![]() For example, Xi used a CFEAC meeting in August 2021 to launch his “common prosperity” agenda on economic inequality. The CCP Central Financial and Economic Affairs Commission (CFEAC) under the CCP Central Committee has traditionally been the core decision-making and coordination body on economic policy and public finance, meeting about twice per year to discuss the overall direction of Chinese economic policy. China is the world’s largest manufacturer, the largest trader, the largest exporter, the second-largest importer, the largest holder of foreign exchange reserves, one of the largest sources and recipients of foreign direct investment, and an important source of global growth. China’s economic trajectory impacts not only Beijing but the global economy. China’s economy is likely to continue growing but not as fast as once thought, making distributional issues more important in Chinese politics, leading to an increase in social tensions and instability, and creating political headaches for Xi’s administration. ![]() ![]() Still, his efforts to reform China’s economic structure have progressed slowly because of poor policy choices and the weight of vested interests. Xi has shifted the party’s official focus from quantity of growth to quality of growth. The transition from an old and now largely exhausted economic model centered on investment, manufacturing, and exports to a higher value-added model focused on consumption, services, and innovation will be crucial for China to become a high-income country. However, growth is now slowing to the mid-single digits, partly for structural reasons as China becomes richer, and partly for policy reasons as Xi’s more statist agenda contributes to slower productivity growth and rising political risk. Market-oriented policies and a favorable geo-economic environment enabled 800 million people to lift themselves out of poverty, transforming China into an upper-middle-income country and the world’s second-largest economy. China has recorded economic growth averaging over 9 percent per year since former paramount leaders Hua Guofeng and then Deng Xiaoping inaugurated an era of economic “reform and opening” following the death of Chairman Mao in 1976. China’s economic trajectory is arguably the most vexing issue facing the Chinese Communist Party (CCP) and its leader, General Secretary Xi Jinping.
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