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Growth: Innovation Driven

Dec 21-2020   



To enter the rank of high-income nations, China needs to achieve an annual economic growth rate of 3.7% in the next 30 years. That might not seem particularly high, but what makes it different from past growth is that much of it will have to be powered by innovation, said Prof. Yao Yang in a recent MBA forum in Shenzhen.

 

The seminar was co-organized by the NSD and China Development Institute and centered on China’s growth prospects amid the changes and challenges. Prof. Yao delivered a keynote speech based on the book China 2049: Economic Challenges of a Rising Global Power , which was jointly compiled by the NSD and the Brookings Institute.

 

One of China’s centenary goals is to build itself into a great modern socialist country in 2049. Prof. Yao took it to mean that China’s per capita income will reach half of that of the US. It also means that China’s total economic volume will double that of the US. For that to happen, a key element will be to maintain the speed of technological innovation and the growth rate of all-factor productivity.

 

There are certain conventional advantages on China’s side. Despite a recent dip, the savings rate remains high, which ensures funding for sci-tech research. In terms of human capital, eight million students graduate from Chinese universities every year and the quality of education has been improving.

 

China also enjoys some unique advantages. For one, its colossal market makes technological investments less costly. The fast development of Chinese internet firms is a case in point. Another advantage of China is its comprehensive industrial system; in fact, China is the only country in the world that possesses all the industrial departments on the UN’s industrial catalogue. Shenzhen, for example, beats Silicon Valley when it comes to making product prototypes or mass production. Prof. Yao predicted that in 20-30 years, Shenzhen might ease past Silicon Valley to become the world’s innovation center. One more unrivalled advantage of China is the powerful drive of the Chinese people to keep striving for a better life.

 

Even so, China will have to rise above three major challenges: how to navigate the shifting international environment and in particular how to manage competitions with the US; how to do the balancing act in financial oversight so that direct financing rises proportionally and the banks are completely weaned from their predilection for SOEs; and how to reform the social security system to cope with a greying population.

Growth: Innovation Driven

Dec 21-2020   



To enter the rank of high-income nations, China needs to achieve an annual economic growth rate of 3.7% in the next 30 years. That might not seem particularly high, but what makes it different from past growth is that much of it will have to be powered by innovation, said Prof. Yao Yang in a recent MBA forum in Shenzhen.

 

The seminar was co-organized by the NSD and China Development Institute and centered on China’s growth prospects amid the changes and challenges. Prof. Yao delivered a keynote speech based on the book China 2049: Economic Challenges of a Rising Global Power , which was jointly compiled by the NSD and the Brookings Institute.

 

One of China’s centenary goals is to build itself into a great modern socialist country in 2049. Prof. Yao took it to mean that China’s per capita income will reach half of that of the US. It also means that China’s total economic volume will double that of the US. For that to happen, a key element will be to maintain the speed of technological innovation and the growth rate of all-factor productivity.

 

There are certain conventional advantages on China’s side. Despite a recent dip, the savings rate remains high, which ensures funding for sci-tech research. In terms of human capital, eight million students graduate from Chinese universities every year and the quality of education has been improving.

 

China also enjoys some unique advantages. For one, its colossal market makes technological investments less costly. The fast development of Chinese internet firms is a case in point. Another advantage of China is its comprehensive industrial system; in fact, China is the only country in the world that possesses all the industrial departments on the UN’s industrial catalogue. Shenzhen, for example, beats Silicon Valley when it comes to making product prototypes or mass production. Prof. Yao predicted that in 20-30 years, Shenzhen might ease past Silicon Valley to become the world’s innovation center. One more unrivalled advantage of China is the powerful drive of the Chinese people to keep striving for a better life.

 

Even so, China will have to rise above three major challenges: how to navigate the shifting international environment and in particular how to manage competitions with the US; how to do the balancing act in financial oversight so that direct financing rises proportionally and the banks are completely weaned from their predilection for SOEs; and how to reform the social security system to cope with a greying population.