Huang Yiping: Several Key Elements in Developing New Quality Productive Forces (AI Translation)

黄益平：发展新质生产力的几个关键要素

China has entered a new phase of economic development, and the book “China 2049” by the National School of Development at Peking University and the Brookings Institution delves into this transformation. The book covers changes from now until 2049, addressing the shift in China’s economic environment, status, challenges, and strategies [para. 1]. The significant changes in China's new phase of development include rising costs reducing China's low-cost advantage, challenges emerging in the global market as the global economic environment changes, and an aging population presenting new challenges [para. 3].

China's economic development model, which relied on low costs, exports, and direct foreign investment, is no longer sustainable. The book asserts that the future growth model must shift towards innovation, domestic market reliance, digital technology, and policy modifications [para. 4]. The core of this new model is driven by technological innovation and enhancing Total Factor Productivity (TFP) [para. 7].

As China moves away from low-value, labor-intensive manufacturing, questions arise about the nation's capacity for innovation. This capacity depends on two factors: R&D inputs and the return on those inputs [para. 10]. Innovation is further challenged by the need for openness and the vitality of the private sector. As geopolitical tensions rise, maintaining openness and supporting private entrepreneurs are crucial [para. 12]. Despite China’s rapid technological growth, its actual strength in quality remains less robust [para. 15].

China’s overcapacity issues aren't new but have evolved. Historically, China mitigated overcapacity by exporting surplus production. However, with geopolitical shifts and China's large economic footprint, this strategy faces limitations [para. 21]. Additionally, China's current overcapacity is exemplified by concentrated development in the "new three items" without broader diversification [para. 23].

To balance investment and consumption, the government needs to enhance domestic demand. While policies like consumer goods trade-ins help, a more proactive approach may include direct financial support to citizens to spur consumption [para. 31]. This could in turn stimulate business orders, increase production, and foster investment, driving economic growth [para. 33].

Future development necessitates global economic cooperation. China's prolonged trade surplus poses challenges, echoing past global economic disruptions like the Opium Wars and Japan’s trade conflicts with the US [para. 45]. To address this, China should promote a multilateral, open international commerce system, encourage domestic enterprises to invest abroad, and cooperate with countries along the "Belt and Road" [para. 48]. A proposed "Global South Green Development Plan," mirroring the post-WWII Marshall Plan, aims to support green transitions in developing nations. This plan could help balance China's trade surplus while fostering global goodwill and promoting the global circulation of the RMB [para. 51].

Long-term economic stability will also depend on addressing surplus capacity and leveraging international cooperation for green development, thus maintaining China’s competitive edge while contributing to global economic stability [para. 53]. This holistic approach aligns with China's broader goal of building a community with a shared future for humanity [para. 56].