The economic policy direction of China in Xi Jinping’s second term is “qualitative growth.” This means accelerating a reform of the supply side, which has been pushed forward with for two years.
China sees the second term of the Xi Jinping administration as a period for laying the groundwork for becoming an advanced economy. Instead of slowing down growth, the government will take measures to improve the quality of economic growth, considering the gap between the rich and poor, and the environment. “Shaokang” (all people enjoying comfortable and affluent lives) is the main focus of Xi’s second term. "The reform and openness hold the key to determining the fate of China and with 40 years of reform and openness, the Chinese people are getting richer as they realize the good quality of life," President Xi Jinping said. “I think that it will realize the great revival of the Chinese people by expanding the opening and promoting mutual reform and opening by gathering experience."
In order to achieve this, the Xi Jinping administration selected deepening supply-side structural reforms and the early construction of an innovative country as economic growth engines. This means that the administration should make high-end consumption, innovation inducement, and shared economy new growth engines by building a world-class manufacturing powerhouse and combining big data, artificial intelligence with the real economy.In addition, China will induce epoch-making technology innovation by strengthening basic science research. By doing so, the Chinese government should support the construction of a science and technology power, a quality power, an aerospace power, an internet power, a digitalized China and a smart society.
Balanced growth is also a major economic task. Xi emphasized the balanced development among cities, rural areas, and classes to build a modern economic system. The restructuring of state-owned enterprises will also continue in his second term.
It is pointed out that the economic strategy of Korea should be revised as Xi stressed a quality-comes-first principle and technological strength based on qualitative growth in his second term. In particular, Korean companies are no longer as successful as before in the Chinese market. Although there are political factors behind the THAAD deployment, Korean companies’ business in China is being hindered by Chinese companies’ stronger competitiveness and environmental issues in China.
Ultimately, strengthening the competitiveness of Korean companies is an urgent task. “A vertical labor division structure between Korea and China is weakening due to the Chinese government's import replacement strategy and an improvement in Chinese manufacturers' competitiveness," said a recent report by the Korea Institute for International Economic Policy. “Korea should further spur the technological differentiation of intermediate goods and creating more value for them."