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Development overly dependent on investment is not sustainable, Premier says

Updated: Sep 1,2017 4:43 PM

Premier Li Keqiang said that a development approach overly dependent on investment projects is not sustainable in China anymore, so an innovation-driven approach must be taken.

At the State Council executive meeting on Aug 30, he said over-dependency on investment can decrease the marginal effect in the economy as well as create contradictions and risks, as China has become a middle-income country and is involved in the middle- and post-industrialization.

That is why China must turn to innovation for development, he said. It was the third time in nine days that the Premier mapped out plans for innovation, after his visit to the Ministry of Science and Technology on Aug 22 and the State Council executive meeting on Aug 23.

The Premier urged government officials at all levels to change their mindset and work harder to promote innovation in various industries, while not forgetting to promote effective investment at the same time.

A decision was made at the meeting to introduce the reforms that have been tried since last June in some regions in order to promote innovation throughout the whole country. Premier Li said innovation will transform industrial and corporate structure, which is key to shifting the development approach.

“In addition, innovation should also be involved in major investment projects and infrastructure construction,” he said.

Innovation environment

“Creating a sound environment is the main approach we have taken in recent years to promote innovation,” said the Premier.

“The government should push forward the reform with persistence in streamlining administration, delegating power to lower levels, enhancing regulation and improving services, for a better environment for innovation,” he added.

“There was an opinion a few years ago that priority should be given to expanding investment to counter economic downward pressures. But we did not choose that way,” he said. The government function reform over the years has played an institutional role in cultivating a good market and stimulating social creativity.

Related statistics show that the number of enterprises registered every day has increased from 13,000 to 17,000 since the reform started.

The reform of streamlining administration and delegating power is not unloading burdens. It is a way to limit government interests and shift the focus to regulation over the whole process of business operations, the Premier said.

The executive meeting on Aug 30 decided to give stronger support to micro, small and medium-sized enterprises in carrying out innovation, build a one-stop services system for sharing information in investment and financing, support financing to affiliated enterprises with accounts receivable acquired from large-size enterprises as mortgages, and develop new patent pledge financing models.

Premier Li said more measures should be rolled out to break bottlenecks hindering innovation-driven development and create a better environment.