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China's new economic leap to innovation

Editor: Li Kun 丨CCTV.com

12-22-2015 18:59 BJT

By Lou Jifang, Doctor of Economics, Ministry of Civil Affairs

The annual Central Economic Work Conference was held in Beijing on December 18-21. The meeting pointed out that 2016 will mark the first year to complete building a moderately prosperous society and to promote more structural reforms.

 

According to an official statement, China's economic work in 2016 should emphasize structural reforms.

Modest expansion, with five major tasks, were identified: cutting excessive industrial capacity; destocking; de-leveraging; lowering corporate costs; and improving weak links to achieve good results for the 13th Five-Year Plan (2016-2020).

Development concepts of "innovation, coordination, green, open and sharing" are in line with Beijing's current phase to move from a middle-income country to a middle-high income nation.

Innovation and development reflect Beijing’s priorities.

Beijing's reforms and opening up since 1978 have greatly contributed to double-digit GDP (gross domestic product) annual growth rates for over thirty years. .

Investments, consumption and exports have played a huge role. But, continuous over-reliance on "effective demand" would deviate from a healthy track of its economy.

Accordingly, China's economy has entered a new normal of medium-highspeed growth. It's essential to find a recipe to fix current challenges. since China's demographic dividend is disappearing.

Additionally, the "Made in China" strategy lacks core technology support. Production expansion remains redundant to low-level quality. Innovation should foster a new growth engine.

The innovation initiatives of internet plus, the "Belt and Road", the Yangtze River Economic Belt, Beijing-Tianjin-Hebeijing integration and high-speed rail's "Going Global" strategy have injected new impetus to economic growth

Net profits growth in different industries have gotten more varied, such as in the coal, iron and steel, Internet, pharmaceutical sectors, which could be due to insufficient mobility of production.

There is a divergence between production operating profits and financial investment profits, which virtual economic bubbles.

Investments trends in real estate, stocks and other financial markets endure peaks and troughs. Surplus capital is seeking new financial channels during a deflationary period.

Developing institutional mechanisms innovations and improving mobility in production could break trade barriers and upgrade efficiency. There should be simultaneous adjustments between supply and demand factors.

The United States and Japan's development paths have proven that innovation plays a pivotal role. After World War II, the US sharply expanded its manufacturing sector and ushered in significant scientific progress.

Meanwhile, Japan has boosted production with better application technologies. Therefore, China's economy should adjust to supply and demand factors through innovation.

Innovation demands long-term hard work to include theoretical, institutional, technological, and cultural innovations. Some say, "Science and technology are primary productive forces."

Well, innovation needs a conducive atmosphere that is encouraged through education, training, and legal protections, which could bring about a second leap for China's economy with renewed vitality.

( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

 

 

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

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