B Increase of Investment in Human Capital

In the context of the decline of working-age population and the speedup of aged tendency of population, fundamental factors, such as increasing investment in human capital, strengthening high-end skill training and higher education system construction, and releasing population quality dividend, are adapted to the changes in the supply and demand of labor force to accelerate the cultivation of new competitive advantages.

Establishment of Modern Educational System

It is important for China to make innovation in the content and methods of teaching by structuring the whole teaching process in a way that addresses scientific spirit, creative thinking, and creative ability for vigorous cultivation of innovative talents. China should promote connotative development of higher education with a focus on talent fostering, improving quality of education, strengthening the innovation ability construction of universities and colleges, and supporting the participation of universities and colleges in the construction of national innovation system. In addition, China should accelerate the construction of modern occupational education, enhance the practicability of occupational education, cultivate a large number of technical talents, and strengthen the occupational skill training and job skill training for migrant workers. Furthermore, China should strengthen the inclusiveness and fairness of basic education, continuously increase financial investment in basic education, consolidate and improve compulsory education, expedite the popularization of preschool education and high school education, improve the quality of basic education, and narrow the gap between urban and rural education.

Speeding Up Reform of Educational System

It is advisable to provide universities and colleges with more autonomy in running schools, encourage the establishment of private-owned, small-size, high-level research institutions, and lift the limitation for the cooperative

Strategie Choice in Adjustment and Transition 29 operation of schools between foreign first-class universities and colleges and domestic ones. In addition, it is necessary to promote a number of local universities and colleges to be transformed into those focusing on applied technology or occupational education. Besides, it is important to advance the reform of enrollment and examination system for higher education. It is also of significance to implement the evaluation system combined with academic achievements examination and comprehensive quality in high school, so as to reverse the trend of exam-oriented education and establish and improve multiple admission mechanisms.

Reform of Talent Flow Mechanism

It is necessary to improve the position management of the staff to eradicate barriers to the flow of talent system and promote the rational flow of researchers in scientific research institutions and enterprises. It is important to eliminate the obstacles that flow inside and outside of the system, establish the “revolving door” mechanism with Chinese characteristics, and encourage the flow of professional talents in academic institutions, government departments, enterprises, and non-profit organizations. Besides, it is advisable to perfect the incentive mechanism for talents to go to the basic and arduous positions for startup of business. It is also important to promote classified reform of talent evaluation mechanism and titling system.

Stimulating Potential of Human Capita!

It is important for China to create a culture that encourages innovation and tolerates failures in order to encourage innovative talents to develop innovation and startup business. In addition, it is necessary for China to reconstruct the incentive mechanism for entrepreneurial activities, with a view to respect and protect entrepreneurs’ personal property rights and stabilize the expectation and confidence of property owners. Besides, it is also vital to expedite the urbanization of migrant workers, especially the second generation of migrant workers, to make them at par with the urban people and to stimulate their enthusiasm for economic development and entrepreneurial activities.

C Advancing Rise of Quality and Efficiency and Upgrade in Industries

After entering the new stage of development, the fundamental way to tap the growth potential of China’s economy lies in the revitalization of real economy, which, in turn, depends on upgrading the quality and efficiency of industries for improving industrial value chain and raising added value of products.

Accelerating Cultivation of New Economic Growth Points

It is important to adapt to the new changes of international industry competition; accelerate the cultivation of emerging industries in the field of industrial robots, information network, integrated circuits, new energy, new materials, and biological medicine; promote the development of intelligent manufacturing, distributed energy, online shopping, Internet banking, and other new manufacturing and service formats; and encourage enterprises to make progress in R&D, design, standards, branding, and supply chain management. Besides, China needs to promote the plan of “Made in China 2025”, encourage qualified enterprises to upgrade according to “Industry 4.0”, carry out the “Internet plus”, and make optimum use of the latest achievements and advanced intelligent manufacturing technology by means of information technology revolution, advance upgrade of manufacturing quality, and efficiency. By 2025, China should make its overall manufacturing reach world level, with the establishment of world’s leading technology system and industrial system.

Speeding Up Transition and Upgrade of Traditional Industries

As traditional industry is still the main battlefield for economic development, China should promote structural tax-cut and implement inclusive taxation policy in an effort to reduce the burden of enterprises. Besides, China should further promote the integration of manufacturing industry and the Internet, accelerate the pace of technical innovation, establish a stable high-skilled staff team, and enhance the value creativity and market competitiveness of enterprises. It is advisable for China to make comprehensive use of economic, legal, and administrative means; accelerate the elimination of traditional heavy chemical industries which are prone to have high energy consumption, high emission, and low added value; improve access standards in terms of environmental protection, energy consumption, and technology; speed up technical progress, management innovation, industrial restructuring, and layout optimization; and encourage the transnational management of heavy chemical industry. It is also of significance to improve the quality of labor, enhance human capital accumulation, and encourage traditional labor-intensive industries to transform its operations into manufacturing and service integrated with labor, knowledge, and skills; these factors will help advance the transition and upgrade of traditional labor-intensive industries and processing trade.

Establishment of Market Clearing Mechanism for Excess Capacity

China should formulate enforcement regulations related to of bankruptcy and implement it as soon as possible, so as to stop transfusion of fiscal funds

Strategic Choice in Adjustment and Transition 31 and bank capital into “Zombie Enterprises” (unprofitable and debt-laden enterprises backed by investors or government) and release the idle resource. Regarding the institutional obstacles against the exit of enterprises, China should accelerate the promulgation of instruction, specific policies and measures on personnel placement, corporate debt cancellation after verification, asset disposal, bankruptcy reorganization, and corporate restructuring. Besides, China should release financial support policies conducive to clearing excess capacity and raise special funds used for solving problems of personnel placement and debt disposal in clearing excess capacity. It is also advisable for China to actively explore the market-oriented means of clearing excess capacity, such as establishing national market for overcapacity transaction, allowing cross-regional transaction of productivity index on the basis of rational distribution of overcapacity exit index.

Quickening Development of Producer Services

Productive service industry has become a key link to improve the added value in the manufacturing industry and production efficiency in the service industry. It is important to focus on encouraging the development of financial insurance, business service, technology service, information service, and creative production services; expedite the development of productive service sectors of R&D, design, standards, logistics, marketing, branding, and supply chain management; increase the added value, knowledge, technology and human capital content in the manufacturing industry; keep up with the new trend of service industry transfer and accelerated development of service outsourcing worldwide; and actively and steadily expand the range of opening up of service industries, as well as undertake international service transfer and service outsourcing in software, telecommunications service, financial service, and management consultation.

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