Xi Jinping, General Secretary of the Central Committee of the Communist Party of China (CPC), has called for the development of a modernized economy to push the country's development to the next level. Xi made the remarks while presiding over the third group study of the Political Bureau of the 19th CPC Central Committee on January 30.

Xi called developing a modernized economy "a key subject in theory and practice, a strategic goal for the country's development, and an imperative for the shift of the development mode, economic structure and growth momentum."

Only with a modernized economy can China better adapt to the trend of modernization, take the initiative in international competition and provide support for the modernization of other fields, Xi said.

The following is an analysis on how to develop a modernized economy by Xinhua News Agency:

After decades of rapid advances, China is shifting its economic focus to high-quality development, with the "development of a modernized economy" high on the agenda.

Now an economic catchphrase, the idea provides a blueprint for the world's second largest economy over the next five years and beyond.

The concept will be embodied by innovation-driven industries with coordinated development, an open and fair market, efficient and fair income distribution, coordinated urban-rural and regional development, energy conservation and environmental friendliness, as well as an open economy with higher standards.

Efforts will be made to give full play to the role of the market, while the government is expected to play a better part.

Real economy focused

The real economy, once outshone by rampant real estate prices and financial speculation, has again gained traction.

While presiding over a group study of the Political Bureau of the CPC Central Committee, General Secretary of the CPC Central Committee Xi Jinping described the real economy as the foundation of the modernized economy, advocating the use of new technology such as the Internet, big data and artificial intelligence to boost traditional industries.

In order to develop a modernized economy, China should channel more energy into improving the quality of supply and grow itself into a manufacturing powerhouse, said Wang Yiming, Vice Minister of the Development Research Center of the State Council. The government has already rolled out an array of measures to this end including the Made in China 2025 and Internet Plus strategies.

Funds that used to flow into the virtual economy due to high yields are returning to factories that produce tangible goods. New loans in the real economy rose 11.34 percent to 13.84 trillion yuan ($2.2 trillion) last year.

Thanks to rising investment, the sprouting of innovators across the country is injecting new vitality into the economy. More homegrown tech firms are metamorphosing from followers to leaders in the international tech community.

Technology is playing an ever bigger role in driving the economy. Technological progress is estimated to have contributed 57.5 percent to economic growth last year, up from 56.2 percent in 2016, according to Wang Zhigang, Vice Minister of Science and Technology.

Opening up

During the group study, Xi called for a diverse, balanced, secure and efficient system for opening up the economy, with better use of global resources and markets, and the promotion of international cooperation under the Belt and Road Initiative.

The year 2018 is the 40th anniversary of the beginning of China's reform and opening-up policy, and accordingly the country's door to the world will only become more open.

At the World Economic Forum annual meeting in January, senior Chinese official Liu He said more plans are in the pipeline to further open the country's finance, manufacturing and service sectors, and to step up the protection of intellectual property.

The Chinese Government has been striving to ease market access for foreign investment and build a level playing field for market actors at home and abroad.

Foreign direct investment in the Chinese mainland hit an all-time high of 878 billion yuan ($140 billion) last year, with 35,652 foreign-funded businesses established in the country.

China has promised to boost imports, announcing plans to purchase more than $10 trillion of goods and services in the next five years. The First China International Import Expo will be held in Shanghai in November, which is expected to bring together thousands of enterprises from more than 100 countries.

Liu said that China will make more efforts to cut tariffs on products including cars. Import taxes on 187 products were slashed last year, with the average rate down from 17.3 percent to 7.7 percent.

The Belt and Road Initiative is another crucial part of China's opening up to the world. Industrial cooperation under the Belt and Road Initiative will prompt a re-balancing of the world economy, said Zhang Yansheng, a researcher at the China Center for International Economic Exchanges.

China's non-financial outbound direct investment (ODI) to countries involved in the Belt and Road Initiative totaled $14.4 billion last year, 12 percent of the total ODI, up from 8.5 percent in 2016.

Market power

China's modernized economy will continue to be market-oriented and follow market rules, with stronger reforms to break barriers and bring vitality to the economy.

A market system that is unified, open, competitive and well-ordered is required, Xi said during the group study, adding that China will give full play to the market and prompt a better role for the government.

One of the major tasks is the consolidation of state-owned enterprises (SOEs). Debt-ridden and loss making state-owned "zombie companies" are to be reorganized via mergers and acquisitions or face bankruptcy according to the rules of the market. Some have begun to carry out mixed-ownership reform to improve their competitiveness. Of the 19 SOEs piloting the reform, seven have brought in more than 40 investors with the injection of over 90 billion yuan ($14 billion).

Meanwhile, the private sector will receive stronger support. At the 19th CPC National Congress, policy makers pledged a negative list for market access and to do away with regulations and practices that impede fair competition.

The government has rolled out measures to build a sound business environment for the private sector, including less red tape, better services and lower fees and taxes. Last year, 6.07 million new businesses were registered, up 9.9 percent from a year ago. More policies can be expected to protect property and the rights of private businesses, relieve their burden and allow them to enter more key industries.

Copyedited by Laurence Coulton

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