New momentum driving China's high-quality development

China Plus Published: 2019-08-15 23:05:02
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Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

China’s National Bureau of Statistics has reported that in the first seven months of this year, growth in the country’s high-tech manufacturing industry was 2.9 percentage points higher than growth for overall industrial output. Investment in the high-tech manufacturing sector grew at a rate 5.4 percentage points higher than overall investment, and investment in the high-tech services sector was 6.2 percentage points higher than overall investment. And high-tech services and strategic emerging industries achieved double-digit growth. Taken together, these results point to new momentum accumulating in China's economy, despite the increasingly complex external environment. This momentum is about to become the new force driving China's high-quality development.

Workers making vacuum glass at a glazing product manufacturer in Ganzhou City, Jiangxi Province, August 9, 2019. [Photo: IC]<br>

Workers making vacuum glass at a glazing product manufacturer in Ganzhou City, Jiangxi Province, August 9, 2019. [Photo: IC]

China is shifting its focus from high-speed growth to a development model that's more efficient, better structured, and more sustainable. The goal is to transform the country from being a bulk manufacturer to one that turns out high-quality goods. The key to success will be in cultivating a new momentum and continuous innovation.

China's new economic engine index, which measures the price performance of companies from new economy industries, grew at an average rate of 28 percent between 2015 and 2018. Last year, the country's new economy sector, which features new industries, new types of businesses, and new business models, accounted for 16.1 percent of GDP – that's up 0.3 percentage points from a year earlier, and the sector contributed more than two-thirds of the country's new jobs.

In this year's Global Innovation Index, which is issued by the World Intellectual Property Organization, China advanced up the rankings for the fifth year in a row. It's now in 14th place, outperforming other economies on indicators such as the number of patents, trademarks, industrial designs, and exports of high-tech and innovative products. Huawei, for instance, submitted more than 5,400 international patent applications last year, the largest number submitted by any company in the world. Huawei's newly-released operating system Harmony OS, which it developed itself, is a good example of the strong capacity for innovation and competitiveness of China's companies.

The accumulating momentum in higher-end industries is the result of China's innovation-driven development strategy. The government has introduced policies to cultivate this momentum by strengthening fiscal and financial support, boosting venture capital, facilitating research and development of core technologies, speeding up the popularization of scientific and technological advancements, and encouraging international cooperation on innovation.

But despite China's considerable progress, some voices in the West have turned a blind eye to these achievements, fabricating stories about China's development to meet their own needs. When China's economy is growing strongly, they call China a threat. When the economy grows at a slower steady rate, they say China is about to collapse.

These voices would do well to pay more attention to the health of the economy in their own countries. Take the United States as an example: According to figures released by the U.S. Commerce Department, America's economy grew at an annualized rate of 2.1 percent in the second quarter of the year, down from the 3.1 percent growth in the first quarter. This shows that trade frictions are becoming a drag on the country's investment and exports. On Wednesday, the 10-year bond yields for U.S. Treasuries fell below two-year note yields for the first time since 2007, and the 30-year bond yields plunged to a record low. This has been widely interpreted as a sign of investor concern that the world's biggest economy is heading for a recession. A recent survey conducted by the Wall Street Journal shows that economists saw a 33.6 percent probability of a recession in the coming 12 months, up from 30.1 percent in July. It's the highest score recorded by the survey since it began in 2011.

Instead of naysaying about China's economy, observers in the West, especially those in the United States, should shift their attention homeward if they are as concerned as they make out to be about the state of global growth.

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.