Text | Liu Shijin, former deputy director of the Development Research Center of the State Council
China's economy is now in the stage of shifting from high-speed growth to high-quality development, and a new round of technological revolution is also in the upward stage, and the two levels intersect. In this context, new qualitative productivity has emerged. In order to enhance China's ability to enhance this ability, it needs to give full play to its own advantages in the framework of the new technological revolution, make up for the shortcomings in the field of basic research, create a good cultural atmosphere of innovation, and provide institutional and mechanism guarantee for innovation.
China in the framework of the new technological revolution
Three main benefits
To enhance the innovation capacity under the framework of the new technological revolution in all aspects, it is necessary to make full use of China's current important advantages contributed by a number of factors. Here we will explain it from three main perspectives.
(1) Super-large-scale market advantages. First, China has a unified market of 1.4 billion people. In terms of scale and integrity, such a market should be unprecedented. The size of the population does not necessarily mean the unity and integrity of the market. Some countries also have large populations, but they have not been able to form a unified market in the true sense of the word, but there is a certain degree of market segmentation in the geographical sense. China's large market is actually equivalent to a complete economic complex of tens or even hundreds of millions of people.
In this context, China's overall market can be further divided into a middle-income group of more than 400 million people and a middle- and low-income group of 900 million people. The 400 million middle-income group is a huge market, but the more potential is the 900 million low- and middle-income group, some of which are entering the middle-income group.
Previously, the report of the 19th National Congress of the Communist Party of China clearly stated that from 2020 to 2035, the proportion of middle-income groups should be significantly increased, which means a huge increase in the scale of market consumption - which is what we have talked about in the past. However, it should be emphasized that the rapid growth of supply-side investment can accommodate the competition of more enterprises, especially large enterprises, in the market. Other smaller economic complexes often fail to do this, and their capacity in the domestic market is relatively small, and they need more support from the international market; The large domestic market can provide more opportunities for trial and error for companies by competing with each other.
On the other hand, fierce and frequent domestic competition may bring about the problem of "overcapacity", which is also a hot topic of discussion recently. Recently, a popular term in China is called "juan", which means that the competition is fierce. The sheer size of China's domestic market offers the possibility of intense competition. To a certain extent, "volume" can promote technological breakthroughs, and technological breakthroughs will achieve high-quality development of production.
It should be noted that there are some controversies on this issue, such as the issue of duplicate construction. In essence, the market economy means that there are more than one competitors, and there is a possibility of duplicate competition in more than one, and the market economy can be said to be duplicate construction to a certain extent. So for an industry, especially an industry in the rising period, only through competition can the competitiveness be enhanced. Enterprises that have passed the domestic competition in China generally do not perform badly internationally, and they often perform quite well. This is actually something that has been proven in practice in China.
In recent years (2019-2023), China ranks first in the world's clean energy investment changes
(2) Late-mover advantage and new technology application joint linkage. At present, the general per capita income level of advanced economies is more than 30,000 US dollars, and the per capita income level of China is 13,000 US dollars, which is lower than that of developed countries. But it also means that in China, there are relatively more opportunities for growth in new technologies and products, and there is room to reduce costs through economies of scale.
For example, in the fields of the Internet, mobile phones, and new energy vehicles, many Chinese consumers' first phone is a mobile smartphone, and the first car is a new energy smart car...... They are buying new products supported by new technologies. Compared with many countries, including advanced economies, these products have greater growth opportunities and market space in China.
The cost of new energy in China is decreasing
China's global wind power, photovoltaic and energy storage battery industry chain pattern
(3) The ability to follow technology and engineering. In recent years, China's technological development has been in the stage of catching up and following, absorbing, digesting and applying advanced technology and forming a strong ability to follow and engineer.
This is not just a simple imitation, but also includes innovation and reuse, especially a good IP can eventually form a competitive product in China, which benefits from a relatively complete industrial supporting and supply chain system. For example, the cost of renewable energy in China has fallen quite rapidly in recent years; In addition, China's exports of the "new three": new energy vehicles, lithium batteries, solar cells have actually formed a new industrial chain. China has competitive advantages in most of these aspects, and its industrial layout is relatively complete.
China's shortcomings in the architecture of the new technological revolution
The shortcomings of China's economic field are manifested in many industries as the phenomenon of "stuck necks" in some key production links, and more in the field of basic research from 0 to 1, such as the chip and software industry, but the bigger shortcomings are still in the field of basic research and original innovation. Take the field of artificial intelligence as an example, two years ago, the gap between China and the world in terms of computing power and data was not large, but especially in the past six months, the gap between China and the world in computing power has been rapidly widened, for example, NVIDIA's H100 and B100 chips have reached 100,000 or hundreds of thousands of applications in generative AI. More importantly, there is a gap in algorithms, and the original algorithm models, ideas and methods are mainly from some enterprises and institutions such as Google, Intel, and OpenAI in the United States.
If we want to break through basic research and innovation from 0 to 1, we need to cultivate a strong culture of innovation and the original intention of scientific discovery, and we need more idealism that goes beyond utilitarianism and wants to do something for the human world. However, at present, both the government and enterprises are still short-term utilitarian, and there is still a certain gap in the culture, institutional mechanism, and policy of science and innovation. In such a situation, it seems difficult to produce something truly significant, both in terms of science and innovation.
Strengthen the framework of the new technological revolution
Innovative culture and mechanism building
The first is to recognize, protect and promote the entrepreneurial spirit. In the final analysis, innovation is actually a kind of entrepreneurial spirit, and there are some people who have the will and ability to promote one thing. In view of the problems of unstable expectations and lack of confidence, a major theoretical and policy breakthrough is needed. Second, the classification of enterprises should be adjusted to promote the equal development and fair competition of different types of enterprises in China, and all types of investors have their own characteristics and capabilities.
Second, we should attach importance to giving play to the role of large science and technology enterprises. For example, from the perspective of international experience, generative AI requires a large amount of capital investment, and China's large platforms, technology companies, Internet engineering and other enterprises should have more room for investment and growth. The term "regulatory traffic light" needs to be improved, especially in the areas of the Internet and the digital economy. A "green light" means that something needs to be approved before it can be carried out, but for innovation, approving a project that has not been done before can be problematic in itself. Innovation is difficult to predict and plan, so regulation should still be based on the negative list.
The third is to strengthen cutting-edge exchanges, follow-up and transcendence in the field of basic research. On the one hand, there is talent. In order to attract and gather world-class scientific and technological talents in the Guangdong-Hong Kong-Macao Greater Bay Area, it is especially necessary to form the necessary material and technical supporting facilities, cultural and scientific spirit, institutional mechanisms and policy conditions. On the other hand, there is enterprise and institution building. Consideration can be given to establishing some scientific research institutions similar to OpenAI, advocating idealism and long-termism, transcending short-term utilitarianism, cultivating scientific ideals and scientific spirit, attaching importance to imagination and creativity, and gradually forming a cultural inheritance and corresponding evaluation and incentive mechanism that is truly conducive to major and original innovations at the frontier of science. We will do a good job in the dual construction of actual technology investment and innovation culture atmosphere, and help the innovation momentum under the framework of the new technological revolution to be continuously and comprehensively exerted in China.