Synchronization of new industrial revolution and supply-side reform
- By He Yafei
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China Today, March 22, 2016
Opportunities and Challenges of the New Industrial Revolution
The new industrial revolution is a historic opportunity as it allows the growth mode and business patterns of the global economy to be reshaped, the modes of production and lifestyles, the ecological and cultural environment to be renewed and improved. It is a motor that drives the restructuring and economic change in all countries, which requires cooperation and coordination of different stakeholders.
The new industrial revolution has its origins in the digital revolution of the mid-20th century. It is characterized by progress and the merger of new technologies based on big data and the development of the Internet, with the advent of new industrial production methods, new products, and even entirely new industries. Innovation and sharing are defining features of this revolution that are radically changing traditional production, management, and consumption. It is a subversive revolution expected to result in harmonized coexistence between man and machine, but also between man and the environment. We are only at the beginning of this revolution.
What are the opportunities and challenges of this revolution? What relations should be regulated?
The first concerns the relationship between labor and capital. It is increasingly common for manpower to be replaced by automation because of technological progress. Foxconn, for example, once employed millions of Chinese workers but robots are gradually replacing them. The Charoen Pokphand Group has a modern poultry plant that provides two to three million eggs per day for the Beijing market — it employs only a dozen people. This replacement of people with machines will only widen the gap between the return on capital and labor remuneration. However, China must develop its manufacturing industry and cannot afford to let it weaken.
The second concerns the relationship between talent and innovation. The capacity of talent and innovation is the core competitiveness in the new industrial revolution, whether in the fusion of new technologies, "Internet Plus", or artificial intelligence. Their development will depend on the talents and their ability to innovate.
New products and new industries are changing very quickly, upsetting the old production and value chains. Research and development, production, marketing, and consumption now all proceed on digital platforms on a global scale, which can be shared by all. Internet + 3D printing can make anyone a "designer + producer + consumer," presenting an economic proposition of the supply side. Supply and demand must be coordinated, both must adapt to and support each other. Focusing solely on demand does not address the current situation and will not work in the future.
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