Opinion     

Economic restructuring essential

China Daily, January 23, 2014

• Domestic demand and innovation must be effectively cultivated so they become the drivers of future growth

  Gross Domestic Prerequisite [By Jiao Hiayang/China.org.cn]

  
  
  

  Structural adjustment is an important trend in today's global economy, and since competition in the technological revolution has become increasingly fierce, economic transition and industrial upgrading are essential requirements for China not only to compete in the global economic stage, but to build a moderately prosperous society and step over the middle-income trap.

  Since the international financial crisis in 2008, many advanced economies have already begun structural adjustments to rebuild their real economy and fight recession. For example, the United States introduced the Manufacturing Enhancement Act, and the United Kingdom has increased its investment in innovation and created nine manufacturing innovation centers. Emerging countries, such as Brazil and India, have also introduced their own manufacturing recovery plans. Therefore, it is important for China to cultivate technical innovation if it is to meet the future challenges.

  China's demographic advantage is now at a turning point, and the country can no longer depend on low-cost labor and investment to realize sustainable growth. Data show the working-age population has been declining ever since 2012, and the tendency will continue until 2020, resulting in a constant increase in labor costs and increasing the pressure of an aging society.

  Meanwhile, pollution has reached a level that is beyond the public's tolerance, and the country faces an ever-growing price in attaining sustainable economic growth nowadays.

  While the above factors are pushing the economic transition in China, the transformation and upgrading are expected to solve some tough domestic issues, such as conserving resources, boosting consumption, and lightening the government's hand on the market.

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