Firms raise the stakes in battle for innovation
increase in agriculture and 6.4 percent in secondary industries.
“Consumption is playing a more prominent role in driving growth, evidence of progress in economic restructuring ,” said Zhang Liqun, a researcher with the Development Research Center of the State Council, China’s cabinet.
Innovation is critical to Su’s and other Chinese businesses’ progress up the value chain, an uphill battle they have to fight as improved salaries and living conditions for China’s workers have allowed other countries to occupy the market for low-end products such as shoes and toys once cornered by China.
Industrial output growth in the high-tech manufacturing sector reached 13.4 percent in Q1, outstripping the 6.8-percent registered across all industrial companies.
The domestic wave of innovation and start-ups means new business and new consumption, according to Mao Shengyong, an official at the National Bureau of Statistics.
China still has a long list of reform tasks, many intertwined with one another, which when added to global risks like US interest rate increases and protectionism makes policymaking tricky, analysts said.
China should continue to reduce excess capacity, curb credit, lower debt leverage in the corporate sector and reform State-owned enterprises, said Sudhir Shetty, chief economist of the World Bank’s East Asia and Pacific Region.
That view is echoed by the DRC’s Zhang, who said that policy should focus on cutting overcapacity, reducing inventories, deleveraging, lowering costs and strengthening weak links to generate long-term growth and meet new consumer demand.
“Supply-side structural reform can force Chinese businesses to increase their competitiveness and improve overall growth quality, although the process will be painful,” said Cai Zhizhou of Peking University.