The key to promoting structural adjustment and transforming economic development mode

For a long time, the extensive growth mode has been a prominent issue in China’s economic and social development. This is mainly manifested in the low level of industrial technology, low value-added products, weak enterprise competitiveness, and the over-dependence of rapid economic growth on the expansion of investment and consumption of resources. As a result, there are problems of inefficiencies, relative low benefits, increased pressure on resources and the environment, slow industrial upgrading, and unsustainability of development. Practice shows that the traditional extensive growth mode has been unsustainable. Therefore, since the 1990s, promoting structural adjustment and transforming the mode of economic growth have always been the focus of China’s economic work. The Ninth Five-Year Plan proposed to readjust the industrial structure and implement the mode of economic growth transferring from extensive mode to intensive mode. The Tenth Five-year Plan proposed that the economic structure be strategically adjusted with the focus on improving economic efficiency. However, from the actual situation, the effect of structural adjustment is not satisfactory. The situation of “high input, high consumption, high growth and low efficiency” has not been fundamentally changed. One of the fundamental reasons is that the capability of independent innovation of enterprises is not enough. To achieve the transformation of the mode of economic growth, we must improve the capability of independent innovation of enterprises.

Through independent innovation, we should upgrade the technical content and added value of traditional industries, guide the transfer of various types of production factors to emerging industries, foster new economic growth points, and expand new space for survival and development. Through independent innovation, we should improve the utilization efficiency of various types of resources and realize the transformation from a resourceconsuming economy to a resource-saving economy. Through independent innovation, we should increase the level of environmental governance and protection so as to achieve the growth shift from a growth at the expense of the ecological environment to a harmony between man and nature. This is a fundamental way out for China’s sustained and healthy economic and social development.

Based on the national goal of building an innovative country for the next 15 years, our essence is to fundamentally solve the problem of China’s social and economic development. For 30 years since the reform and opening up, China’s socialist construction has made remarkable achievements. From 1978 to 2007, China’s GDP grew at an average annual rate of more than 9.5%. In 2007, its economy was the third largest in the world, with the total volume of import and export transactions also among the third largest in the world. However, for a long time, in order to raise the level of economic development and industrialization as soon as possible on the basis of relatively weak science and technology, China took the path of extensive economic growth by mainly relying on high input and high accumulation of productive forces, such as labor, natural resources, and capital. The basic national conditions, such as population, resources, and environment in China, determine that it can no longer maintain the extensive and rapid economic growth simply by expanding investment and increasing resource consumption and environmental costs.

Improving the capability of independent innovation is the main driving force and an important way to carry out structural adjustment. After longterm efforts, the economic structure of China has undergone a positive change. However, with the rapid economic growth and the rapid expansion of its scale, China’s economy is facing a growing number of constraints from three main areas.

Ecological and environmental constraints

It has been increasingly difficult for the increasingly fragile ecological environment to bear the blind expansion of extensive mode of economic growth. The ecological environment in China is obviously vulnerable. The huge population, the intensified activity intensity, the requirement of improving the quality of life, and the carrying capacity of the ecological environment each constitute a sharp contradiction. Compared with the early 1980s, China’s ecological and environmental issues have undergone profound changes in terms of type, scale, structure, and nature. Not only has the total amount of sewage increased, and the scope of ecological damage expanded but the problems of ecology and environment have become more complicated with more threats and risks. The impacts on ecosystems, human health, economic development, social stability, and even national security have become even more far-reaching. At present, China has entered a stage of large-scale ecological degradation and compound environmental pollution. Under the circumstances that the economy has entered a period of rapid development, the pressures on the ecological environment will further aggravate and become the main constraints of sustainable economic and social development in China, of coordinating the relationship between man and nature, and of the peaceful development.

 
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