The long-term positive trend of China’s economy has not changed and cannot be changed. It is constantly shifting from high-speed growth to high-quality development, and the old and new kinetic energy are continuously converted. The short-term economic operation may fluctuate and be unstable in stages, but in the whole development process, it will have ten trend changes, which determines the potential and future prospects of China’s long-term economic development.
First, the final consumption expenditure growth has become the first driving force for economic growth.
From 2014 to 2018, according to the demand expenditure method, among the three major demand growth: fixed capital formation, final consumption expenditure and net export of goods and services, the final consumption expenditure growth has become the first driving force for China’s economic growth for five consecutive years.
Moreover, the popular and wave-free consumption of some consumer goods is turning to the pursuit of high-quality, differentiated and diversified selective consumption. In 2018, the total retail sales of consumer goods in China was 38.1 trillion yuan, up 9.0% over the previous year. Although the growth rate slowed down by 1.2 percentage points over the previous year, the contribution rate of the overall final consumption growth (including service consumption) to economic growth was 76.2%, up 18.6 percentage points over the previous year.
Second, the consumption structure is advanced: the proportion of service consumption in household consumption is rising.
In recent years, the Engel coefficient of urban and rural residents in China has dropped significantly. In 2017, food consumption expenditure only accounted for about 28% of the total expenditure of urban residents, and only accounted for about 32% of the total expenditure of rural residents. The growth of consumption expenditure has increasingly turned to other consumption fields.
Compared with commodity consumption, service consumption has maintained a faster growth. Tourism, culture, sports, old-age care and domestic service consumption are very active. According to the Ministry of Commerce, service consumption accounted for 49.2% of household consumption in 2017, an increase of 5.2 percentage points over 2012. In 2018, the proportion of service consumption reached 49.5%, an increase of 0.3 percentage points over the previous year, which also explained the decline in the growth rate of total retail sales of consumer goods in China in 2018. Internationally, in 2018, the proportion of service consumption in the United States reached 68.9%, and other developed countries were 59.4% in Japan, 58% in Britain, 54% in France and 52% in Germany. China accounts for 49.5%, which is close to German and other continental European countries.
Third, production and consumption upgrading: production inputs are scientific and digital.
In 2018, the expenditure on national research and experimental development (R&D) increased by 11.6% over the previous year, and the ratio to GDP was 2.18%, an increase of 0.03 percentage points over the previous year. At the same time, data becomes a new factor of production and is consumed. In the era of digital economy, the role of data in economic activities is becoming more and more important. It can not only help people to better organize and plan production and operation, but also make effective judgments and predictions. Moreover, it becomes a direct input factor in artificial intelligent manufacturing. In many fields of production and management, it has been regarded as a new factor of production. As early as October 9, 2016, the Political Bureau of the Communist Party of China (CPC) Central Committee had a collective study on the implementation of the strategy of strengthening the country through the Internet. On December 8, 2017, the Political Bureau of the Central Committee once again conducted collective study on "Implementing the National Big Data Strategy", and proposed "Building a digital economy with data as the key element", which made it clear that data is a production factor. The amount of data generated and stored in the world has increased dramatically, and it is estimated that it will reach 44 trillion GB by 2020. The amount of data generated in China will account for nearly 20% of the total global data. As of 2017, the United States has 44% of the world’s large data centers, and the number of large data centers in China is second only to the United States. In the next few years, with the completion of a number of innovation platforms in the field of big data, 13 national big data laboratories will have their own achievements in different fields, providing support and services for related technological innovations in the field of big data.
Fourth, the digital economy has become a new industry and opened up new fields in the network market.
At present, applications based on new technologies such as Internet, Internet of Things, big data and cloud computing are increasingly entering social production and exchange, resulting in digital media, e-commerce and e-financial services, and many new products, industries and formats. The Internet is changing the production and lifestyle of human beings. According to the World Internet Report 2017, 22% of global GDP is closely related to the digital economy. In 2016, the total scale of China’s digital economy reached 22.58 trillion yuan, ranking second in the world, accounting for 30.3% of China’s GDP. According to the World Internet Report 2018, by 2018, the global Internet users had reached 3.6 billion, more than half of the global population. The number of users in cmnet was 753 million, an increase of 8% over the previous year in 2017, and the use of mobile data increased by 162% year-on-year. In the China market, online entertainment (long and short videos and mobile games), new retail and mobile payment have all made further development, and China is becoming a global Internet giant center.
The opening of new fields of digital economy and network market has posed new challenges to modern economics and statistics. The concept of total retail sales of social consumer goods provided in short-term economic operation statistics can no longer reflect the whole picture of household consumption. Data input factors have not yet entered the PPI price index statistics; The concept of fixed capital formation or fixed assets investment can no longer accommodate the investment in production and production tools in the network field; The direct exchange value and consumption value of online market also failed to enter the current statistical system; The concept of "gross domestic product" in modern economics can no longer accommodate and cover the economic activities of the whole society and the creation of total social output in the new era. Paying too much attention to the increase or decrease of 0.1 or 0.2 percentage point of GDP will make us fall into the misunderstanding of observing the economic situation.
In October, 2016, General Secretary of the Supreme Leader stressed that it is necessary to increase investment, strengthen the construction of information infrastructure, promote the deep integration of the Internet and the real economy, speed up the digitalization and intelligentization of traditional industries, make the digital economy bigger and stronger, and expand new space for economic development. In March 2017, the "Government Work Report" first proposed to accelerate the development of the digital economy. In October of the same year, the digital economy was written into the report of the 19th National Congress of the Communist Party of China. Developing digital economy has become a national strategy. At the China International Import Expo on November 5, 2018 and the APEC meeting on November 18, the Chairman of the Supreme Leader emphasized that all countries should seize the opportunities brought by the new round of scientific and technological revolution and industrial transformation and strengthen cooperation in frontier fields such as digital economy, artificial intelligence and nanotechnology to jointly create new technologies, new industries, new formats and new models. Digital economy is the future development direction of Asia-Pacific and even the world.
Five, high-end manufacturing and intelligent manufacturing change the industrial economic structure.
In 2018, the National Development and Reform Commission issued the "Three-year Action Plan for Enhancing the Core Competitiveness of Manufacturing Industry (2018-2020)", and organized and implemented special actions for the industrialization of key technologies in key areas such as rail transit equipment, high-end ship and ocean engineering equipment, intelligent robots, smart cars, modern agricultural machinery, high-end medical devices and medicines, new materials, manufacturing intelligence, and major technical equipment.
In recent years, the new kinetic energy of manufacturing industry has been gradually enhanced. The high-end equipment manufacturing industry represented by high-speed rail and large aircraft, and the high-tech industry represented by information technology have maintained a rapid growth trend. Wind data shows that in 2018, the added value of high-tech industries, equipment manufacturing industries and strategic emerging industries increased by 11.8%, 8.3% and 8.8% respectively, and the growth rate was faster than that of industrial output above designated size. The new kinetic energy promotes the optimization of the kinetic energy structure of the traditional economy. In 2018, the proportion of high-tech manufacturing industry in industries above designated size reached 14.4%, an increase of 1.4 percentage points year-on-year; Investment in high-tech manufacturing industry increased by 16.1% year-on-year, and the growth rate was 6.6 percentage points higher than that of all manufacturing investment.
At the same time, intelligent manufacturing has become a new trend of high-quality development of industrial economy. In July 2017, the State Council officially issued the "New Generation Artificial Intelligence Development Plan"; In November 2018, the "Work Plan for Revealing the Key Tasks of New Generation Artificial Intelligence Industry Innovation" issued by the Ministry of Industry and Information Technology proposed that by 2020, China will reach or approach the international advanced level in key technologies, computing power, communication capabilities, and standards related to vehicle intelligent platforms. In 2019, the "Government Work Report" proposed "smart+"; On March 19, 2019, the seventh meeting of the Central Committee for Comprehensively Deepening Reform reviewed and approved the Guiding Opinions on Promoting the Deep Integration of Artificial Intelligence and the Real Economy, and proposed to build an intelligent economic form that is data-driven, man-machine collaboration, cross-border integration and sharing. This means that the pace of promoting artificial intelligence to empower and upgrade traditional industries in China has been greatly accelerated. It can be predicted that artificial "intelligence+"will become an important direction of manufacturing development in the future, and will also become a new kinetic energy engine to accelerate the development of emerging industries.
The application exploration of artificial intelligence in manufacturing industry is forming four typical application modes. One is to improve manufacturing efficiency, the other is to optimize production technology, the third is to optimize supply chain management efficiency, and the fourth is to improve after-sales operation and maintenance value. With the deepening of technology application, the coupling of capital investment is also increasingly strengthened. Driven by technological breakthroughs and application requirements, artificial intelligence technology has stepped out of the laboratory, accelerated its penetration into various fields of the industry, and greatly improved its industrialization level. In this process, capital has played an important role as an accelerator of industrial development. In the first half of 2018 alone, the global financing scale in the field of artificial intelligence reached 43.5 billion US dollars, of which the investment scale in China reached 31.7 billion US dollars, accounting for more than 70% of the world. At the same time, artificial intelligence has been widely used in intelligent robots, drones, finance, medical care, security, autonomous driving, search, education and other fields. Among them, autonomous driving is one of the most promising landing areas in the field of artificial intelligence. Traditional domestic automobile companies such as FAW, SAIC, BAIC, Chang ‘an and Dongfeng have invested heavily in intelligent and autonomous driving.
Six, the supply of some public goods has become a new service industry.
The report of the 19th National Congress of the Communist Party of China pointed out that the main contradiction in our society has been transformed into the contradiction between the people’s growing need for a better life and the unbalanced development. People’s basic needs for food, clothing, housing and transportation have changed to more needs for fairness, environment and various public products and services.
In cities, insufficient development is the main problem. Mainly for the lack of public products and public services, not excellent. The so-called public goods generally fall into two categories. The first category is transportation, urban infrastructure, water, electricity and heat; The second category is science, education, culture, health and sports insurance (insurance). These products are in short supply or poor quality, so they cannot meet everyone’s needs for a better life. In the case that the supply of these products and services depends entirely on government input, it can only lead to insufficiency or inferiority. Therefore, market mechanism and competition mechanism should also be introduced into the supply of some public goods. The supply of public goods and public services should give consumers choices, and the pricing of public goods should be flexible, so as to attract more social capital into the production and supply of public goods and form new industries. In the primary stage of socialism, public goods have different degrees of welfare and different degrees of commodity, so they should be properly classified, treated differently, specifically implemented and priced differently to attract social capital investment and alleviate the shortage of government investment.
For example, in the fields of education and medical care, the welfare should be guaranteed by the government, and the commodity price should be guided by the government to regulate the market. The health industry is an emerging industry that integrates medical treatment, rehabilitation, old-age care, leisure and tourism. In western developed countries, the health industry is the second largest industry after the financial industry. In 2017, the health industry in the United States accounted for 17% of GDP. China is stepping into an aging society, the proportion of middle-income groups in social strata is rising, and the demand for health is growing. It is necessary to combine the supply of public services such as medical care and rehabilitation with the supply of competitive services such as leisure and tourism, allocate resources through market mechanisms, and create supply. Of course, the special industry formed by the supply of some public goods should not take profit as the sole purpose, and it has the characteristics of inclusiveness, but it also needs to solve the problems of investment return and commercial interests of enterprise development.
Seven, economic agglomeration in the Bay Area and urban agglomeration to form the scale effect of resource allocation.
China’s economy will gather in Guangdong, Hong Kong and Macao Bay Area, Shanghai and Yangtze River Delta Bay Area, Beijing and Tianjin and Bohai Bay Area, and become the growth pole of China’s economy. By 2016, the population, land area and port container throughput of Guangdong, Hong Kong and Macao Bay Area ranked first among the four Greater Bay Area cities in the world, with a total GDP of 1.38 trillion US dollars, second only to new york Bay Area. In North China, the sub-centers of xiong’an new area and Beijing will also be the signs of regional economic agglomeration. Master Plan of xiong’an new area, Hebei (2018— 2035) closely follows xiong’an new area’s strategic positioning, and proposes to orderly undertake the function relief of Beijing’s non-capital, optimize the pattern of land space development and protection, create a beautiful ecological environment, promote the integrated development of urban and rural areas, shape the features of the new district, create a livable and business-friendly environment, build a modern comprehensive transportation system, build a green and low-carbon city, build a world-class innovative city, and create a city of digital intelligence. The construction of xiong’an new area has attracted international attention. The Nihon Keizai Shimbun commented that the construction of a new city "xiong’an new area" is a grand plan put forward by China in 2017 as a "Millennium Plan". It will build a smart city using a new generation of cutting-edge technologies, and the infrastructure construction will be completed by 2022. It is estimated that the population of the new district will exceed 2 million in the future. The estimated total investment is 2 trillion yuan.
With the construction of a number of central cities, urban agglomerations around central cities will rise, thus further accelerating the agglomeration effect of China’s economy and the scale effect of resource allocation.
Eight, the new urban-rural and regional relations shape a new division of labor and expand new exchanges.
The opposition between industrial production and agricultural production, and the opposition between physical and chemical economy and bio-economy were once the basic contents of traditional urban-rural exchange and urban-rural relations. Now and in the future, there will be subversive changes, and the development trend will be: big cities and economic core areas will focus on intelligent services (scientific research and development design, etc.), data and information, digital economy and public goods production; Small and medium-sized cities are dominated by industrial physical and chemical economy and labor service economy; Rural areas are dominated by bio-economy and eco-economy, forming a new exchange relationship among them. This not only provides a wider employment space for various labor factors, but also forms a more detailed and exquisite professional division of labor. The content of urban-rural and regional exchange relations is more diverse and there is more room for development.
At the same time, the development of urban rail transit provides greater convenience for the division of labor and cooperation between cities, and the phenomenon of "commuting" between cities is becoming more and more frequent, which means that the tradeability of service labor is further enhanced and the service trade is further expanded, and at the same time, it creates new foundations and conditions for the transformation and upgrading of service industry.
Nine, new opportunities for rural revitalization.
The strategy of rural revitalization put forward by the 19th National Congress of the Communist Party of China is to give priority to the development of agriculture and rural areas, establish and improve the system, mechanism and policy system of urban-rural integration development in accordance with the general requirements of industrial prosperity, ecological livability, rural civilization, effective governance and affluent life, and accelerate the modernization of agriculture and rural areas. This will become the general grasp of the work of agriculture, countryside and farmers in the new era. According to this strategy, agriculture must first become a human capital-intensive industry. It is necessary to professionalize agricultural management and cultivate a modern new peasant team. Encourage new farmers to actively participate in the construction of cooperation, credit and mutual aid organizations, so as to become modern and efficient commodity agricultural laborers and agricultural producers and operators. Secondly, we should support the popularization of agricultural scientific research and build a stable scientific and technological support system; Scientific research support and personnel training are the foundation of modern agriculture and an important way to solve the bottleneck constraint of resource elements, which need to be accumulated for a long time. Third, rural renovation is an important measure to promote rural revitalization. With the development of urbanization, the structure, layout and function of rural land use will change dramatically. It is difficult to adapt to this rapid change by relying solely on the land market, and the government needs to intervene in the form of law, planning and construction projects. China’s rural renovation should be given more complete functions as an important platform for implementing the rural revitalization strategy, and the combination of land renovation with agricultural scale management, rural tourism, infrastructure construction, landscape and environmental protection should be promoted. Fourth, to be a "new node" for small and medium-sized towns. To create "Living in the countryside and working in cities and towns "has promoted the development of rural areas." In the future, we should create conditions for the development of county towns and small towns in infrastructure investment, medical and educational resources layout and land index distribution. Work on the node of small cities and towns. Fifth, build beautiful countryside and develop ecological economy. Rural revitalization is not the revitalization of every village. In some natural villages, there has been a phenomenon of natural disappearance of young and strong labor force and large-scale land abandonment. We should promote their disappearance naturally, reduce the ratio of administrative villages to natural villages, and make land resources and construction funds more rationally allocated. On this basis, we will implement "village renewal" to improve the quality of rural life and build beautiful countryside. Implement rural construction marked by "toilet revolution" to improve the quality of livable life in rural areas. Through the implementation of village renewal projects, these villages will form a distinctive style and a pleasant ecological living environment, and promote the development of ecological economy.
X. China is more closely linked with the open world economy.
In the face of trade protectionism and the US trade war, China’s policy of opening to the outside world has not changed, and the steps of opening to the outside world have become more solid. China’s basic strategy to meet the challenge is to develop itself and overcome trade protectionism in building an open world economy. China has set up 12 free trade pilot zones, implemented more open trade and investment facilitation measures, and further expanded the opening of service trade. At the same time, it has explored new paths for deepening reform in the whole country, copied and popularized new experiences, and gathered new common interests with other countries in the world, which will become a new hub for China to connect with the open world economy.
In 2018, China ranked first in world trade in goods and second in service. Since 2013, the foreign investment of China enterprises has exceeded 100 billion US dollars, and it has stabilized at about 120 billion US dollars in 2018, and the stock of overseas investment has reached about 1,929.5 billion US dollars. China has become the third largest economy in the world with foreign investment, and it is the second largest economy if China and Hongkong are included. China’s economic ties with the world are hard to isolate. It is wishful thinking for American protectionist forces to try to decouple China’s economy from the world economy.
Since 2013, China has made continuous progress in jointly building the Belt and Road Initiative with relevant countries. In 2017, it implemented new investment in 57 countries along the route, with an investment of US$ 20.17 billion, up 31.5% year-on-year, accounting for 12.7% of foreign investment, up nearly 5 percentage points from the previous year. In 2018, new non-financial investment in countries along the route reached US$ 15.64 billion, up 8.9% year-on-year, and the proportion of foreign investment further rose to 12.8%. By the end of 2018, China-Europe trains had accumulated more than 13,000 trains, and the return rate increased by nearly 20 percentage points, reaching 49 cities in 15 countries abroad; 387 civil aviation routes reach 33 countries along the route. Financial cooperation continued to strengthen, with 11 Chinese banks setting up 71 first-level institutions in 27 countries along the route. Carry out joint financing cooperation with multilateral development banks such as African Development Bank, Inter-American Development Bank and European Bank for Reconstruction and Development. RMB clearing arrangements have been established in seven countries and regions along the route, and the RMB cross-border payment system covers 41 countries and regions along the route. People’s hearts are also deepening. Cultural cooperation agreements have been signed with more than 60 countries along the route, more than 300 cultural exchange implementation plans have been determined, 17 overseas China cultural centers have been built in countries along the route, and 85 overseas educational institutions and projects have been held in countries along the route. In deepening cooperation, we have continuously reached a new consensus on international economic and trade rules and reached 17 free trade agreements with 25 countries and regions.Although no bilateral investment agreement has been reached with the European Union, relevant bilateral investment agreements have been signed separately with many European countries.
In the future, China will further build and improve the "One Belt, One Road" information platform for foreign investment, and reduce the asymmetry of foreign investment information of enterprises. Reasonably guide the investment direction of enterprises in the Belt and Road Initiative, promote the transfer of superior production capacity to countries along the Belt and Road Initiative, improve the investment layout of enterprises in key industries and regions of the Belt and Road Initiative, improve the quality of investment in the Belt and Road Initiative, and achieve mutual benefit and win-win results with the host country.
(The author of this article is Pei Changhong, a member of Chinese People’s Political Consultative Conference and a professor at China Academy of Social Sciences. Source: Economic Daily)
