III. Forming the new normal of mass entrepreneurship and innovati on
The service industry’s dominant position will not only produce the major force for a new-round innovation and startup development but also carve out enormous markets for innovation and startup development and prepare important conditions for the new innovation-driving layout.
1. Driving technical upgrading with service upgrading
China has come to the middle and late stage of industrialization. Technical upgrading and service demand make directly combination. Enterprise competitiveness and service quality are directly interlinked. Enterprise competitiveness mainly depends on whether the service is professional and elaborate.
2. Carving out startup space in service industry
As service industry has low requirement to capital scale, the startup threshold and difficulty is lower than those of manufacturing. In the past years, the mushrooming multinationals were mainly in the service industry, such as amazon.com, google.com, facebook. com and other giants of international service industry. For example, in 2013, the total revenue of Zhongguancun’s modern service industry reached 2 trillion yuan, accounting for 66.7% of the total revenue of Zhongguancun-based enterprises, 5 percentage points higher than that in 2011. As for industrial development law, service industry has diverse sectors, high individualization and differentiation and can offer wide space for startups. Especially, the robust development of big data and Internet in China brings the mode rebirth opportunities for traditional industries. Many traditional industries can realize large-scale elimination of intermediate services through online customized orders and initiate a new-round startup development fever.
Foreword
In the face of the current economic downturn, China’s economic growth prospects and economic transition trends have attracted increasing attention. In general, the 13th Five-Year Plan Period (2016-2020) is the last “window of opportunity” for China’s economic transition and upgrading. When the mid-term (2020) is well planned and well tapped, China will lay a solid foundation for the following 10-20 years of fair and sustainable growth. If the important historical opportunity of the mid-term (2020) is missed, China will lose the initiative of economic transition and reform and face the consequent systemic economic risks. We should have objective and sober estimation of such possibilities.
Based on these considerations, this book on the, theme of “a decisive choice to advance economic transition”, attempts to objectively analyze the trends of and challenges for China’s economic transition and upgrading in the six years from 2015 to 2020, and offers suggestions for practical action. The book consists of an overview and eight chapters. The “overview” sets forth the general thinking on the economic transition and reform for the six years from 2015 to 2020. Chapter I-III study and examine the three historical trends that China faces in the economic transition and upgrading: first, the general trend of industrial transition and upgrading from “Made in China” to “Smart Manufacturing in China”; second, the general trend of urbanization transition and upgrading from scale-oriented urbanization to urbanization of population; third, the general trend of consumption structure upgrading from material consumption to service consumption. To adapt to the three general trends, Chapter IV puts forward the basic goals of the 2020 economic transition and upgrading. We believe the way for China’s economic transition is to accelerate the transition from an industrial power to a service industry power and complete a service industry dominated economic structure by 2020. To realize this strategic goal, the key is to deepen reform. Therefore Chapter V to VIII analyze the four important tasks of comprehensively deepening economic reform in the period 2015-2020: first, accelerating the opening up of the service market and forming an open environment for the service market as soon as possible; second, breaking up the fixed vested interest structure and cracking the “hard nut” of structural reform, and making new breakthroughs in fiscal, taxation, financial and educational reform; third, grasping new opportunities in multi-lateral and bilateral free trade to promote the process of enrichment of the country through service trade and exploiting new advantages in international competition; fourth, deepening governmental reform by streamlining administration and delegating power to lower levels to enable the administrative reform to effectively promote the economic transition and upgrading.
Releasing an annual report on China reform is an important task of the China Institute for Reform and Development (CIRD) to build “China Reform Think Tank”. We expect this book will be well received by readers, trigger further thinking among all circles about China’s economic transition and upgrading and have a positive influence on the study and formulation of the 13th Five-Year Plan.
This report is a collective creation of the research team of CIRD with reliance on domestic and overseas documents. The book is mainly compiled and edited by Chi Fulin, Fang Shuanxi, Xia Feng, He Dongni, Kuang Xianming, Liu Feng and Zhang Fei and others., Miao Shubin, Song Min, Gan Lu, Chen Suohua, Fang Yunyun, Guo Wenqin, Song Xue, Yang Tianying, Li Xuka, Ren Xiping, Yu Xiujuan and others also participated in material collection and editing of the book. Many thanks to China Intercontinental Press for its strong support for this publication.
Chi Fulin, February 1, 2015