The annual Central Economic Work Conference took place in Beijing from December 11 to 12. At the tone-setting conference, President Xi Jinping reviewed the country's economic work in 2023, analyzed the current economic situation and provided guidance for next year's policy priorities. A notable emphasis was placed on becoming more mindful of potential risks and effectively responding to them. 

This commitment to vigilance echoes President Xi's remarks at the 2021 Central Economic Work Conference, where he emphasized the importance of preparing for the worst and preventing major risks and crises. In the 2021 speech, he quoted a famous line from Xichou's Remarks by He Tan, an official and scholar from the Song Dynasty (960-1279): "We must nip early risk factors and diseases in the bud." This cautionary statement serves as a reminder for people to be aware of potential risks lurking in the background.

China's economy is recovering, with solid progress made in high-quality development. In the first three quarters of 2023, the country's GDP grew 5.2 percent year on year, and the target of achieving around 5-percent economic growth for the entire year is within reach. Over the first 11 months of this year, China's consumer price index, the main gauge of inflation, rose 0.3 percent year on year, and the urban surveyed unemployment rate for the first three quarters averaged 5.3 percent, decreasing by 0.3 percentage points year on year. Its foreign exchange reserves had remained above $3.1 trillion so far this year. The renminbi has gained market share in international payments, overtaking the euro in October as the second most used currency in international trade finance after the U.S. dollar.

Specifically, China's economic growth rate still ranks at the top among the world's major economies. Steven Barnett, Senior Resident Representative in China of the International Monetary Fund (IMF), said China remains the biggest engine of global economic growth in 2023, contributing one third of global economic growth.

Despite these commendable strides, challenges persist. The report delivered by Xi to the 20th National Congress of the Communist Party of China, which outlines goals and tasks for the development of the Party and the country in the next five years and beyond, highlights that China has entered a period of development in which strategic opportunities, risks, and challenges are concurrent and uncertainties and unforeseen factors are rising. Various "black swan" and "gray rhino" events may occur at any time.

Internationally, the Russia-Ukraine conflict, the Palestinian-Israeli war and protectionist policies of some countries combined have led to substantial disruptions to the international industrial chains and business environment, in turn affecting China's economy.

Internally, the foundation for economic recovery is not yet solid. For example, the Central Financial Work Conference in October called for maintaining awareness that problems in the financial field are intertwined and affect each other. "Some are in plain sight, but the hidden economic and financial risks are also rife. Moreover, the quality and efficiency of financial services for the real economy are not high. Financial irregularities and corruption have persisted, and financial supervision and governance capabilities remain weak," it said.

Against the backdrop of increasing uncertainty and growing risks both internationally and domestically, "we must nip early risk factors and diseases in the bud." The line does not only serve as an immediate warning, but also as a reminder of the need for long-term vigilance.

At this critical stage in China's economic recovery, and in this crucial phase of advancing Chinese modernization with high-quality development, the country must enhance its capacity to prevent and mitigate major risks and will remain on high alert against systemic security risks through early identification, early warning, early exposure and early resolution. All aim to ensure the stable development of the economy and society alike.

Copyedited by G.P. Wilson 

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