China’s economy is transitioning from a stage of high-speed growth to one of high-quality growth. To pull it off, China must follow through with a set of supporting reforms, including the important local competitive mechanism, said a top economic advisor.
Regarded as the source of power for the country’s high-speed growth, race for GDP growth among local governments will remain effective in the stage of high-quality growth. It should not be and will not be discarded, but needs reforms and innovations, Liu Shijin, deputy director of the Economic Commission of the National Committee of the Chinese People’s Political Consultative Conference, wrote in the prologue to Ten-year Outlook on China’s Economic Growth (2018-2027).
The first is to reconstruct a new system of objectives, assessment and incentives for local development, he argued. Given that prioritizing GDP has shown increasing undersides, there should be predictive, consequential alternatives, though new indicators still require further research.
One possible answer is to use a combination of indicators that reflect high-quality development, such as employment and business start-ups, quality and profits and stability and sustainability, forming an indicator system.
In the transition to high-quality development, the contents of local competition will also undergo major adjustments.
There will be, among others, a business environment-oriented competition that promotes industrial transformation and upgrading, competition to build an innovation-friendly environment,, and competition to draw medium to high-level productive factors and competition for building a more inclusive and stable society.
The State should not only support and protect the entrepreneurship of businesses, but also encourage and protect the creativity of local governments, he said.
Provided they follow this general direction, local governments should be allowed to have their differences, trials and errors. The aim is to discover and popularize good practices, models and policies through competition.