Transformation to qual­ity growth

... in­no­va­tion-ori­ented in­dus­trial transformation is play­ing an im­por­tant role in ex­pe­dit­ing the eco­nomic transformation and up­grad­ing.

China Daily (Latin America Weekly) - - Views - The au­thor is pres­i­dent of Hainan-based China In­sti­tute for Re­form and Devel­op­ment.

In his re­port to the 19th Na­tional Congress of the Com­mu­nist Party of China, Gen­eral Sec­re­tary Xi Jin­ping said the coun­try has en­tered a “New Era”, and it should con­tinue ad­vanc­ing its eco­nomic transformation and up­grad­ing in the new era.

The main goal of the eco­nomic transformation and up­grad­ing in the new era is to build a modern eco­nomic sys­tem and shift from high-speed growth to high-qual­ity growth. But to build a modern eco­nomic sys­tem, China needs fresh eco­nomic mo­men­tum, which in turn re­quires sci­en­tific and tech­no­log­i­cal in­no­va­tions, and struc­tural transformation and up­grad­ing.

To be sure, in­no­va­tion-ori­ented in­dus­trial transformation is play­ing an im­por­tant role in ex­pe­dit­ing the eco­nomic transformation and up­grad­ing. For in­stance, the dig­i­tal econ­omy has taken a lead in the eco­nomic transformation by pro­mot­ing growth through in­no­va­tions in var­i­ous sec­tors, in­clud­ing man­u­fac­tur­ing, in­stead of de­pend­ing on in­puts of re­sources and other pro­duc­tion fac­tors.

The transformation and up­grad­ing of the in­dus­trial, con­sump­tion and ur­ban­iza­tion struc­tures in the next five to 10 years will help de­velop a new pat­tern of “medium-speed and high­qual­ity” growth and have a huge im­pact on the coun­try. De­spite the eco­nomic growth rate slow­ing to be­low 7 per­cent, China’s con­tri­bu­tion to global growth will re­main around 30 per­cent. More im­por­tantly, a new eco­nomic struc­ture will help im­prove the qual­ity of growth, op­ti­mize so­cial struc­ture and re­duce China’s de­pen­dence on re­sources and there­fore ease the bur­den on the en­vi­ron­ment.

In ad­di­tion, eco­nomic transformation and up­grad­ing are im­por­tant to de­velop the real econ­omy, to make the mar­ket play a de­ci­sive role in al­lo­cat­ing re­sources and to en­sure the gov­ern­ment bet­ter plays its due role. These re­quire deep­en­ing the sup­ply-side struc­tural re­form and im­prov­ing the qual­ity, ef­fi­ciency and dy­nam­ics of eco­nomic devel­op­ment.

The 19th Party Congress high­lighted the im­por­tance of the real econ­omy. And given that struc­tural im­bal­ances pose a challenge to the na­tional econ­omy, the sup­ply-side struc­tural re­form should focus on re­vi­tal­iz­ing the real econ­omy. For in­stance, the devel­op­ment of mixed-own­er­ship econ­omy should be ac­cel­er­ated to cul­ti­vate “world-class en­ter­prises with global com­pet­i­tive­ness”.

Be­sides, op­ti­miz­ing the busi­ness en­vi­ron­ment is nec­es­sary for not only sharp­en­ing China’s com­pet­i­tive edge in the global mar­ket, but also boost­ing the do­mes­tic mar­ket. This would re­quire break­ing up mo­nop­o­lies and with­draw­ing reg­u­la­tions and prac­tices that hin­der the growth of a uni­fied mar­ket and fair com­pe­ti­tion.

More at­ten­tion should be paid to the su­per­vi­sion sys­tem re­form. For ex­am­ple, there is need to put in place a com­pre­hen­sive fi­nan­cial su­per­vi­sion sys­tem, in­clud­ing a law-based and stan­dard­ized anti-mo­nop­oly mech­a­nism that ap­plies both to na­tional and for­eign en­ter­prises. And if fur­ther open­ing-up to the out­side world will ex­pe­dite China’s eco­nomic transformation and up­grad­ing, a new pat­tern of com­pre­hen­sive open­ing-up will help it be more com­pet­i­tive in the world mar­ket.

At a new cross­road of glob­al­iza­tion, the Belt and Road Ini­tia­tive has pro­vided a new plat­form for glob­al­iza­tion and re­gional in­te­gra­tion, as it is aimed at re­al­iz­ing mu­tual ben­e­fit through in­fra­struc­ture con­struc­tion and thus mak­ing trade and other ex­changes eas­ier. So China should keep pro­mot­ing glob­al­iza­tion and free trade, be­cause they will have a pro­found ef­fect on the coun­try’s eco­nomic growth and struc­tural up­grad­ing.

To ex­pe­dite the eco­nomic transformation and up­grad­ing, China also needs to shift from trade in goods to trade in ser­vices as a way to fur­ther open up to the world. And it should pro­mote a two-way open­ing-up of trade in ser­vices.

There is also a need for China to up­date its na­tional treat­ment pol­icy and neg­a­tive list, ease mar­ket ac­cess and open up the ser­vice sec­tor wider, and ne­go­ti­ate with other coun­tries to open up their ser­vice and high-tech mar­kets, in or­der to in­still new vi­tal­ity into the global econ­omy. And as China’s eco­nomic transformation and up­grad­ing in­ten­si­fies, its huge do­mes­tic mar­ket will fur­ther boost global eco­nomic growth and play a vi­tal role in global eco­nomic gov­er­nance re­form.

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