New development pattern

The new development pattern will by no means be closed domestic circulation. Instead, it is open dual circulation involving both domestic and foreign markets, President Xi said in a speech expounding on the country's new national development plan, Xinhua reported on Nov 3.

Xi also said that this year China's gross domestic product is expected to exceed 100 trillion yuan ($14.9 trillion), people's living standards will significantly improve and all rural impoverished populations will be lifted out of poverty by current standards.

In addition, the goal to complete the building of a moderately prosperous society in all respects can be achieved on time, Xi said.

Raiser said that once extreme poverty has been eradicated, countries need to address social vulnerabilities.

Rebalancing toward consumption is one way for the government to help with the vulnerable population, he said.

During the COVID-19 crisis, for instance, some migrant workers and others informally employed in China's urban areas became vulnerable, as they had not been previously featured as target populations for the government's poverty-eradication programs.

"Social policies thus needed to be adjusted to cover these groups," he said.

Raiser, in an interview with China Daily, on Oct 12, said the government can help "the living standards of those at the bottom of the distribution" through better targeted assistance, a stronger social insurance system and a stronger social transfer system.

"China has the fiscal space to do that," he said, adding that it will require a little more government spending, but will have the benefit of supporting the rebalancing toward consumption.

One of the reasons people in China save a lot is because they feel if something happens to them they have to rely on themselves, Raiser said.

"If they knew that the government is going to provide a bit more assistance, they would probably feel that they can afford to spend a bit more. And that would be good for the Chinese economy, and for the rebalancing."

Another way to help the disadvantaged is to make sure that economic growth is inclusive, he said. "That means that jobs are created, and that the wages of people at the bottom of the distribution continue to increase."

Raiser has closely followed development for China's 14th Five-Year Plan, which is expected to be endorsed by the country's top legislature next year.

In a blog posted on the Brookings Institution website on Nov 10, Raiser and Marcin Piatkowski, a senior economist at the World Bank, said the plan is likely to emphasize investments in digitalization, which will have consequences for social and economic outcomes.

"There is emerging evidence that the development of e-commerce is associated with higher employment, faster growth in incomes, increased entrepreneurship, reduced migration outflows, higher gender equity and reduced poverty," they wrote in "China 4.0: Sharing the dividends of digitalization".

In fact, China has ramped up efforts to expand internet-based services to the vast rural market by improving infrastructure, especially in poverty-stricken areas.

Fiber-optic availability in the country's poor villages has reached a record 98 percent, and a rural e-commerce promotion project has covered all the 832 poor counties, Yang Xiaowei, deputy head of the Cyberspace Administration of China, said at a news conference on Nov 6.

As the world wrestles with a pandemic that has killed more than 1.53 million people, Raiser said how China recovers from the pandemic "matters significantly" for a lot of the country's trading partners.

China continues to be the only major economy to grow this year, when global contraction of 4.4 percent is expected, according to the World Economic Outlook that the International Monetary Fund issued in early October.