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New Book by Prof. Yao Yang Examines Changes and Constants in Chinese Economy

Nov 14-2022   



The last decade has seen China undergoing two major structural transitions. One is the evolution of its growth model from export-oriented to domestic demand-driven; the other is that its industrialization peaked out in 2012. According to a new book by Prof. Yao Yang, Dean of the NSD and Interim Dean of BiMBA Business School, the two transitions indicate that the Chinese economy has moved from outward expansion to endogenous development. To boost the shift, innovation is the key.

 

In the book, Common Sense of Economy, Prof. Yao points out that China should fuse innovation with traditional cultures and traditions, and that instead of following in the path of the US, China can learn from Japan and Germany. The US is known for 0-1 innovation, typified by Apple and coming at high costs. Along with monopolistic profit margins for a few companies, destructive disruptions have been dealt to traditional industries and industrial belts and caused many jobs to disappear in the US.

 

In comparison, Germany and Japan have embraced 1-N innovation. Knowing that they can’t compete with the US in the arenas of internet and semi-conductors, the Germans have adopted a differentiated innovation strategy in the form of Industry 4.0, in which its traditional manufacturers are empowered to focus on micro-innovations and optimizations to produce world-beating products. German industries still account for 25% of all jobs in the country, far higher than 10% in the US.

 

Viewed from historical perspective, China’s innovation strategy has gone a full cycle. Priority was given to industrialization in the first 30 years after the founding of new China. Then the country chose to develop export-oriented industries and labor-intensive ones in the early years of reform and opening up. Enormous accomplishments notwithstanding, the share of labor-intensive products in all export products has come down to less than 10%, while that of electronic products and machineries has shot up.

 

From geographical perspective, Prof. Yao believes that cities like Shenzhen, Hangzhou, and Suzhou have the potential to develop into global innovation centers, but most other regions are suited for 1-N innovation. By examining its history and geography, China should take its cultures as the starting point and embark on a suitable innovation path.

 

New Book by Prof. Yao Yang Examines Changes and Constants in Chinese Economy

Nov 14-2022   



The last decade has seen China undergoing two major structural transitions. One is the evolution of its growth model from export-oriented to domestic demand-driven; the other is that its industrialization peaked out in 2012. According to a new book by Prof. Yao Yang, Dean of the NSD and Interim Dean of BiMBA Business School, the two transitions indicate that the Chinese economy has moved from outward expansion to endogenous development. To boost the shift, innovation is the key.

 

In the book, Common Sense of Economy, Prof. Yao points out that China should fuse innovation with traditional cultures and traditions, and that instead of following in the path of the US, China can learn from Japan and Germany. The US is known for 0-1 innovation, typified by Apple and coming at high costs. Along with monopolistic profit margins for a few companies, destructive disruptions have been dealt to traditional industries and industrial belts and caused many jobs to disappear in the US.

 

In comparison, Germany and Japan have embraced 1-N innovation. Knowing that they can’t compete with the US in the arenas of internet and semi-conductors, the Germans have adopted a differentiated innovation strategy in the form of Industry 4.0, in which its traditional manufacturers are empowered to focus on micro-innovations and optimizations to produce world-beating products. German industries still account for 25% of all jobs in the country, far higher than 10% in the US.

 

Viewed from historical perspective, China’s innovation strategy has gone a full cycle. Priority was given to industrialization in the first 30 years after the founding of new China. Then the country chose to develop export-oriented industries and labor-intensive ones in the early years of reform and opening up. Enormous accomplishments notwithstanding, the share of labor-intensive products in all export products has come down to less than 10%, while that of electronic products and machineries has shot up.

 

From geographical perspective, Prof. Yao believes that cities like Shenzhen, Hangzhou, and Suzhou have the potential to develop into global innovation centers, but most other regions are suited for 1-N innovation. By examining its history and geography, China should take its cultures as the starting point and embark on a suitable innovation path.