China’s economy has reached a new phase of transformation, and now the focus is on high-quality development instead of following the high-speed growth model. This transformation and upgrading of the Chinese economy will benefit both China and the world.
A strong driving force of China’s economic transformation is the fast-developing digital technology, which has facilitated innovations in the traditional manufacturing industry and helped create new innovation-oriented industries. For instance, the information technology industry is expected to reach 12 trillion yuan ($1.81 trillion) in value, and e-commerce about 67 trillion yuan in volume, by 2025. Which means innovation-oriented transformation of the emerging industry will ensure lower but sustainable and high-quality economic development that will provide a big and profitable market for the world.
The services sector has been playing an increasingly important role in China’s economic transformation, with a significant increase in services’ proportion of the economy. According to the National Bureau of Statistics’ estimate, the services sector will account for nearly 60 percent of China’s industry in 2020, and the scale of the sector will increase from 33 trillion yuan last year to 50 trillion yuan.
Besides, the change in the consumption structure will boost the development of China’s market, with the services market expected to account for about 50 percent of the total economy and increase to about 50 trillion yuan in 2020.
This will help China to build a solid foundation to develop free trade with the rest of the world, which General Secretary Xi Jinping emphasized in his report to the 19th National Congress of the Communist Party of China in October. Accordingly, China will grant foreign investors greater access to its market, further open up its services sector and build more pilot free trade zones. And services trade will be key to the open economy as services are predicted to take up a more than 20 percent share of foreign trade by 2020.
A new type of urbanization, as well as urban-rural integrated development, will pave the way for investment and consumption of nearly 100 trillion yuan over the next decade, with the rural market becoming a new driver of China’s medium- and long-term development.
Moreover, the economic transformation may have a cumulative effect. Statistics show that from 2012 to 2016, about 1.7 million jobs were created in the nonagricultural sector with each percentage point increase in GDP, and the ratio will increase if the services sector keeps developing.
And as the middle-income group is predicted to make up half of China’s total population in the next 10 years and energy consumption is expected to decrease by about 14 percent by 2020, the country’s social structure and environmental health will greatly improve.
Therefore, the upgrading of the economy will help China to maintain stable growth as well as contribute to the global economy, and enable it to build a community of shared future for humankind.
The author is the head of the China Institute for Reform and Development.