Promoting self-innovation is key for sustainable development

Fueled by a series of stimulus packages since late 2008, China's economy has managed to meet growth targets against the backdrop of the global financial crisis.

However, the concentration of emergency policies and measures has also resulted in overcapacity for some of the country's traditional manufacturing sectors, increased pressures on its economic restructuring and weakened its ability for sustainable development.

Some delicate changes have taken place in the country's macroeconomic policy under these new circumstances, with accelerating economic restructuring, other than tactical measures for emergency purposes, confirmed as the overwhelming task for the national economy.

The key to attaining this target lies in unremitting efforts toward the country's long-overdue industrial structural adjustment and developing those new industries with huge investment potential and bright prospects.

Such development will speed up China's economic measures and further help the world's third-largest economy gain a consolidated foothold in the increasingly competitive global economy.

Amid the global financial crisis, a number of developed countries regard vying for a favorable position in the approaching round of global economic and technological competitions as a top priority.

They see technological innovation as the overwhelming strategic mission, indicating that the global era of concentrated scientific and technological innovations is nearing. This trend is expected to fundamentally change mankind's way of life, as well as push for world economic development.

In modern times, China has failed to take hold of several opportunities to keep its science and technology in step with the rest of the world. With rapid development in the past three decades after its reform and opening up, the country has ranked third in the world in terms of its comprehensive national economic strength. But in the upcoming round of fierce global competition in the fields of science, technology and new industries, China should not let itself become excluded from scientific and technological advancement.

It has been China's long-planned strategy to vigorously develop new industries with strategic significance. The policies from the government for these new industries can help the country create new growth areas in its economic development. However, the country should also remain cautious of any possible misuse of central government policies in some regions as social resources are being used in new industries. Local governments should also be prevented from using these policies as an expedient instead of a long-term strategy.

Despite tangible technological progress in the past few years, China's new industries still lag far behind their counterparts in developed countries and are yet to boast self-innovative technologies. Due to high technological costs and prolonged processes in technological funding from input to output, some of the preferred new industries still see low-level acceptance among domestic producers for the short term.

In light of the above, high expectations should not be made of the role played by these new industries in pushing forward the country's much-needed economic structural adjustment in the near term. Instead, more concrete and practical efforts should be used.

China's new, emerging industries still have a long way to go before they can replace traditional ones to dominate the national economy, although the country has drawn up an initial roadmap on their development.

Because of inadequate policy support from the government for new industries, we should keep a sense of urgency and patience to promote their development. Any strategies toward this purpose should facilitate the country's plan to raise its technological prowess and comprehensive national strength as well as help catalyze its technological and industrial revolutions.

To boost new industries, the country should strive to achieve a technological breakthrough in a number of core sectors and develop them as a strategic target. Sustainable development should also be put on a firm strategic direction. In the process, utmost importance should be attached to self-innovation as well as homegrown technologies, patents and technical standards.

A balance should also be struck between developing new industries and traditional sectors. The country's pursuit of technological innovation should not be made at the expense of technological progress in its traditional sectors. Given that a solid foundation has been laid in its traditional processing field, the country's strategy to boost the development of new industries should not be confined to this field. The country should make full use of favorable conditions to extend its well-developed processing technologies to some high-end sectors to help gain a sharp edge in global competition.

Substantial efforts are also needed to create an institutional environment for the development of new industries. In addition to sufficient fiscal input, the country should try to set up a mechanism aimed at facilitating the transfer of talent, funds and technologies to enterprises and push for market-dominated technological innovations to cultivate the spirit of innovation and entrepreneurship.

A financial system aimed at offering funding support for the development of strategically important new industries should also be set up to resolve problems brought about by insufficient capital. At the same time, a special fund is also needed to aid core technological progress in new industries.

The author is a senior economist with the State Information Center.

(China Daily 04/20/2010 page8)