Growing up to the challenges - 中国日报...

Growing up to the challenges

By Zhang Monan (China Daily)

Recently, more and more countries are seeing signs of economic recovery while the world is still under the influence of the financial crisis and the economic downturn it caused. How to quickly resume endogenous economic growth, cultivate successors to the government stimulus package and seek new sources of long-term economic growth may be the most important strategic subject of concern to governments of various countries.

Facing the financial crisis, governments of different countries have realized that to cope with the crisis not only needs them to resume the previous economic structure, but also, more importantly, depend on new technological and industrial revolutions for constructing new industrial and economic structures. According to experience in history, each global economic crisis could speed up new technological breakthroughs and promote the development of newly emerging industries and the emergence of enterprise groups and entrepreneurs, which could impel a new round of economic growth.

China's Nasdaq-style secondary stock market, ChiNext, was officially launched on Oct 30, 2009 after 10 years of twists and turns, indicating that China's entrepreneurial economy entered a rapid development path. The practice of economic growth shows that the motivation of endogenous economic growth mainly comes from large amounts of innovative start-ups. The development of entrepreneurial economy, integrating knowledge, technology, management, capital and entrepreneurship, has great strategic significance for technological innovation, institutional innovation, upgrading of industrial structure, transition of economic growth pattern and "employment-friendly" growth.

As the "post-crisis era" is coming, the global power balance is likely to favor countries or economies with high-speed growth. The vigorous driving force of a new growth cycle will originate from the newly emerging economies including China.

However, can China sustain its rapid growth? Can China find new engines for furthering economic boom given the decline of its traditional competitive advantage and evident shortage of internal motivation? The challenges facing China are unprecedented as are the opportunities China should seize.

The challenges come from the weakening dynamic of long-term growth and China is forced to thoroughly transform its previous growth model. And, the crisis is a good chance to learn and for profound self-examination.

The global financial crisis prompted China to realize that it must carry out economic restructuring and seek new growth engines, of which the most important is to boost domestic demand. If we consider that China's high-speed growth in the past three decades was mainly fueled by export and foreign investment, then future development must rely on the strengthening and expansion of native start-ups and capital. In this sense, the major step of boosting domestic demand should be to increase productivity investment in the field of entrepreneurial economy, which could be more effective than stimulate consumption.

The world economy is undergoing a new round of readjustment and shuffling with many countries endeavoring to develop low-carbon and green economy, and the US intending to return to the real economy, in a bid to regain predominance in global competitiveness. China should make breakthroughs in structural adjustment and explore the development path of entrepreneurial economy in line with the current national condition.

The vigorous development of entrepreneurial economy needs joint efforts by individuals, enterprises, institutions and governments. Fundamentally, boosting entrepreneurial economy means not only to simply offer support or preferential policies to startups but to establish an entrepreneurial economic system.

During the economic downturn, China's entrepreneurial economy has seen green shoots. From the perspective of the direction of industrial development, we should develop knowledge-intensive, technology-intensive and human capital-intensive sectors and develop entrepreneurial economy with enterprises featuring technology, knowledge, service and originality as the leading factor. The newly approved 82 pilot entrepreneurial cities, numerous newly formed startups, tens of thousands of entrepreneurs and new business champions will make up the driving force of China's new growth cycle in the post-crisis period.

We should grasp the strategic opportunity to formulate an action guideline of China's entrepreneurial economy, establish entrepreneurial economic system and expand investment in such field. Although the entrepreneurial economy is still in its infancy in China, this new economic growth model, with great creativity and vitality, will definitely change the economic pattern of China, and the world and China will certainly embrace a bright future full of its new dynamics.

The author is an economics researcher with the State Information Center.

(China Daily 11/02/2009 page4)