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The Shift of Growth Drivers and Economic Transformation and Upgrading
2017-12-20
By Li Wei, DRC
At present, China is experiencing a critical period in building a moderately prosperous society in all respects as well as the development of socialism with Chinese characteristics. To accelerate the shift of growth drivers from old to new and push ahead with economic transformation and upgrading is not only the essential approach to smoothly realizing the first centenary goal, but also the fundamental need to lay a more solid material foundation for achieving the second centenary goal. The following are relevant views of the author on the above-mentioned points.
I. To accelerate the shift of growth drivers from old to new is not only for the goal of realizing another round of relatively high economic growth, but also for creating a sustainable development. In recent years, with the support of a series of macro-regulation policies and policies on structural reform issued by the Central Government, China has maintained a steady and relatively fast economic growth. But it should be pointed out that viewing from the perspective of realizing a sound, sustainable and relatively fast economic growth, cultivating new growth drivers and accelerating the shift of growth drivers from old to new still have a long way to go. On the one hand, although the international trade and major economies have witnessed a rebound in their economic recovery, the landscape for the sustainable, sound and relatively fast development of global economy and international trade is yet to take shape. On the other hand, the space for China’s short-term macro-regulation policies is shrinking, and efforts are needed to restructure a dynamic mechanism for economic growth so as to realize a relatively high speed economic development. In the meantime, it should be noted that accelerating the shift of growth drivers from old to new is not only for a relatively fast economic growth, but also for fulfilling the goal of leading the new normal of economic development and for realizing the historical changes of economic growth models.
II. The shift of growth drivers from old to new has made certain progress, whereas the task remains painstaking. In recent years, the new growth drivers have gained continuous momentum by implementing the policy of “Innovation-driven Development” and “Made in China 2025” strategy and deepening the reform across the board, which have played a more and more important role in China’s economic development. One, the pace of industrial transformation to make traditional sectors become upgraded and intelligent is being accelerated with improved benefits and enhanced efficiency. Two, the mid-to-high-end industries are growing vigorously and their contribution ratio to GDP growth is increased. Three, the development of new business forms and new models is becoming faster. Four, the function of consumption as the major engine of economic development is getting more and more prominent. But we must be aware of the fact that the task for China to shift growth drivers from old to new is yet to be accomplished.
III. The new opportunities brought about by the global technological revolution and the reform of production modes should be firmly seized to accelerate the shift of growth drivers. At present, new technologies keep springing up, and the whole world is facing a window period of new technological revolution. The new technologies and their impact will undoubtedly restructure the industrial pattern and production modes, posing a series of social and economic challenges. While more importantly, it will create a number of new opportunities for the development of all countries and help them to forge and develop new growth drivers. One, new technologies will give rise to new demands, enhancing the driving forces of demand for economic development. Two, new technologies will broaden the space for industrial development and give birth to new underpinners for economic growth. Three, new technologies will improve productive procedures and forge new production organization models. As a country with a large population, China’s per capita GDP has already surpassed the average of those mid-to-high income countries, which means that China boasts a huge potential market. China could make use of strong market demand, seize the opportunities bolstered by new technologies and cultivate new industries to form new drivers for development. In the meantime, China’s gross number of talented people ranks the highest and scientific and research inputs the second in the world, which offers innovative capacity support for it to cultivate new industries and form new drivers for development. However, it should be indicated that with the opportunities brought about by new technologies, all major economies in the world have carried out relevant policies and race to take the commanding height. In this context, we should take a more proactive attitude to firmly seize the opportunities and facilitate the shift of growth drivers from old to new.
IV. The key to accelerating the shift of growth drivers lies in innovation, while innovation requires more efforts to deepen reform. Innovation is supposed to tackle two major issues: one, the issue of innovative drivers and capacity; two, the issue of market demand. The two issues are mutually interrelated and complemented with each other. The essential way to address the two issues is to comprehensively deepen the reform. In light of innovative drivers and capacity, we are facing a number of constraints and obstacles, and efforts must be made to deepen reform if we want to remove the contradictions and problems to forge an institutional environment favorable to the continuous improvement of innovative drivers and capacity. One, we should take solid steps in advancing the reform of streamlining administration, delegating powers to lower levels, strengthening regulation and optimizing services. Two, the structure of tax collection should he optimized. Three, policies of income distribution should be fleshed out. The development of new drivers such as new products and new business forms calls for strong market demand. In light of this respect, the profound problem we are facing is that the income growth of low-to-mid income earners is relatively slow and due to the increasing pressure induced by high expenses relating to education, medical care and housing, it is difficult to enhance people’s spending power.
V. In the course of the shift of growth drivers, Beijing has a big role to play. As the center of technological innovation, Beijing is a city with the highest concentration of R&D resources. Besides, Beijing is also a center of politics, culture and international exchanges, and it is playing a leading role in economic development, with huge influential impact. Beijing has the access to these advantages to firmly focus on the major strategy on the coordinated development of Beijing-Tianjin-Hebei region and strengthen the cooperation with regions including Tianjin and Hebei during the shift of growth drivers. Work should be done to break the institutional bottleneck that block the free flow of key factors of innovation such as talents, technology and capital, and the cooperation models should be innovated so as to push forward the sharing of resources and services of innovation to formulate the joint forces of innovation. Efficient regional innovation clusters should be established to propel the innovation achievements to be applied and expanded to the whole country and give play to the innovative advantages of Beijing as much as possible, offering new experience and making more contribution to the economic transformation and upgrading of Beijing-Tianjin-Hebei region and even the whole country.
The shift of growth drivers and the economic transformation and upgrading is a long process, we should grasp the opportunities and actively push ahead with the replacement of growth drivers, and maintain the strategic focus and stay true to the mission in a persistent manner. We should not only let the market play the decisive role in resource allocation, but also ensure a better role played by the government; we should let enterprises truly serve as the mainstay for the shift of growth drivers and unleash the vitality of the entire society to push forward the economic transformation and upgrading.
Note: Li Wei, President of DRC
