In­no­va­tion the foun­da­tion of sus­tain­able growth

China Daily (USA) - - G20 2016 CHINA - ByWANG YANFEI wangyan­fei@chi­nadaily.com.cn

De­spite fac­ing head­winds and wit­ness­ing its slow­est growth in decades, the Chi­nese econ­omy is still on the right track and mov­ing to­wards sus­tain­able growth in the long run, ac­cord­ing to ex­perts.

China was ranked the 25th most in­no­va­tive econ­omy, ac­cord­ing to the Global In­no­va­tion In­dex re­port co-re­leased by the World In­tel­lec­tual Prop­erty Or­ga­ni­za­tion, Cor­nell Univer­sity and INSEAD in Au­gust.

China’s re­search and de­vel­op­ment ex­pen­di­ture as a per­cent­age of GDP ranks sec­ond in the world after that of the United States, the re­port shows.

Zhao Gang, a re­searcher with the Strate­gic Re­search In­sti­tute un­der the Min­istry of Science and Tech­nol­ogy, said that, among the BRICS economies, China has the high­est com­mit­ment to in­no­va­tion.

Margit Mol­nar, a se­nior econ­o­mist with the Or­gan­i­sa­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment, said that China’s eco­nomic trans­for­ma­tion is on the right track, as it has been aided by strong pro­duc­tiv­ity con­ver­gence be­tween man­u­fac­tur­ing and the ser­vice in­dus­try.

“While the mis­al­lo­ca­tion of cap­i­tal over the past decades is man­i­fest in ex­cess ca­pac­ity in a num­ber of man­u­fac­tur­ing sec­tors, the chan­nel­ing of in­vest­ment to­wards high­tech and new in­dus­tries is ap­par­ent, ”she said, re­fer­ring to in­dus­tries such as avi­a­tion, space­craft equip­ment, and elec­tronic and com­mu­ni­ca­tion equip­ment man­u­fac­tur­ing.

Mol­nar said that ef­forts be­ing made in the past cou­ple of years in the pub­lic sec­tor to re­duce the costs of start­ing a busi­ness would spur en­trepreneur­ship and al­low more ideas to ma­te­ri­al­ize, ul­ti­mately lead­ing to more in­no­va­tion.

Echo­ing her state­ment, Hu An’gang, an econ­o­mist with Ts­inghua Univer­sity, said that after giv­ing up the old in­vest­ment driven model that might boost growth in the short run, the govern­ment’s strong com­mit­ment to a sus­tain­able in­no­va­tion-driven econ­omy is play­ing a key role in sup­port­ing long-term growth.

In­no­va­tion has been put high on agenda, where it has been rec­og­nized in the 13th Five-Year Plan (2016-20), which sets the tar­get for China to be­come an in­no­va­tive econ­omy by 2020.

In the mean­time, Mol­nar sug­gested that the govern­ment should make ef­forts to strengthen the com­mer­cial­iza­tion of re­search. More ef­forts need to be made to help guide more pri­vate in­vest­ment into in­no­va­tive in­dus­tries, as most achieve­ments stem from the re­search of com­pa­nies and only a small per­cent­age from col­lab­o­ra­tive projects, let alone projects with over­seas col­lab­o­ra­tors.

Zhao said that the mar­ke­ti­za­tion of in­no­va­tions in emerg­ing high-tech in­dus­tries can pro­vide the mo­ti­va­tion for in­no­va­tion to drive growth in the long run.

The chan­nel­ing of in­vest­ment to­wards high-tech and new in­dus­tries is ap­par­ent.” Margit Mol­nar, OECD econ­o­mist

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