Over the weekend, the People’s Daily ran an important articleentitled "Accelerating the Optimization and Upgrading of the Economic Structure.”
The piece was billed as the first in a series on "Grasping the New Implications of Important Strategic Opportunities for China's Development.”
The piece highlighted that:
Structural adjustment is a global phenomenon.Developed countries have been pushing for “re-industrialization.”
China’s low-cost resource model has run its course, and the economy can no longer rely on external demand due to weaker global growth.This situation is exacerbated by the ageing workforce.
The fundamental point: China’s catch-up gains – employing cheap economic inputs and obtaining technology from other countries – have been exhausted.
That means China has to innovate internally. According to the piece, key elements of that innovation should include:
The Internet of Things
New energy vehicles
China should also rely on its huge domestic market and consumer upgrading to drive demand and boost productivity.
Our take: Chinese policymakers have the diagnosis and prescription right. But whether or not they can create an economic ecosystem that nurtures innovation remains an open question.
BJ News: 人民日报头版头条：加快经济结构优化升级