China Accelerates Transformation of Its Economic Development Model

just one category sometimes equivalent to the entire population of certain countries. China has insisted on the basic national policy of reform and opening-up. To this end it has introduced substantial amounts of international capital and talents with management experience. In addition to the direct economic spillover effect of foreign investment in China, it thus also promotes exchanges of technology, cultures, ideas, management skills and religions.

In addition to the human factor, China has a long history, rich culture, and the economic characteristic of a high savings rate. Financial institutions currently use bank savings for investment purposes. As time goes by, these sums will also be earmarked for consumption.

The above analysis shows that, no matter due to high investment or a high savings rate, once aroused, the people’s enthusiasm will drive various combined domestic and international factors towards enormous achievements through joint efforts. This, in turn, will sustain the driving force and resources necessary for economic growth and social development.

Facts have proven that, as long as every round of reform further liberates China’s workers and stimulates their enthusiasm, the country can achieve immense economic growth and social development. But China has yet to reach the optimum point of giving full rein to people’s enthusiasm and creativity. In many circumstances, a country’s development still relies on such factors as capital, land, water, electricity and other resources. The current economic development model has not yet adapted to the new domestic and international situation, especially the huge changes globalization has brought about. To avoid falling into the middle-income trap, China must explore a suitable development path and accelerate transformation of its economic development model. The Third Plenary Session of the 18th Central Committee of the Communist Party of China explicitly stated that China will carry on reform and opening-up, and make necessary adjustments to inappropriate systems and mechanisms of economic and social development that will accelerate reform and progress. For years past China has been studying the advanced aspect of the Western market economy, and is now re-aligning the relationship between the government and the market. Only reform and opening-up can promote mutual adaptation of the relations of production and productive forces, inspire people’s enthusiasm and creativity, and increase efficiency, so guaranteeing sustained socio-economic development.

Hu Jiangyun is a researcher at the Development Research Center of the State Council.