In­no­va­tion: New Driver of China’s Econ­omy

In­no­va­tion is grad­u­ally be­com­ing the new en­gine driv­ing China’s eco­nomic de­vel­op­ment, which is evolv­ing from de­pen­dent on in­vest­ment to driven by in­no­va­tion.

China Pictorial (English) - - Contents - Text by Chen Qiqing

The govern­ment work re­port de­liv­ered by Pre­mier Li Ke­qiang at this year’s an­nual ses­sion of China’s Na­tional Peo­ple’s Congress men­tioned “in­no­va­tion” many times. The re­port re­viewed the suc­cess­ful re­sults of in­no­va­tion-driven de­vel­op­ment over the past five years. It at­trib­uted the so­cial and eco­nomic achieve­ments since the 18th Na­tional Congress of the Com­mu­nist Party of China (CPC) partly to a com­mit­ment to in­no­va­tion-driven de­vel­op­ment. The re­port pro­posed mov­ing even faster to make China a coun­try of in­no­va­tors and stay abreast of trends of the lat­est global rev­o­lu­tion in science and tech­nol­ogy and in­dus­trial trans­for­ma­tion, im­ple­ment in­no­va­tion-driven de­vel­op­ment strat­egy, and con­tinue mak­ing the Chi­nese econ­omy more in­no­va­tive and com­pet­i­tive.

In­no­va­tion is the prime and fore­most driver for de­vel­op­ment. Since the 18th CPC Na­tional Congress, China has com­mit­ted to the prin­ci­ple of in­no­va­tive de­vel­op­ment, im­ple­mented in­no­va­tion-driven de­vel­op­ment strat­egy and pro­moted the con­struc­tion of an in­no­va­tive coun­try.

Driven by in­no­va­tion, China’s econ­omy is un­der­go­ing a se­ries of ma­jor changes.

First, in­no­va­tion has led to a fun­da­men­tal change in the growth model. In China’s case, its econ­omy is shift­ing from driven by in­vest­ment and fac­tors to driven by in­no­va­tion. With progress in in­no­va­tion, es­pe­cially tech­no­log­i­cal in­no­va­tion, in­vest­ment’s con­tri­bu­tion to eco­nomic growth is de­creas­ing while science and tech­nol­ogy are gain­ing an in­creas­ingly larger por­tion. In Fe­bru­ary 2018, Wan Gang, then Chi­nese Min­is­ter of Science and Tech­nol­ogy, briefed re­porters on the fact that the con­tri­bu­tion rate of sci­en­tific and tech­no­log­i­cal progress to eco­nomic growth has reached 57.5 per­cent, com­pared to 52.2 per­cent in 2012.

Sec­ond, in­no­va­tion has pro­moted the op­ti­miza­tion of eco­nomic struc­ture. China’s eco­nomic struc­ture has un­der­gone his­tor­i­cal changes since the 18th CPC Na­tional Congress in 2012. Con­sump­tion has re­placed in­vest­ment to be­come the largest driv­ing force for growth. The ter­tiary in­dus­try has sur­passed the pri­mary and se­condary in­dus­tries to gain the big­gest por­tion in the econ­omy, which could not have been achieved with­out con­tri­bu­tions from in­no­va­tion.

Third, in­no­va­tion has quick­ened the evo­lu­tion of growth en­gines. In re­cent years, some sig­nif­i­cant tech­no­log­i­cal re­sults have been quickly trans­ferred into prod­ucts or the pro­duc­tive force of strate­gi­cally im­por­tant in­dus­tries, in­ject­ing new im­pe­tus into eco­nomic growth. For in­stance, China’s lat­est gen­er­a­tion of high-speed rail tech­nol­ogy now leads the world and fos­ters an advanced high-speed rail­way in­dus­try. China’s fourth gen­er­a­tion of mo­bile com­mu­ni­ca­tions stan­dard, known as TD-LTE, has formed a com­plete in­dus­trial chain with users num­ber­ing more than 650 mil­lion. Sales of new en­ergy ve­hi­cles neared 700,000 in 2017, with a year-on-year growth rate of 51.2 per­cent.

Driven by in­no­va­tion, China’s econ­omy is cast­ing off old modes char­ac­ter­ized by high in­put, high con­sump­tion and heavy pol­lu­tion. The coun­try is on track to­wards in­no­va­tive, green, qual­ity, lu­cra­tive and sus­tain­able de­vel­op­ment.

Although China has made re­mark­able achieve­ments in in­no­va­tion, it hasn’t yet met the stan­dards to be­come a lead­ing in­no­va­tive coun­try and a science and tech­nol­ogy gi­ant. It is still dwarfed by de­vel­oped coun­tries in com­pre­hen­sive strength for in­no­va­tion. Due to a weak foun­da­tion for re­search, rel­a­tively low abil­ity to pro­duce orig­i­nal in­no­va­tion, a lack of in­no­va­tive hu­man cap­i­tal, es­pe­cially high-end hu­man cap­i­tal, and many sci­en­tific and tech­no­log­i­cal developments await­ing ap­pli­ca­tion, it is im­per­a­tive for China to ac­cel­er­ate im­ple­men­ta­tion of the in­no­va­tion­driven de­vel­op­ment strat­egy.

To de­velop by in­no­vat­ing, we need in­no­va­tors, which should be the mar­ket en­ti­ties will­ing to in­no­vate. The power to in­no­vate comes mainly from com­pe­ti­tion and re­form. First and fore­most, com­pe­ti­tion should be in­tro­duced to drive in­no­va­tion. Xi

Jin­ping, gen­eral sec­re­tary of the CPC Cen­tral Com­mit­tee, once pointed out that un­der the back­ground of in­creas­ingly com­plex re­la­tions be­tween sup­ply and de­mand, many new tech­nolo­gies, new in­dus­tries and new prod­ucts are not dis­cov­ered or fos­tered by the govern­ment, but through mar­ket com­pe­ti­tion. Re­stric­tions on mar­ket ac­cess should be fur­ther re­moved, and mo­nop­o­lis­tic and pro­tec­tion­ist be­hav­iors should be elim­i­nated so as to build an en­vi­ron­ment for fair com­pe­ti­tion.

Then, re­form poli­cies should be in­tro­duced to spark in­no­va­tion. Xi once re­marked that sci­en­tific and tech­no­log­i­cal in­no­va­tion is the new en­gine for China’s de­vel­op­ment, and re­form is the ig­ni­tion sys­tem for the en­gine. Re­form of in­sti­tu­tions re­lated to science and tech­nol­ogy should con­tinue, and old-fash­ioned reg­u­la­tions that hold back the en­cour­age­ment of in­no­va­tion should be abol­ished. Re­sults of in­no­va­tion shouldn’t be locked in draw­ers, but ap­plied to boost eco­nomic de­vel­op­ment. Only by putting it into ac­tion can in­no­va­tion drive de­vel­op­ment. In re­cent years, more and more re­sources in­vested in sci­en­tific and tech­no­log­i­cal de­vel­op­ment have pro­duced de­sir­able re­sults.

This year marks the 40th an­niver­sary of China’s re­form and open­ing up. China has achieved high­speed growth through re­form, which is widely con­sid­ered a “Chi­nese miracle” in the eco­nomic his­tory of the world. Four decades later, China’s eco­nomic de­vel­op­ment has en­tered a new era in which in­no­va­tion is grad­u­ally be­com­ing the pri­mary force driv­ing eco­nomic growth. We are ea­ger to cre­ate an­other “Chi­nese miracle”—a miracle of high­qual­ity de­vel­op­ment.

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