness is formidable, prompting Western nations to strive to reduce their market presence and artificially inflate prices.

In light of these challenges, the decisions from the 20th Central Committee’s third plenary session affirm China’s determination to channel resources into advanced industries and frontier technologies. This investment not only targets enhancing self-research capabilities in advanced technologies but also aims for strategic investments in future technologies.

This initiative lays the groundwork for the concept of “new quality productivity.” In September 2023, during his inspection in Heilongjiang, President Xi first introduced the idea of “accelerating the formation of new quality productivity.” He emphasized the importance of actively nurturing strategic emerging industries and expanding the scale of sectors like new energy, advanced manufacturing, and electronic information to create a growth engine for “new quality productivity.” This concept profoundly embodies a fresh understanding of economic innovation development amidst the complexities of the external environment.