President Xi Jinping's governance philosophy and vision on economic development is centered on the people, and this people-centered approach charts the course for China's high-quality growth. The results of the people-centered endeavors in various fields are embodied in President Xi's economic thought.
We recognize that after more than 40 years of rapid development following the reform and opening-up period, the principal contradiction facing Chinese society has evolved. It has shifted from the contradiction between the ever-growing material and cultural needs of the people and the backward social production to one between unbalanced and inadequate development and the people's ever-growing need for a better life. China's development is not only illustrated by economic figures but also by the sense of happiness shared by its people.
This evolution of the principal contradiction means that the economic achievements of the reform and opening-up period have addressed the general needs of people's lives. Now, people's expectations for a better life are constantly rising. While increasing income levels and material abundance remain important, these aspirations also encompass many other dimensions, such as demands for improvements in ecological, cultural, and other aspects of life.
In this context, advancing high-quality development is of vital importance. Such development calls for innovation, coordination, greenness, openness, and shared growth, and can only be achieved through the full, accurate, and comprehensive implementation of the new development philosophy.
To fully and faithfully implement the new development philosophy on all fronts, it is essential -through the lens of new structural economics - to recognize that it represents a guiding vision for development, with innovation as the primary driving force. Promoting innovation must go hand in hand with advancing coordinated, green, open and shared development. The key lies in following a fact-based, locality-specific approach, developing new industries and technologies in line with each region's resource endowments and comparative advantages to continuously unleash new quality productive forces.
New quality productive forces are a form of productivity that aligns with the new development philosophy. In promoting their development, it is essential to fully, accurately, and comprehensively implement the new development philosophy.
The development of new-quality productive forces is carried by industries, particularly through the leading sectors in each region. Local governments should base their work on reality, and in light of the resource endowments, industrial bases and technological conditions of different regions, adopt a "build the new before abolishing the old" approach, adapt measures to local conditions, and provide classified guidance. Accelerating the formation of new quality productive forces is of vital importance for achieving the first and foremost goal of pursuing high-quality development proposed in the report to the 20th National Congress of the Communist Party of China, in order to build a modern socialist country in all respects.
Strategic opportunity
Regarding the medium- to long-term trajectory of China's economy, there has been widespread debate abroad over whether the country can escape the so-called "middle-income trap." While crossing this threshold poses a challenge for many countries, it can indeed be overcome by continuously boosting productivity and fostering new quality productive forces driven by innovation, making the growth rate of its income level higher than that of developed countries.
China has already reached the global forefront in certain sectors. To achieve breakthroughs in technological innovation, industrial upgrading, and the development of new quality productive forces in those sectors, sustained investment in R&D and the invention and adoption of new technologies are essential. For traditional industries in the process of catching up, they can also leverage digitalization, intelligentization, and green transformation to unleash new quality productive forces.
China has now reached an upper-middle-income level and is poised to cross the threshold into high-income country status in the near future, as defined by the World Bank's threshold of $14,005 GNI per capita. By 2024, China's per capita GDP had reached $13,445, while its per capita GNI stood at approximately $13,500 — just 4 percent shy of the mark.
China is highly likely to cross the threshold by 2025, or almost certainly by 2026. Of course, whether this materializes will ultimately depend on exchange rate levels. But what carries greater significance is steady productivity growth. China's annual economic growth rate continues to outpace that of the US by about three percentage points, signaling faster productivity growth that helps solidify its competitive edge relative to the US.
As long as China remains focused on the essence of economic development and aligns policy efforts with its fundamental determinants, China's capabilities across all areas will continue to strengthen. This will further solidify the foundation for the rejuvenation of the Chinese nation, which is of utmost importance.
After the reform and opening-up, our average growth rate ranged between 8 percent and 9 percent, but in recent years, economic growth has slowed to 7 percent, 6 percent, and 5 percent. This economic slowdown inevitably brings considerable pressure to various industries. However, we must also recognize that this slowdown has both internal and external causes.
Since 2010, following the 2008 global financial crisis, although our economic growth rate has declined, our annual contribution to global economic growth has remained around 30 percent. This indicates that the slowdown is not unique to us - other countries have experienced it too. The challenges and difficulties we face are, in fact, shared by businesses worldwide.
Overall, however, we remain in a period of strategic opportunity for development. For an economy to grow, productivity levels must continuously rise, technological innovation must continue, industries must constantly upgrade, and new quality productive forces must continually emerge. In this regard, we still have significant room for growth.
In the context of the Fourth Industrial Revolution, we stand on the same starting line as developed countries. Compared to others, we have distinct advantages: a talent advantage; the advantage of having the world's largest domestic market, where technological breakthroughs can immediately find vast application scenarios; and the most comprehensive manufacturing sectors globally, making it easy for any new idea to translate into products quickly that are cost-competitive in the domestic and international markets.
Add to that our social and political stability, as well as an institutional advantage that effectively integrates an efficient market with an enabling government - if we can leverage these strengths effectively, I believe we can not only keep pace with developed nations in the Fourth Industrial Revolution but even take the lead. Moreover, in traditional sectors, we can enhance quality and efficiency through digitalization, intelligentization, and green transformation. These are all our advantages.
Amid slowdown pressures, there are indeed challenges, but as long as we seize the opportunities and space for development, I am confident we can sustain high-quality development, which will help us overcome various challenges on this new journey, continuously move forward, and, I believe, contribute to the stability and development of the world.
The author is dean of the Institute of New Structural Economics at Peking University, and former chief economist and senior vice president of the World Bank.
Source: Global Times:
Company: Global Times
Contact Person: Anna Li
Email: [email protected]
Website: https://globaltimes.cn
City: Beijing
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