In his keynote speech at the World Economic Forum early last year, President Xi Jinping stated China‘s firm commitment to economic globalization, free trade and innovation-driven development. As we mark the 40th anniversary of reform and opening-up in China this year, we have introduced a host of major steps to deepen reform, expand opening-up and advance innovation, aiming to promote both China’s own development and global growth.
To boost the new drivers of global growth in the new industrial revolution, we need to make development more inclusive. It is imperative to enhance institutional arrangements for equal rights, equal opportunities and fair rules, follow a balanced and inclusive development approach, make education universal, and better support the vulnerable groups so as to achieve more inclusive development that benefits all.
To boost the new drivers of global growth in the new industrial revolution, we need to pursue integrated innovation and development. We need to promote wider application of the Internet Plus model, clear the hindrance to optimized allocation of production factors, and establish more inter-disciplinary, multi-stakeholder innovation platforms to open up broader space for the development of the new growth drivers.
In the past several years, China has stayed the course of reform and innovation guided by the new development philosophy. Seizing the opportunity of the new industrial revolution and harnessing our advantages in human resources and market potential, we have focused on enhancing the new growth drivers. Our endeavors have produced better-than-expected results.
We have made vigorous efforts to streamline administration and cut taxes and fees, unlocking market vitality. In the past five years, the number of market entities in China has surged by nearly 80% to more than 100 million, and around 70% of new market entities are in active operation. This has not only accelerated the development of new drivers but also given a strong boost to employment. We are now seeing more than 13 million new urban jobs created each year in China.
We have adopted a prudent yet accommodative approach to regulation, contributing to a boom in emerging industries. As long as new forms of business and new models do not go against laws or regulations, cross the line of security or damage public interests, we will take an accommodative attitude toward their innovations by leaving sufficient space for their development. For those malpractices that involve seeking illegal gains, putting lives and property in danger, cheating and swindling, making or selling fake or substandard goods, and infringing on IPRs, we will mete out serious punishment in accordance with the law, no matter whether they emanate from emerging or traditional businesses, or are conducted online or offline. This regulatory approach has facilitated the rapid rise of emerging industries, such as online shopping, mobile payment and the sharing economy, which have become a hallmark of the thriving new drivers of the Chinese economy.
We have encouraged mass entrepreneurship and innovation, inspiring immense social creativity. China has a workforce of nearly 900 million, among which 170 million have received higher education or training in professional skills. Every year we produce over eight million university graduates and over five million graduates from secondary vocational schools. To tap their vast creative potential, we have made institutional improvements, adopted supportive policies, and fostered an enabling ecosystem for entrepreneurship and innovation. In the past five years, the number of in-force Chinese invention patents has tripled, and the annual volume of technology transactions doubled. The Global Innovation Index 2018 recently published by the World Intellectual Property Organization and other institutions puts China at the 17th place globally, 18 places higher than in 2013.
The growing ranks of entrepreneurs and innovators are making China a magnet for innovation and business ventures and creating new horizons for economic development powered by new drivers. Online sales have increased by more than 30% annually, and new forms of consumption, such as information and green consumption, have seen rapid growth, raising the share of consumption in economic growth to over 60%. China’s economic structure and growth pattern has also seen a major shift, with new drivers contributing more than one third to economic growth and two thirds to new urban jobs, which lays a solid foundation for sustained and sound economic growth.
In the first half of this year, China’s economy expanded by 6.8%, staying within the medium-high growth range of 6.7-6.9% for 12 quarters in a row. In the first eight months of this year, over 10 million urban jobs were created, and the surveyed urban unemployment rate was kept at a relatively low level of around 5%. Over 18,000 new companies are set up on an average day, and corporate profits of large industrial companies have maintained double-digit growth. On the whole, the Chinese economy has stayed on the track of steady progress, with growing new drivers and sound fundamentals.
Having said that, the Chinese economy is inevitably affected by notable changes in the global economic and trade context and is confronted with more difficulties in maintaining a stable performance. Nevertheless, China boasts a solid material and technological foundation, a fairly complete industrial system, and broad space for urban-rural and regional development. It also enjoys huge new market demand generated by the upgrading of consumption and economic restructuring, abundant and increasingly competent human resources, vibrant entrepreneurship and innovation activities across the society, and a reserve of innovative measures and policy tools for macro regulation. All this gives our economy sufficient resilience, potential and space for maneuver. We have the confidence, ability and means to cope with the current difficulties and challenges. The express train of China’s economy will not lose speed but stay on a steady course.
China did not resort to massive stimulus in the past; there is no reason why we should do it now. To make sure the economy operates within a proper range, we will continue to develop new and better ways of macro regulation, and keep to the fundamental goals of our macro policies while giving more attention to pre-emptive measures and fine-tuning. We will keep the macro leverage ratio stable and liquidity reasonably ample. We will see to it that the monetary policy transmission mechanisms are smoothed out in order to channel more funding into the real economy and make financing more accessible and affordable for micro businesses and SMEs. Persistent depreciation of the RMB will only do more harm than good to our country. China is steadfast in its commitment to a market-oriented exchange rate reform. We will not engage in competitive devaluation; we will work to create conditions for keeping the value of the yuan stable. Given the healthy fundamentals of the Chinese economy, our sound balance of international payments and abundant foreign exchange reserves, there is every reason that the RMB exchange rate will remain basically stable at an adaptive and equilibrium level.
The Chinese economy is now at a crucial stage of shifting from traditional drivers of growth to new ones. We will adhere to the general principle of seeking progress while maintaining a stable performance, and focus on supply-side structural reforms to invigorate the market, bolster self-driven development and unleash the potential of China’s domestic demand. Through these efforts, we aim to keep the economy at a medium-high rate of growth and move our industries to a medium-high level.
First, China will work even harder to advance reform and opening-up. By further streamlining administration, delegating powers, strengthening compliance oversight and improving government services, we will further widen market access, raise policy transparency, and exercise fair and impartial regulation to create a market environment in which companies of all ownerships, be they Chinese or foreign-owned, are treated as equals and compete on a level playing field. We will deliver and step up policy measures in support of the private sector, remove all hidden obstacles to their investment, protect all types of property rights, and incentivize entrepreneurial and innovation activities. We will open up further to enhance convergence with international economic and trade rules, and foster a world-class business environment. We will encourage more Chinese companies to go global in an orderly way.
Second, China will work even harder on restructuring. We will continue to encourage businesses to transform and upgrade traditional manufacturing by harnessing new technologies and new business models. At the same time, we will give strong support to emerging industries and services sectors, phase out outdated production capacities through market-driven and law-based measures, and promote integrated development between the primary, secondary and tertiary industries to substantially raise the quality of made-in-China goods and services. We will expand effective investment and encourage private sector participation in infrastructure and livehood areas to provide more public goods and services.
Third, China will work even harder to stimulate innovation.
To protect IPR is to protect and promote innovation. China cannot realize innovation-driven development without respect for and protection of IPR. Therefore, we have put in place a complete legal framework for IPR protection and set up special tribunals to handle IPR cases. Since China’s accession to the WTO, intellectual property royalties paid by Chinese companies to overseas proprietors have increased by 14 times. Going forward, we will further strengthen law enforcement and introduce a more rigorous mechanism of punitive compensation for IPR infringements to deter violations and better protect innovators from all sectors.
NOTE: The opinions expressed in this article are solely the author’s and do not represent those of the Lithuania Tribune or its staff.