Taking productivity improvement as the main driving force for the development of the new normal


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Recently, in the context of the slowdown of my country's economic growth, some scholars have published research results that believe that productivity improvement has made little contribution to my country's past high-speed development, and the slowdown in my country's productivity growth in recent years is worrying. Contrary to this view, we have found through a large number of data calculations that in the past 30 years of rapid economic growth in my country, the increase in productivity did not make a small contribution, but made an important contribution; in recent years, the rate of increase in my country's productivity has slowed down, which is a success. The regular phenomenon generally experienced by catch-up economies is a sign that my country's economy is gradually approaching the world's technological frontier and becoming mature.

Recently, in the context of the slowdown in China's economic growth, some scholars have published research results that productivity growth has contributed little to China's previous high-speed development, and the slowdown in China's productivity growth in recent years is worrying. Contrary to this view, we have found through a large number of data calculations that in the rapid growth of our economy in the past 30 years, productivity growth has not contributed little, but has made an important contribution. The slowdown in China's productivity growth in recent years is a regular phenomenon commonly experienced by successful catch-up economies, a sign that China's economy is gradually approaching the world's technological frontier and maturing, and it is also a manifestation of China's economic development reaching a new level. However, this also reminds us that in the future, we should fully release the potential of productivity improvement through comprehensive deepening reform, so that productivity improvement will become the main driving force of economic development under the new normal.

Rapid productivity gains are one of the reasons for China's economic miracle

The level of productivity is the core expression of the quality of economic development. In China's economic growth miracle over the past 30 years, the continuous increase in factor input is the primary driving factor, and productivity improvement has also played a crucial role. Estimates show that from 1978 to 2013, China's productivity increased by an average of 3.6% per year, and its contribution to economic growth reached 37%. The research of some foreign scholars also supports this conclusion. For example, research by Professor Perkins of Harvard University and others found that from 1978 to 2005, China's productivity growth averaged 3.8% per year, contributing as much as 40% to economic growth.

China's rapid productivity improvement is mainly due to technological catch-up and cross-sectoral flow of factors. First of all, the huge gap with the technological level of developed countries allows China to improve its technological level at a lower cost, risk and faster speed. In the process of technological catch-up, reform and opening up have played a huge role. The introduction of foreign investment and multinational companies has enabled China to learn advanced technology and management experience while using foreign capital; Opening up to the outside world has not only expanded the international market and deepened the division of labor, but also improved the technical level of imported intermediate inputs and capital goods, and improved the overall technical level of export commodities. Second, the flow of factors of production from low-productivity agricultural sectors to high-productivity non-agricultural sectors (especially manufacturing) is an important source of productivity gain. The study found that one-fifth of the increase in labor productivity over the past 30 years came from this structural change.

The slowdown in productivity growth is a sign that economic growth has reached new levels

Since the international financial crisis, the average annual growth rate of China's productivity has decreased by more than 30 percentage point compared with the average of the previous 1 years, and there have been signs of increasing the decline in the past two years. How do you view this phenomenon?

In recent years, China's productivity growth has slowed down, which coincides with the law of economic development of successful catch-up economies in the world, and is a regular phenomenon that economic development has reached a certain level. After comparative analysis, we found that: First, developed countries such as the United States that are at the forefront of technology have a relatively stable rate of productivity growth, which has remained at about 1%. Second, in the development stage when the per capita GDP reached about 10000,1960 international yuan, Japan, South Korea and other latecomer countries have experienced a shift in productivity growth from a higher rate to a lower speed. Japan's productivity growth in the high-speed economic growth period from 1973 to 5 increased by an average of 58.1973% per year, and then began to decline sharply, and even showed negative growth from 1980 to 1980. From 1990 to 3, South Korea's productivity growth averaged nearly 1 percent per year during its high-growth period, and then fell back to less than 1980 percent. Data analysis shows that as the level of development increases, the technological level of successful catch-up economies gradually approaches that of developed countries, and the rate of productivity growth generally slows. Especially when the income level is close to the high-income threshold and the economy is shifting from high-speed growth to medium-speed growth, this regularity is more obvious. The deep-seated reason is that with the improvement of the level of development, the latecomer advantage of developing countries in technology and the space for factors to transfer from low-productivity sectors to high-productivity sectors have gradually narrowed, and the pace of technological catch-up and factor transfer has slowed down accordingly. China's productivity increased at an average annual rate of more than 2007% from 3 to 2007, and fell to about 2011.1% from 6 to <>, and the trend of change was basically the same as that of Japan, South Korea and other countries. This shows that the decline in the rate of productivity growth in China is in line with the general law of the development of successful catch-up economies, and is the symbol and prelude of the economy from a state of rapid catch-up to a mature state. At the same time, it also shows that China's economic development has entered a new normal and is evolving to a stage with a more advanced form, a more complex division of labor, and a more reasonable structure.

In addition to the regular factors of latecomer catch-up and economic development entering the new normal, there are some secondary regularity factors and China's own special factors that have led to a slowdown in productivity growth. The former is mainly due to the fact that productivity growth is usually low during economic downturns, that is, productivity growth is pro-cyclical; The latter is mainly the large-scale investment stimulus policies implemented in response to the impact of the international financial crisis in previous years, which to a certain extent exacerbated overcapacity in some areas and led to a certain decline in the speed of productivity growth.

China's productivity growth has slowed down in recent years, which is fundamentally different from the situation in some Latin American countries. Some Latin American countries fell into a debt crisis in the 20s of the 80th century, long-term stagnation of economic and social development, a sharp decline in the rate of productivity growth, and fell into the "middle-income trap". At that time, the per capita GDP of these countries reached only about 4000,10000 international dollars. At present, China's per capita GDP has reached about <>,<> international yuan, which has clearly exceeded the stage that Latin American countries were at when they fell into the "middle-income trap". Therefore, the characteristics of China's current slowdown in productivity growth are different from those of Latin American countries, and similar to successful catch-up countries such as Japan and South Korea. Looking deeper, the reasons why Latin American countries fell into the "middle-income trap" are also very different from the reasons for the decline in the rate of productivity growth in China. The long-term rigid implementation of import substitution development strategies is an important reason why Latin American countries have fallen into the "middle-income trap". Import substitution has reduced the driving force of domestic industrial innovation, and the domestic market space of Latin American countries is small, and it is difficult for protected industries to form economies of scale, resulting in slow industrialization, a large number of working people staying in traditional economic sectors for a long time, unable to share the fruits of development, and thus causing a series of serious social problems. The import substitution strategy has also led to a large amount of foreign debt borrowing by Latin American countries, while the efficiency of domestic enterprises is low, and the government fiscal revenue is lacking, which eventually leads to a debt crisis and falls into the "middle-income trap". Unlike Latin American countries, China's industrialization tends to be completed, and the slowdown in productivity growth is a manifestation of economic development reaching a new level. Therefore, the development trend of our country cannot be inferred simply based on the productivity performance of Latin American countries when they fell into the "middle-income trap".

China's economic quality and efficiency upgrading mainly depends on improving productivity

The experience of developed countries shows that although the rate of productivity growth slows as income levels approach the high-income threshold, it does not continue to decline, but remains at a certain level for a long period of time, and can gradually replace slower investment growth as the main driving force for sustained economic development. China's economic development has entered a new normal, the mode of economic development is shifting from scale and speed extensive growth to quality and efficiency intensive growth, one of the keys to economic development is to avoid the rapid decline in the short-term productivity growth rate, and focus on making it replace investment as the main driving force of economic growth. To this end, we should make productivity improvement the focus of leading the new normal, and vigorously open up new ways to improve productivity.

Improve the efficiency of internal resource allocation in manufacturing and service industries. The study finds that the difference in capital output efficiency between China's manufacturing and service industries in the past 20 years is significantly greater than that in developed countries such as the United States, indicating that there is a serious resource misallocation within China's manufacturing and service industries, and there is a lot of room to improve productivity by optimizing resource allocation. The difference in capital output efficiency is not only manifested between industries, but also between different types of enterprises, such as between state-owned enterprises and non-state-owned enterprises, between export-oriented enterprises and non-export-oriented enterprises, between large and medium-sized enterprises and small and micro enterprises, and between eastern enterprises and central and western enterprises. Eliminating resource misallocation and improving the efficiency of resource allocation through deepening reform is an important way to improve the productivity of manufacturing and service industries.

Pay more attention to the survival of the fittest within the industry. Eliminating inefficient and backward enterprises through competition, enabling high-efficiency enterprises to develop and grow, is the source of sustained economic growth under the conditions of market economy. In the past 30 years, with the establishment and continuous improvement of the socialist market economic system, the mechanism for enterprises to enter and exit has gradually taken shape. Studies have shown that in the past 10 years, the survival of the fittest effect has contributed more than 20% to China's manufacturing productivity. Nevertheless, the exit mechanism still has a number of shortcomings. Some "zombie" enterprises have lost their ability to survive, but rely on the "blood transfusion" of the government or banks to survive, so that limited social resources are ineffectively occupied and the efficiency of resource allocation is reduced. Improving the competition and exit mechanism of enterprises is an important way to improve productivity in the future.

Continue to introduce and absorb new technologies. After more than 30 years of rapid development, the technical level of various industries in China has made great progress, and the technical level of some industries and enterprises is close to or reaches the international frontier. However, on the whole, there is still a big gap between China and the world's cutting-edge technology level. The latest OECD estimates of global value chains show that China's exports contain only 67% of domestic value-added, compared with 89%, 85% and 73% of the United States, Germany and Japan, respectively. This reflects the technological gap between China and developed countries from one side, and also shows that China still has a lot of room for introducing and absorbing foreign technology.

A high value is placed on original innovation. As China's technological level gradually approaches the international frontier, original technological progress is becoming more and more important. Only by paying more attention to original innovation can we maintain rapid productivity growth for a long time, obtain more added value in the fierce international competition, and realize the transformation from a manufacturing country to a manufacturing power. Compared with the 80s and 90s of the last century, the current smile curve of the global value chain is more concave, the profit level of the simple manufacturing link is getting lower and lower, and the added value at both ends of the high-tech value chain is correspondingly increased. This shows that the speed of global scientific and technological innovation is getting faster and faster, and the new round of global scientific and technological competition is more intense. We must not fall behind in the competition of scientific and technological innovation, we must vigorously implement the innovation-driven development strategy, catch up, and strive to surpass.

Comrade Xi Jinping profoundly pointed out that from the perspective of development, the decisive factor leading the fate of national development is the development of social productive forces and the improvement of labor productivity, and only by continuously promoting scientific and technological innovation, constantly liberating and developing social productive forces, and continuously improving labor productivity can sustained and healthy economic and social development be achieved. Although the rate of productivity improvement in China has slowed down in recent years, the space and potential for productivity improvement are still considerable. By releasing these potentials, China's economy can continue to develop on the track of the new normal, achieve the "dual goals" of maintaining medium-high speed growth and moving towards the high-end level, and enter a new realm of undiminished speed regulation and better quantity and quality.

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