Syn­chro­nized New In­dus­trial Revo­lu­tion and Sup­ply-side Struc­tural Re­form

China Today (English) - - CONTENTS - By HE YAFEI

China’s eco­nomic per­for­mances should be ob­served and an­a­lyzed in the con­text of world eco­nomic re­struc­ture, but also from the per­spec­tive of the new in­dus­trial revo­lu­tion, sup­ply-side re­form, and the re­la­tion­ship be­tween the two.

Anew in­dus­trial revo­lu­tion, ev­i­dent in new tech­nolo­gies, wider ac­cess to the In­ter­net, and com­put­er­i­za­tion across all sec­tors is chang­ing the world. Its im­pact en­cam­passes life­styles, think­ing, and the po­lit­i­cal and so­cial struc­tures of hu­man so­ci­ety. Big data are chang­ing the con­tours of the phys­i­cal and bi­o­log­i­cal en­vi­ron­ments. The nar­row­ing gap be­tween vir­tual re­al­ity and real life is cre­at­ing a new world, a new econ­omy, and a new nor­mal. All this de­ter­mines the global econ­omy in which China must find its place by deep­en­ing re­forms, a key move as struc­tural re­form of the sup­ply side comes into fo­cus.

We must ob­serve and an­a­lyze China’s eco­nomic re­form in the con­text of re­struc­tur­ing and trans­for­ma­tion of the world econ­omy, but also from the per­spec­tive of the new in­dus­trial revo­lu­tion (the fourth in­dus­trial revo­lu­tion), sup­ply-side struc­tural re­form, and the re­la­tion­ship be­tween the two.

Big­ger Risks

Af­ter decades of eco­nomic glob­al­iza­tion, trade and in­vest­ment con­tinue to grow at a rapid pace. In­dus­tri­al­iza­tion is tak­ing off in many coun­tries, cre­at­ing new emerg­ing economies. The world GDP now ex­ceeds US $70 tril­lion. In pur­chas­ing power par­ity (PPP), this rep­re­sents US $118 tril­lion. In terms of PPP, emerg­ing economies in 2015 ac­counted for more than half of the global GDP, or 57.6 per­cent, ac­count­ing for more than two-thirds of global eco­nomic growth, ex­actly 68 per­cent, and China alone rep­re­sents half of that fig­ure.

How­ever, it is clear that this pat­tern of de­vel­op­ment has reached its lim­its and the guid­ing prin­ci­ple must be re­newed. Some U.S. econ­o­mists now be­lieve that many coun­tries in Latin Amer­ica, Asia, and Africa have been wrong to fol­low blindly the neo-lib­eral poli­cies ad­vo­cated by the IMF and the World Bank, and sup­ported by the West, es­pe­cially the United States. The re­sult is the cur­rent re­ces­sion and stag­na­tion in these coun­tries. The 2008 fi­nan­cial cri­sis is also the re­sult of short­sighted eco­nomic and fi­nan­cial poli­cies that were en­forced for

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