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Reform is the Key to the Steady Relay of Old Growth Drivers by New Ones

Submit Time:16-08-2017 | Zoom In | Zoom Out

Author:Lu Yanan | Source:People’s Daily (July 18, 2017)

Abstract:

The Chinese economy is now marching from the stagnating period of replacing the old growth drivers with new ones into the critical period for the new growth drivers to accelerate their expansion. By relying on the reform dividend, the Chinese economy will surely write a new chapter of steady development with improvement.  

The economic growth rate has maintained in the interval of 6.7%—6.9% for 8 consecutive quarters, the business index of small and micro enterprises reached a new high in the recent two years, the industrial operation has come to the best condition since 2015, the daily average number of newly registered enterprises set a new historical record …the half-year report of the Chinese economy is so inspiring.  

What made us excited is not only these “new highs” in a period, and the more important is the continually enhancing sense of gain of the ordinary people. The surveyed urban unemployment rate in 31 big cities was kept below 5% for 4 consecutive months, and the actual growth rate of the per capita disposable income of residents in the whole country exceeded that of GDP. More jobs, more income and stable prices, such a picture of the people's livelihood reflects an eye-catching happiness index.  

As the second largest economy in the world, and facing the treacherous external economic environment and the domestic population problem of aging before becoming rich, China has to solve complicated problems left from the past, and also cope with new challenges from the accumulated risks, so people can well imagine how difficult for China to achieve so much. Then, what has enabled China to get such good achievements? It is the new growth drivers, instead of sticking to the old path.  

The new growth drivers are opening a new horizon for the development. The successful maiden flight of C919 built on the proprietary intellectual property rights, the birth of the world first optical quantum computer in China, the “Fuxing Hao” EMU that first realized the connectivity of EMU units based on different technical specifications, and the “Jiaolong” that realized retrieving a gas-tight hydrophore from the ocean…with the innovation-driven development strategy of the state, innovation is becoming an important engine for the economic growth of China. At the same time, new growth drivers are in the new space that continually optimizes the growth. Experts have estimated that new growth drivers have provided 30% support to the Chinese economy. The new growth drivers, represented by sharing economy, platform economy and high and new technology industries, have activated the consumption, supported new jobs, and promoted the upgrading of the traditional industries, becoming a locomotive that pulls the Chinese economy to the future.  

The new growth drivers cannot come from nothing, and “new highs” in the period are not free lunch without cost. Behind them is the dividend released from comprehensive deepening of reform.  It should be seen that the replacement of old growth drivers with new ones is a seesaw battle, and needs tenacity in reform. The new growth drivers will surely encounter pains in its growth, and the old growth drivers should put down the heavy burdens in the transition and upgrading. The steady relay of the old and new growth drivers cannot be achieved without the further advancement of cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening areas of weakness, and also depends on the continual deepening of the reforms to streamline administration, delegate powers, and improve regulation and services. In the years after the 18th National Congress of the CPC, it was because of optimizing the business environment to the maximum extent, streamlining administration without reducing responsibility and delegating power without laissez-faire that more “golden phoenixes” have been attracted, left and given birth, enabling the new growth drivers to become the new force in the economic development.  

The replacement of old growth drivers with new ones is also a hard battle, calling for the wisdom of reform that advances with the times. The new growth driver is a new thing, and innovation is inevitably accompanied with changes to the existing rules, orders and interests patterns. The supervision departments should not only overcome the inertia of the past practice, but also avoid laissez-faire, not only be bold to break the hedge of interests, but also have the tolerance and wisdom to allow new products, business forms, patterns and industries to develop further and better.  

In fact, every round of growth miracle is based on the dividend of reform. The real secret for Chinese economy to successfully rise to the front of the world in the past three decades and more is reform. We reduced the institutional transaction cost substantially and systematically, thus increasing the resource allocation efficiency to the maximum extent, and activating the potential growth rate. Today, only by comprehensively deepening reform, to allow the market to play a decisive role in resource allocation and give better play to the role of the government, can we direct the cost curve into the descending channel again, bring the economic structure to re-balance and let the economic development get new growth drivers.  

The Chinese economy is now marching from the stagnating period of replacing the old growth drivers with new ones into the critical period for the new growth drivers to accelerate their expansion, and stop of development and refusal of reform will be the biggest risk. By crushing the hard nut, wading through the deep water, and relying on the reform dividend, the Chinese economy will surely write a new chapter of steady development with improvement.  


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