During the past forty years of reform and opening up, China’s rapid economic development has been mainly attributed to the advantage of low-cost labor, resources and environment. After entering a new stage of development, China has developed a new strategy driven by innovation.
Since 2016, China’s economy has achieved steady development in the transformation and upgrading. The “L” trend has gradually formed, the structural upgrading has become the main growth force, and the new economy has accelerated its rise.
1. The New Normal of China’s economy
The new normal of China’s economy is a state of China’s social economy in the 21st century. In May of 2014, Xi Jinping, the CPC General Secretary, first described the Chinese economy in the new cycle with the “new normal” during his inspection on-site in Henan: “China is still in a significant period of strategic opportunity. We must boost our confidence, adapt to the new normal condition based on the characteristics of China’s economic growth in the current phase, and stay cool-minded in our strategy.”
The “new” of the new normal means that it is different from the previous state; the “normal” of the new normal means “relatively stable”, characterized by an appropriate rate of economic growth in addition to structural optimization and social harmony.
This “new normal” means the conditions and environment for China’s economic development have undergone many major changes and its economic growth will not be as rapid, imbalanced, uncoordinated, and unsustainable as it had been in the past.
After the Chinese economy enters a new normal, quality has gradually become emphasized. Focusing on high-quality development, the Central Economic Work Conference explained the next step of China’s economic development through a series of key words: fiscal and monetary policies, financial risks, the plan of “cutting overcapacity, de-stocking, de-leveraging, reducing costs and improving weak links”, real estate, physical economy, property rights protection, rural reform, and the reform of state-owned enterprises. With the continuous improvement of the quality of all areas, industries and systems in China, future economic development will inevitably be healthy, stable and be resistant to risk.
2. Internet Plus
In March 2015, Chinese Premier Li Keqiang formulated the “Internet Plus” action plan in the 2015 Government Work Report and officially incorporated “Internet Plus” into China’s national development strategy. “Internet Plus” is a concept specifically designed for the transformation of traditional enterprises. It refers to the process of combining the Internet with traditional industries. “Internet Plus” is not simply a combination of the two, but uses information technology and Internet platforms to integrate the Internet and traditional industry to create a new development ecosystem. “Internet Plus” emphasizes integration and win-win situations, helping traditional industries improve efficiency, optimize their service experience, so that information flows faster in the whole society in a more transparent way, and the efficiency of matching and managing social resources is significantly improved. “Internet Plus” is the further practice of Internet thinking, promoting the continuous evolution of economic forms, thereby driving the vitality of social and economic entities and providing a broad network platform for reform, innovation and development. It represents a new social form, that is, giving full play to the optimization and integration of the Internet in the allocation of social resources, integrating the innovation results of the Internet into the economy and society, and enhancing the innovation and productivity of the whole society. It is a new form of economic development with Internet-based infrastructure and implementation tools.
3. The Digital Economy 2.0
The first information revolution was based on information technology. In 1946, the American physicist William Shockley invented the transistor which promoted the invention and development of personal computers. The second information revolution was developed on the Internet (especially the mobile Internet), with new economies being built on cloud computing, big data, and artificial intelligence, leading to the development of the digital economy 2.0. China is entering the digital economy 2.0 era from the digital economy 1.0 era. A new economy will emerge in the digital economy 2.0 era: the platform economy.
At the 2016 G20 Summit in Hangzhou, the development of the digital economy was put forward as China’s primary avenue to promote innovation; it received a positive response and support from all in attendance. In 2017, the “digital economy” was first written into the work report of the Chinese government: “Promoting the growth of the digital economy, allowing enterprises and the people to benefit.” In fact, the “Internet Plus” and the “digital economy” should be considered in the same vein. “Internet Plus” emphasizes connectivity, while the “digital economy” emphasizes that there is beneficial output as a result of being connected. With the in-depth development of the fourth industrial revolution (which is represented by Internet industrialization, industrial intelligence, and industrial integration), the digital economy business ecosystem has seen the integration of cloud computing, big data governance, artificial intelligence, the Internet of Things, and blockchain. The era of digital economy 2.0 is symbolized by digitization, and is profoundly affecting emerging formats such as new retail, new physical economy, information consumption, and Internet Plus movies, thus reshaping business models and bringing innovation to industry.
4. Economic Growth and Environmental Protection
The report of the 19th National Congress of the Communist Party of China stated, “Building an ecological civilization is a thousand-year-long plan for the sustainable development of the Chinese nation. We must establish and practice the concept of ‘Clear waters and green mountains are as valuable as mountains of gold and silver’, adhere to the basic national policy of conserving resources and protecting the environment, treating the ecological environment like a living being, coordinating the management of natural resources, and implementing the most stringent ecological environmental protection system.” It also emphasized the need to promote green forms of development and lifestyle, to resolutely follow the path of civilized development by production development, affluent life and good ecology, and to build a beautiful China to create a good production and living environment for the people and contribute to global ecological security.
5. Structural Adjustment and Regional Development
Since the reform and opening-up, China has made a series of policies and measures including the preferential development of light industry, the expansion of high-end consumer goods imports, the strengthening of basic industries and infrastructure construction, and the vigorous development of the tertiary industry. These policies ensure that development will be coordinated to create an optimized and upgraded economic structure. However, China’s development is concentrated in certain areas creating an imbalance, which manifests itself in two areas. The first is the imbalance between the eastern coastal areas and the central and western regions. The second is the imbalance between the south and the north. In order to remedy this situation, the state implemented the “Western Development Strategy” and the “Rise of Central China Plan” to balance the development between all regions. Then, in order to revitalize the northern economy, the state has increased its support for the economic development of the Bohai Rim region. Taken together, these initiatives have promoted coordinated development and comprehensive reforms across the country.
Cultural Notes
Western Development Strategy
The Western Development Strategy is a policy by the Chinese central government with the purpose to “use the surplus economic development capacity of the eastern coastal areas to improve the economic and social development in the western region as well as consolidating China’s national defense.”