Chen Wenling: China Needs to Extend the Boom in Manufacturing

“China’s economic development cycle will certainly be extended, growth will be maintained and the macroeconomic policies will always match its economic development. The economy will not experience a significant decline suddenly,” said Chen Wenling, chief economist of China Center for International Economic Exchanges at the 5th New Year Forum (2019).

According to her analysis, China has made a great improvement in certain aspects, such as infrastructure, which is now good enough to support China’s economic development in the long-term. Plus, Chinas economic development is supported by sufficient labor support and the almost completed urbanization process. Therefore, we should have confidence in China’s economic development.”

Chen Wenling emphasized that China needs to extend the prosperity cycle of the manufacturing industry and re-establish guiding ideology for its manufacturing development. The service industry should become an important part of the economy but it does not mean that the bigger the service sector, the better the economy will be. As the foundation of the national economy, the manufacturing industry must be transformed and upgraded to the mid-to-high end, rather than replacing the manufacturing industry with the service industry. In the new regional development layout, we can consider shifting manufacturing to the central and western regions in an orderly manner, forming a new industrial chain system, and turning production capacity into a new round of competitive advantage.

Chen Wenling said that China’s strategic opportunity period has not ended yet. The size of the Chinese market has surpassed that of the United States and has huge market dividends. The external environment also contains historical opportunities and the biggest challenges and risks come from ourselves.

High-quality development must be supported by high-quality institution and governance. For the next step of development, she made the following suggestions. First, the macroeconomic policies should meet the requirements of the new round of reform and opening up. Second, to further release productivity, especially the “first productivity” of science and technology, which must be supported by corresponding system design. Third, we must form a talent system that matches the national strategy. Last not least, we should further improve the institutional advantages and better cope with the competition from big countries, especially between China and the United States.