Chinese Economy Needs Innovation to Survive: Renmin University Report
A new report from one of China’s leading university’s says the country needs to turn away as soon as possible from its low-cost approach to economic growth, and do more to foster innovation and high-end industries.
On the eve of Renmin University’s China Macroeconomic Forum for the third quarter of 2017 (中国宏观经济论坛2017年第三季度), Zhang Jie, an economics professor and researcher at Renmin’s National Academy of Development and Strategy, has released the forum’s keynote report: “China’s Economy As It Enters a Critical Era for the Combined Development of Innovation and Industry” (主报告演讲：进入创新和产业融合发展关键期的中国经济).
According to the report since the 2008 Global Financial Crisis the Chinese economy has been in the midst of a transitional development phase, shifting away from a “factor-based broad” growth model to an innovation-driven growth model.
“The ongoing downward economic pressure that China confronts is inextricably tied to its ongoing dependence upon a factor-based broad growth model, and closely related to the various institutional impediments encountered during the process of transition and upgrade of the manufacturing sector, and many weakening factors that are created by the sustainable growth of a real economy dependent upon manufacturing.
“At present China’s new economic drivers are at a key turning point of shifting from quantitative change to qualitative change…this also means that China’s combined innovation and industrial development are at a key tipping point.
“It’s precisely at this time that the impetus of new economies is gradually forming an effective support for China’s economic growth. However, the scale of new economies is not yet sufficient to play a key guiding support role for China’s economic growth,
“The replacement or offsetting of old economic drivers by new ones is currently at a critical ‘stalemate’ period, where one recedes as the other advances.”
According to the report, whether or not the Chinese economy will be able to maintain sustainable growth will depend primarily upon its ability to achieve “in-depth, integrated development of innovation and industry.”
“Given the complex domestic and overseas circumstances of China’s current economic development, clearly recognising and grasping the integrated development of innovation and industry has in actuality already become the key breakthrough point for resolving and overcoming the manifold contradictions and challenges of the Chinese economy, and the decisive factor for whether the Chinese economy can achieve the goal of sustainable development.”