The Report on the Work of the Government this year, closely following the requirement of high-quality development, has the main target of the national economy and promotion measures.

Characterized by high efficiency, high benefit, increased employment, income growth, cleanness and safety, high-quality development should satisfy the public’s growing demand for a better life and reflect new development concepts. It implies the transition from high speed to high quality, from growth to development, which not only includes a quantitative expansion, but more importantly, the improvement in quality.

Currently, the main problems hindering the development of Chinese economy are low quality of economic growth as well as the low contribution of science and innovation to economic growth. The labor productivity of China in 2017 was 101,231 yuan per capita, which lags much behind that of developed countries, such as the United States and Germany. In addition, imbalanced and inadequate economic development is a prominent problem. The proximate cause of this is insufficient ability to innovate while the supply system has failed to adapt to the changes of demand in a timely manner.

The underlying causes are the constraints exerted by institutional mechanisms, such as assessment and evaluation mechanism, fiscal and taxation system, scientific and technological system, financial system and regulatory system, which cannot fully meet the requirements of high-quality development. Moreover, the unsatisfactory policies and regulations as well as the imperfect market environment are also the important factors restricting high-quality development.

To advance high-quality development, the key is reform, which should take supply-side structural reform as the cardinal principle, continue to remedy the ineffective supply, strengthen China’s power in manufacturing and develop new drivers of growth. The core elements supporting the real economy should be scientific and technological innovation, modern finance and human resources development.

Promoting high-quality development hinges upon action. It is advisable that the country should continue to reform state-owned enterprises, support the development of private enterprises and foster reforms in the areas of taxation, finance, science and technology as well as education. Also, the pace of establishing the indices measuring high-quality development through index system, statistical system and performance evaluation should be accelerated to strengthen the index evaluation and statistics in regard to labor productivity, capital output ratio, energy and resource utilization and environmental quality. Other indicators of social progress, such as employment, income growth and higher public service level should be emphasized.

 

This article was edited and translated from the Guangming Daily. Wang Changlin is the executive vice-president of the Chinese Academy of Macroeconomic Research.

(edited by BAI LE)