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Economic Reform
China’s national security is closely linked to its economic reforms. China’s economic reform began in 1978 under the leadership of Deng Xiaoping, marking a shift from a planned economy to a market economy. The core content of this reform includes loosening control over key sectors such as agriculture, industry, and finance, encouraging foreign investment in the Chinese market, and supporting the development of private enterprises.
The economic foundation of national security can be understood from several aspects. Economic growth provides financial support for national security, allowing the government to increase investment in defense, technology, and infrastructure construction. According to 2024 data, China’s defense budget has reached 1.62 trillion yuan, accounting for 1.8% of GDP.
By expanding the domestic demand market, China has effectively reduced its dependence on external markets. In 2024, data from the National Bureau of Statistics showed that the contribution of domestic demand to China’s GDP had risen to 59.5%, further reducing the impact of external economic fluctuations on national security.
Economic reform has also driven technological innovation and industrial upgrading, and in the context of globalization, technological competition has become increasingly fierce. In 2024, a report released by the State Council showed that under the promotion of the “14th Five-Year Plan,” investment in strategic emerging industries such as artificial intelligence, 5G, and new energy increased by 15.3%.
External Pressure
The global economic situation is complex and volatile, with frequent international trade frictions, especially the China-US trade disputes, posing challenges to China’s economic security. According to data from the General Administration of Customs, China’s exports to the US in 2023 decreased by 8.4% compared to the previous year, while imports fell by 6.1%.
Data from the National Bureau of Statistics show that in 2024, domestic demand’s contribution to China’s GDP had increased to 59.5%, indicating that China is gradually reducing its reliance on external markets. The government is also implementing a diversified foreign opening strategy to increase cooperation with other economies to mitigate economic pressure from specific countries. In 2024, China’s trade volume with ASEAN grew by 11.2%.
In recent years, the US dollar’s interest rate hikes and the uncertainty of global financial markets have increased the risk of capital outflows. According to data from the People’s Bank of China, in the first half of 2024, China’s foreign exchange reserves slightly declined from $3.12 trillion at the end of 2023 to $3.09 trillion.
Technology blockades, especially in recent years, have seen some developed countries imposing export controls on Chinese high-tech enterprises, limiting China’s access to advanced technologies. In response to this pressure, the Chinese government has increased its investment in domestic scientific and technological research and development. In 2024, China’s investment in scientific research and technology development accounted for 2.5% of GDP.
Security Strategy
In today’s complex international environment, China’s security strategy encompasses not only military and political dimensions but also a comprehensive layout for economic security. Enhancing economic autonomy is one of the core elements of China’s security strategy. To reduce dependence on foreign technology and resources, China continues to increase investment in domestic innovation and industrial upgrading. In 2024, China’s investment in research and development in strategic emerging industries accounted for 2.5% of GDP.
Strengthening food and energy security and ensuring the supply of essential living resources has become an important aspect of maintaining national stability. According to a report from the Ministry of Agriculture and Rural Affairs, China’s total grain output in 2024 is expected to reach 650 million tons, ensuring a domestic grain self-sufficiency rate of over 95%.
China has accelerated the development and utilization of renewable energy, and in 2024, the proportion of new energy in the country’s total power generation rose to 22%.
Under the “Belt and Road” initiative, China has increased economic cooperation and investment with countries along the route. In 2024, China’s bilateral trade volume with “Belt and Road” countries increased by 9.8% year-on-year. To guard against the impact of global financial market uncertainties on the domestic economy, the Chinese government has adopted a series of measures, including strengthening the management of cross-border capital flows and improving the security of foreign exchange reserves. In 2024, China’s foreign exchange reserves remained stable at over $3 trillion, providing strong support for the country to cope with external economic and financial shocks.
Dual Challenges
External economic sanctions and technology blockades are among the external challenges China faces. In recent years, economic sanctions and technology blockades led by some developed countries have impacted Chinese high-tech enterprises and supply chains. According to data from the Ministry of Commerce in 2024, China’s exports of high-tech products in certain markets were restricted, leading to a 7.3% year-on-year decline in the export value of such products.
As China’s economic growth slows, some industries are facing issues such as overcapacity and high debt levels. If these internal economic contradictions are not properly addressed, they may evolve into broader social and economic problems. In 2024, China’s debt level remained high, with the government’s debt-to-GDP ratio reaching 45.5%.
By increasing stimulus and support for domestic demand, the government hopes to reduce the impact of external market fluctuations on the domestic economy. In 2024, data from the National Bureau of Statistics showed that consumption’s contribution to economic growth reached 61.2%, indicating that the enhancement of domestic demand has alleviated external economic pressure to some extent.
The Chinese government is also actively promoting economic structural adjustment to address deep-seated issues within the economy. By supporting the development of high-tech industries and the green economy, China is gradually reducing its reliance on traditional heavy industries and high-pollution sectors. In 2024, the value of the green economy accounted for 8.7% of GDP. In response to external technology blockades, China has increased investment in independent research and development. In 2024, China’s R&D expenditure in key technology areas increased by 13.5% year-on-year.
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