An economic equilibrium: Fine-tuning the distribution of resources
Achieving optimal quality and efficiency requires collaborative efforts focused on both gradual growth and the rejuvenation of current assets.
TroibNews 
**Editor's Note**: Zhu Fangfei is the director and a researcher at the research department of the Institute for Public Policy of Zhejiang University. This article reflects the author's opinions and not necessarily the views of CN. It has been translated from Chinese and edited for brevity and clarity. This special commentary series, "China's Economy: Five Coordination Priorities for 2025," features analyses from experts on the key coordination priorities discussed at the Central Economic Work Conference, providing a detailed examination of China's economic strategies and future prospects.
In December 2024, the Central Economic Work Conference in China highlighted the importance of balancing the optimization of incremental growth with the revitalization of existing assets. This initiative aims to enhance the efficiency of resource allocation comprehensively. The optimization of incremental growth emphasizes "optimization," targeting improved resource allocation efficiency through a more refined incremental resource structure. Conversely, the revitalization of existing assets focuses on "revitalization," which encompasses activating idle assets, integrating them into the national economic cycle, and ensuring that scarce resources are fully utilized.
To effectively balance these efforts, a variety of policies—including fiscal, monetary, industrial, and employment strategies—must be implemented. Additionally, managing assets and adjusting liabilities are crucial for unlocking the potential of various production factors, particularly those related to innovation. This approach aims to enhance the utilization of idle resources and expedite the development of new-quality productive forces, ultimately maximizing resource use and driving high-quality economic growth.
In the area of revitalizing existing assets, it is vital to leverage supportive policies to make effective use of idle and inefficient land, as well as to manage existing commodity housing actively. Prudent resolution of hidden local government debt issues and promotion of industrial and corporate restructuring are critical for enhancing resource allocation efficiency in existing assets. Efforts should specifically concentrate on optimizing the industrial structure of regional industrial parks, encouraging the revitalization of underutilized land. The implementation of a special refinancing bond program for addressing outstanding hidden debts must be accelerated to support appropriate local government debt supply while curbing the accumulation of new hidden debts. Moreover, maximizing the utilization of local government special bonds and central bank re-lending funds for the acquisition and disposal of commodity housing is essential.
Strengthening efforts to revitalize existing industrial resources involves leveraging current infrastructure for advancing manufacturing and nurturing projects that prioritize technological innovation, environmental sustainability, and job creation. Market-oriented reforms should be advanced to establish and enhance mechanisms for the exit and restructuring of various market entities. This entails streamlining processes for asset and debt restructuring, mergers and acquisitions, bankruptcy, liquidation, and the transfer of equity or property rights, which will ultimately improve the quality and efficiency of market restructuring.
On the front of optimizing incremental growth, supporting key national projects and maximizing the role of new quality productive forces is crucial. Technological innovation should propel industrial innovation, fostering new industries, business models, and driving mechanisms that explore new developmental horizons. Increased emphasis on supporting technological advancements in critical areas, such as the digital economy, green energy, and high-end manufacturing, is necessary to facilitate breakthroughs and optimize industrial structures.
Furthermore, enhancing financial support for innovative enterprises is essential, along with the development of mechanisms that promote innovation-driven growth and broaden the application of advanced technologies like artificial intelligence. This will aid in the digital transformation and intelligent advancement of businesses. Efforts should also concentrate on unlocking consumer potential and nurturing consumption growth, particularly in digital and green sectors. Expanding policy support and creating incremental investment opportunities along relevant industry chains are vital for tapping into the vast consumer market potential.
In summary, optimizing incremental growth and revitalizing existing assets are not oppositional but instead mutually supportive processes. Revitalizing existing assets can foster incremental growth, while optimizing that growth can help reinvigorate existing assets. Ignoring the revitalization of existing assets will obstruct national economic growth and subsequently affect incremental growth. Likewise, neglecting the optimization of incremental growth will lead to the creation of new idle assets, exacerbating challenges associated with existing assets. Therefore, a coordinated approach that addresses both incremental growth and revitalization is essential for enhancing quality and efficiency.
Mathilde Moreau for TROIB News
In December 2024, the Central Economic Work Conference in China highlighted the importance of balancing the optimization of incremental growth with the revitalization of existing assets. This initiative aims to enhance the efficiency of resource allocation comprehensively. The optimization of incremental growth emphasizes "optimization," targeting improved resource allocation efficiency through a more refined incremental resource structure. Conversely, the revitalization of existing assets focuses on "revitalization," which encompasses activating idle assets, integrating them into the national economic cycle, and ensuring that scarce resources are fully utilized.
To effectively balance these efforts, a variety of policies—including fiscal, monetary, industrial, and employment strategies—must be implemented. Additionally, managing assets and adjusting liabilities are crucial for unlocking the potential of various production factors, particularly those related to innovation. This approach aims to enhance the utilization of idle resources and expedite the development of new-quality productive forces, ultimately maximizing resource use and driving high-quality economic growth.
In the area of revitalizing existing assets, it is vital to leverage supportive policies to make effective use of idle and inefficient land, as well as to manage existing commodity housing actively. Prudent resolution of hidden local government debt issues and promotion of industrial and corporate restructuring are critical for enhancing resource allocation efficiency in existing assets. Efforts should specifically concentrate on optimizing the industrial structure of regional industrial parks, encouraging the revitalization of underutilized land. The implementation of a special refinancing bond program for addressing outstanding hidden debts must be accelerated to support appropriate local government debt supply while curbing the accumulation of new hidden debts. Moreover, maximizing the utilization of local government special bonds and central bank re-lending funds for the acquisition and disposal of commodity housing is essential.
Strengthening efforts to revitalize existing industrial resources involves leveraging current infrastructure for advancing manufacturing and nurturing projects that prioritize technological innovation, environmental sustainability, and job creation. Market-oriented reforms should be advanced to establish and enhance mechanisms for the exit and restructuring of various market entities. This entails streamlining processes for asset and debt restructuring, mergers and acquisitions, bankruptcy, liquidation, and the transfer of equity or property rights, which will ultimately improve the quality and efficiency of market restructuring.
On the front of optimizing incremental growth, supporting key national projects and maximizing the role of new quality productive forces is crucial. Technological innovation should propel industrial innovation, fostering new industries, business models, and driving mechanisms that explore new developmental horizons. Increased emphasis on supporting technological advancements in critical areas, such as the digital economy, green energy, and high-end manufacturing, is necessary to facilitate breakthroughs and optimize industrial structures.
Furthermore, enhancing financial support for innovative enterprises is essential, along with the development of mechanisms that promote innovation-driven growth and broaden the application of advanced technologies like artificial intelligence. This will aid in the digital transformation and intelligent advancement of businesses. Efforts should also concentrate on unlocking consumer potential and nurturing consumption growth, particularly in digital and green sectors. Expanding policy support and creating incremental investment opportunities along relevant industry chains are vital for tapping into the vast consumer market potential.
In summary, optimizing incremental growth and revitalizing existing assets are not oppositional but instead mutually supportive processes. Revitalizing existing assets can foster incremental growth, while optimizing that growth can help reinvigorate existing assets. Ignoring the revitalization of existing assets will obstruct national economic growth and subsequently affect incremental growth. Likewise, neglecting the optimization of incremental growth will lead to the creation of new idle assets, exacerbating challenges associated with existing assets. Therefore, a coordinated approach that addresses both incremental growth and revitalization is essential for enhancing quality and efficiency.
Mathilde Moreau for TROIB News
