“Sina-US Innovation Times Reported by Youping Wen, Feb. 26th , 2018”. 2018 is the year when China enters a new era to promote its economy from high-speed development to high-quality development. At the beginning of the new year, Zongjian Chen, the new economy expert and founder of Porter Corporation (ULNV) told reporters from Sina-US Innovation Times in a new year special interview. Mr. Chen said: Looking into 2018 and even further future, China’s economy transformation and development is now at a critical diversified trend, which means China’s economic development is everything but single trend. At this regard, Mr. Chen suggested that economists should use the form of L,V,U,W with caution to describe the characteristics of China’s economic transformation, however, the economic cycle law and industry subdivision law are required to analyse the future economy development via multi-angle and to grasp the direction for innovation breakthrough. Combining all those factors together to fully understand China’s economic transformation from high-speed development to high-quality development.
Critical Moment for China’s Economic Adjustment
How to understand China's current economic development? Zongjian Chen told reporters that this should, first of all, be conducted in full compliance with the cyclical laws of China’s economic development and even the world’s economic development. Mr. Chen believes that at present, China’s economy and even the world’s economy are at an economic cycle, which is the 10-year sustainable adjustment cycle of economic structure adjustment and economic system that arose from US subprime mortgage crisis in 2008 to the bottoming out of the world economic crisis in 2009, and till now. This adjustment cycle is about to return to normal. As a result, China’s economic development is currently at an critical juncture for the adjustment of the economic cycle from 2010 to 2020.
In fact, the 10-year adjustment period from the financial crisis till now, various economic and negative shocks have emerged from time to time in the Chinese economy and even in the world’s economic development. The first was the global economic crisis from 2008 to 2009, followed by The European sovereign debt crisis in 2012, and the systematic adjustment of global commodity prices from 2014 to 2016, the most important is that the effect of the US tax cuts/tax exemptions from 2017 to 2018 will cause global economic imbalance, which may lead the global economic to the patterns of extremalization and malignization. However, we have many officials and experts have not attracted enough attention on this issue, and send out some misleading prediction on future’s economic development.
During the adjustment of the global economy, China has made its corresponding adjustments on economic policies. Firstly, when the global financial crisis bottomed out in 2009, driven by a package of stimulus policies with four trillion yuan, the economic growth rate in the first quarter of 2010 exceeded 10%, after which the stimulus intensity gradually weakened and withdrawn. Subsequently, after 2012 and 2013, the new normal state of economic growth with little fluctuation in China's economic transition emerged, and the growth rate is gradually falling. Judging from the overall policy adjustment, the overall economy is still undergoing a structural adjustment when it is gradually stable at the bottom, which has pushed many new economic industries to new growth, increased the proportion and vitality for the overall economy, and other industries continue to look for new growth platforms and methods. It can be said that as these crises and accompanying continual resistance subside, the world economy has risen and provided more room for adjustment policies to solve long-term problems regarding economic, social, and environmental progress that hinder sustainable development.
Based on this profound understanding of China's economic cycle adjustment over the past 10 years, Zongjian Chen believes that China's economic cycle adjustment has reached a critical moment of positive turning point. The most distinctive feature is that China has ushered in a new stage of historical development, that is, socialism with Chinese characteristics and China’s economic development has entered a new era. The basic feature is that China’s economy has entered a period of high quality growth from high-speed development period. This is an important turning point in China's economic development, and it is also an important resonance for China's economic development to conform to the laws of the economic cycle.
Zongjian Chen emphasized that this kind of historical development of China’s economic development, which is in the midst of the continuous adjustment cycle brought about by the world economic crisis and the new era of socialism with Chinese characteristics, is essentially the embodiment of China’s economic cycle. 2018 is the 40th anniversary of China's reform and opening up, 2019 is the 70th anniversary of the founding of the People's Republic of China, 2020 is the 100th anniversary of the communism's entry into China, and 2021 is the 100th anniversary of the founding of the Chinese Communist Party. The Chinese people are welcoming an era of unprecedented confidence and diligence. Base on which, China would also launch corresponding reforms and economic development policies, so as to promote the positive development of all walks of life.
After earnestly studying and teasing out, Zongjian Chen discovered that the 30-year economic cycle of China’s reform and opening up not only corresponded to the third industrial revolution in the 1970s, but only took 30 years to realize rapid development and achieved nearly 300 years of results of various period for the course of modernization of western countries. This is a great miracle of China's economic cycle and even the world economy development cycle.
Chen Zongjian said that China’s economic cycle has now reached a resonance period of ten years of economic cycle adjustment, and this adjustment cycle happens to locate in the the ten-year range of adjustment between 2010 to 2020, which is the result of the first industrial revolution, the second industrial revolution, and the third industrial revolution, which are 300, 200 and 100 years away from now respectively. The resonance period is of great significance for us to study the law of China's economic cycle development and to know how to fully grasp this economic cycle for steady and rapid development of the new round of economic cycles in the future. After 10 years of structural adjustment, the future will welcome a better development that would last for several decades and even over a hundred years.
Analyze Future Economic Development from the Angle of Industrial Subdivision
At present, how should we comprehensively judge the trend of China's economic? Many economists or authorities have given different answers. One of the most common views is that comprehensive judgments of China's economic trend is L-shaped instead of U-shaped and V-shaped, however, L-shape is a period that can not simply go through for one or two years.
In this regard, the new economic expert Zongjian Chen suggested that economists, authoritative figures, etc., should be prudent to use simple trend patterns to describe the current multi-level development of China's economic transformation. Mr. Chen believes that the adjustment of a country’s economy cannot use only a simple symbol to judge, but symbolic forms, because it is more of a description to demonstrate the subdivision of a country’s economic development. It shows that a country’s economic development is a Quantity-to-quality multi-level trend. Otherwise, it can not only mislead the citizen toward a wrong judgement, but also mislead a country’s decision-making department, all of which would cause huge negative impact to the society.
Zongjian Chen specifically analyzed that the past 30 years of economic development in China's reform and opening up was mainly driven by real estate, infrastructure investment, and export, and the symbolic forms used to describe the development trend may relatively easy and simple. From now on, after China’s economic development has undergone a decade-long cycle of adjustment, we should analyze the Country’s future economic development through the trend of different economic types and viewed from the perspective of industry subdivision.
Obviously, comprehensively judging China's current and future economic development trend can not make it explicit simply via a single symbolic shape, Zongjian Chen also said that the ultimate purpose of the research on the different trends of these different symbolic shapes are to enable the national government to formulate a series of targeted reform strategies, directions, application methods, policies and goals for different types of economic and industrial sectors. In this way, we can truly realize the structural adjustment of the country’s economic development and give priority to supporting the development of China’s real economy. In conclusion, one policy can not be applied for all situations.
As China's economy is at the critical juncture for entering into a new era, Zongjian Chen suggested that when formulating any social, economic, and human development policies, the state must firstly study and follow the laws of the development of the socio-economic cycle and hold the dominant and regulatory power in the economic cycle market instead of going with the stream for whatever it is. Zongjian Chen emphasizes that when economic cycle develops to a climax, we must actively adjust our country’s systems, mechanisms, and policies, social development plans, and take the initiative for industrial transformation and upgrading. We should also vigorously carry out policies regarding talent, capital, technology and taxation of corporate development , etc., so as to avoid passive adjustment when the problems go severe. In 2008, Zongjian Chen proposed research on relevant think tanks and proposed to the state to "Develop new industries, Encourage new models, Study new currencies, and Introduce new tax systems...".
Direction for Breakthrough in the New Era of New Economy
Faced with the imminent ending of this round of world economic cycle adjustment, we have entered the new era of the Chinese economy. What will be the driving force behind the growth of high-quality development in the future? In this regard, as an innovative entrepreneur, Zongjian Chen has fully understanding at his own corporate practice.
Zongjian Chen believes that consumption will become the main driving force for economic growth during the high-quality development period from now till a certain period in the future, with medium and high-end, personalized and diversified consumption becoming the mainstream, and middle-income groups becoming the main players in stimulating consumption; from an industry perspective, growth will be further promoted depending more on new industries such as new products and new forms of business; from the perspective of factors, economic growth, on the one hand, depends more on the new production factors such as science and technology, human capital, and information data, and on the other hand, it also requires the increase of efficiency on labor, capital, land, resources, energy, and the environment. All these constitute the main direction of new economic development in the new era of China's economic development.
According to Zongjian Chen , in the direction of the new economic development in the new era, China should attach great importance to the promotion of innovation and transformation, which are deemed as the transformation of the old and new economic growth forces. The old economy is cleared and upgraded and gradually being replaced by the new force gradually. This will in turn foster new economic growth points.
The key to fostering new economic growth lies in innovation. Zongjian Chen believes that we are deeply involved in a period of profound historical transformation. Since 2020, we will enter the era of smart new economy. This is an era where global market and model taking the predominant position; this is an era to embrace Blockchain, Internet of Things, Big Data, Cloud Computing, Smart Technology, and Digital Finance. Under the new era of globalization, the growth of consumption led by innovation model is the breakthrough direction of China's economy .
Zongjian Chen believes that in order to correctly navigate direction to make breakthrough in the new era for new economy development, one of the most important points is to fully adapt to the development of modern relations of production and adjust the allocation of new economic production resources. He said that because of the advanced productivity tools such as the Internet, big data, cloud computing, the Internet of Things, and artificial intelligence, we are now in the age of information and big data, various social resources and data are transparent and open to all. Facing the open and transparent competition in social resources, it is necessary to guide all walks of life in society to adapt to this situation, and to vigorously use the new productivity of the Internet, big data, new technologies, and new media to adjust our production relations.
Zongjian Chen also emphasized that through the innovation and soundness of the legal system, we should fully guarantee the socialization and marketization of production resources and ensured the continuous development of new economic innovation capabilities. Legislation in the past was led by the government, but now the social innovation outrun the legislation. At present, we can innovate our legislation process concerning who should draft, who should file with the related national department, and then enter into market and go through a series optimization process. In this way, social innovation can be guarantee and protected by the legislation, so as to keep promoting social innovation. Therefore, our national legislation must be optimization-oriented, which means it should be transformed from original approach that experts guide the legislation with pure theory to the innovative one where legislation should go through the process from social legislation, to nation files for record and then authorized by experts. In this way, we have changed the modern productive forces and production relations and the allocation of production resources, as well as market- innovation-based allocation right, and then realize the country’s standardization and development. Therefore, the legislation and market application could keep up with innovation process in the whole development course.
Zongjian Chen concluded that the development of China’s economy ultimately comes down to the development of the real economy. He suggested that the central government and local governments should introduce new and more vigorous reform and opening up measures in support of China's real economy for becoming bigger and stronger. In particular, it is very important to establish a public incubation platform in a certain area to build a market-based resources collection platform for entity growth. What is worth looking forward to is that the Central Government of China will soon launch reforms and opening up measures in the financial industry, manufacturing service industry, protection of property rights, especially intellectual property rights, and expansion of imports. This is a major development opportunity for the development of the real economy.