At the Central Economic Work Conference held recently, an important task for the new year was deployed: Promote the real economy and develop new economic driving power.
Statistics showed that investment in the manufacturing industry rebounded over expectations in 2016. Yet we cannot be too positive about the sustainability of the trend in 2017. Judging from the driving power, the rebound relied mainly on improving export conditions and investment in infrastructure construction. Moreover, the base for improvement in manufacturing industries’ profits is weak. Private investment also needs further improvement.
In addition, the structural problem of real economy and fictitious economy is still an important issue. To solve the problem, we should seek causes from three aspects: enterprises, finance and local governments.
The development of China’s economy is a result of reform and opening up. Therefore, the protection and improvement of property rights is important. A guideline released by the State Council recently on improving and protecting property rights attracted wide attention. We should take this opportunity to increase enterprises’ confidence and enthusiasm in investment and innovation.
Whether the manufacturing industry can provide driving power for China’s economy depends on the major manufacturing areas.
Guangdong province can take advantage of its policy environment, entrepreneurs and workers to improve product complexity and manufacturing technology. A global leading manufacturing base with Dongguan and Foshan as anchors can be established. Meanwhile, some world-level innovation enterprises can be formed in Shenzhen, as the city has advantages in system, a large immigration population and many innovative enterprises.
The biggest challenges for industrial upgrading in Jiangsu province are how to maintain outside investors, help local entrepreneurs grow and attract more competitive enterprises. The traditional export advantage of Zhejiang province is based on the strategy of “buy nationwide and sell worldwide”. Provincial advantageous industries can be formed with the help of product advantages and entrepreneur resources.
Unlike the three provinces, the future industrial upgrading of Shanghai should be combined with its standing as an international metropolis. Shanghai should further improve its service industry, build itself into an innovative city supported by culture and knowledge, and a world finance center. Instead of product variety, product quality should become the focus.