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An Analysis on China’s Economic Transformation towards Quality Development

The 19th National People’s Congress stated China’s economic transformation from rapid growth to quality development. The two sessions have prioritized quality development, working on improving imbalance, modernizing the economy, and optimizing economic structure. This article aims to answer the questions of what is quality development, how to achieve quality developments, and what is the objective of quality development.

As early as the mid-nineties, the ninth five-year plan actively promoted changes in the economic growth model. The eleventh five-year plan considered changing the growth model an important task in the new era. The twelfth five-year plan formulated a series of policy frameworks to promote supply-side reform and economic restructuring. The latest push for quality development further clarifies this theme.

Main ideas

Quality development encompasses the following four ideas.

The first one is enhancing quality and efficiency. The quality of goods, services, and management is still lagging behind demand and needs a profound revolution. To make Chinese goods and services a benchmark of quality, the focus should be on enhancing supply-side quality management in advanced manufacturing, agriculture, and high-end services. Meanwhile, economic efficiency must be improved by minimizing the labor, capital, land, and resources required for maximum output in terms of labor income, corporate profit, tax income, and jobs.

The second one is innovation. Countries all over the world are increasingly attempting to improve competitiveness by innovation in technology, culture, theories, and systems. Innovation contributes to both quality development and economic growth. A new global phase of technological innovation and industrial reform will create both pressure on and opportunities for China. China’s old growth model may not be sustained, as the labor force has begun to decline and resource input ran into bottlenecks. Technological innovation must become a main engine of economic growth.

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Content provided by Bank of China (Hong Kong)
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