To give a head start to the article, keep in mind that China is one of the best-growing countries in the world. It is still a developing country, but surely is performing much better than many developed countries in the world. The rapid industrialization, modernization of technology and good policymaking, all have contributed to the success of the country.
The recent innovation-based industrial growth has been very successful for the economy of China, leading to the growth of the country. The nation’s shift toward innovation-based growth has increased in the pandemic. Shocking, right? It is reported to have added a lot of value to the GDP of the country.
There has been a rise in the country’s new industries and business models. They witnessed an upward trajectory during the time of the pandemic, while other countries were struggling to fight the COVID-19 virus. The value added by these newly introduced sectors is nearly $2.62 trillion which contributes to 17.08 percent of GDP, which is a nearly 0.7 percent rise from the previous year which indicates that these new sectors witnessed a great even in the pandemic.
According to reports, the innovation-based sector is expected to grow by huge numbers by 2035, contributing to one-third of the GDP. Moreover, it is expected to rise up to 50 percent of GDP by the middle of the century, the time where the country is expected to have accomplished the second centenary goal of making itself into a great socialist economy.
What is the ‘three new’ economy?
The ‘three new’ economy refers to the collection of all the economic activities of the country that contribute to the growth of sci-tech innovation-oriented growth in China. Getting into deeper details, it specifically consists of new economic activities led by the new technological and scientific achievements along with new links and chains deriving from the existing industries that can fit into diversified needs of businesses such as internet-enabled business services as well as the integration of business operations.
The added value of the ‘three new’ economy in the year 2020 grew by 4-5 percent as compared to the previous year.
The credit of the growing innovation-led technology can be given to the country’s powerful logistics system of network. The prevalence of the well developed internet network throughout the country, as well as the rising cashless mobile payments, have also been a reason for the swift rebooting of the country’s economy. Tian Yun, the former Vice president of the Beijing Economic Operation Association claimed that the internet has given a lot of benefits to the new developing innovation-led technology.
About Chinese Situation in Innovation
Talking about progress, one fact which cannot be ignored is the growth of this economy during the pandemic. When the Coronavirus started spreading throughout the world, the economies were in the fall. Many countries, including India, suffered a lot of destruction due to the pandemic. Lockdowns prevailed in all the countries, hampering all the economic activities, but China was still able to further develop the new economy.
China, along with fighting the virus had to face complicated international consequences but still managed very well. The rising value-added of the three new economies is not a dividend of new behaviour which was created by the global COVID-19 virus. Moreover, it indicates the efficient planning of the government.
The plans for the country’s vision of tech-oriented growth has been resulted very successful and is bearing fruits. It was discussed in the 13th five-year plan and is laying the groundwork for the economy to quickly emerge from the effects of COVID-19. While other countries are still fighting to maintain a stable economy, China is becoming unstoppable with its growth.
Digitalisation is the future. Every country is making sincere efforts to make it is economy a digital economy. The benefits of it are huge and every country is trying their best in this race. However, China, with proper policies and planning has been very successful in developing a tech-based economy.
As we all know, in economics, technology is known as the key driver of the economic growth of countries, regions and cities. How? Technological progress leads to more efficient production of better and quicker goods and services, which is the major factor deciding the prosperity of the economy.
However, developing a tech-based economy is not as simple as it sounds. The mechanisms through which the technological economy is developed is very complex. A deeper study into their development can lead to the revision of the previously made policies or, in some cases can force a country to make new policies. The concept of the technology required itself can be very confusing.
On the brighter side, the development of a tech-innovation based economy provides a lot of employment opportunities, therefore reducing the unemployment levels. It provides for better job positions, a healthy work environment, increases education level and therefore develops the economy.
The recent growth of the new innovation-led economy has created huge demand for new contracts between countries, educational departments and Research & Development departments. It should be kept in mind that the main elements for the development of a tech-based economy are proper knowledge in the form of theories, better policy framework, scientific progress and well developed protocols. Before making any policy, every risk associated with it should be studied in order to develop the economy, which China has done very efficiently. Without proper knowledge and planning, this would have resulted in nothing but a failure of the economy.
With China pushing the domestic innovation, there is expected a rise in the ‘three new’ economy to GDP ratio by 20 percent by the end of the 14th five-year plan which will end in the year 2025. The ratio is expected to rise by a large ratio and therefore is expected to top one-third of the GDP by the year 2035.
The country is expected to achieve a number of long-range objectives leading to the qualitative transformation of the economy to a completely digital economy by the year 2050, mid of the century. India, which is also making progress to become a digital economy will be surely benefitted if it studies the performance of China and learns from its mistakes.
Edited by Aishwarya Ingle