[Policy Report No. 137] Zheng Yongnian: What will stimulate the vitality of economic entities?
Authored on:2022-05-03
Keywords Economic Development Construction of institutions

Abstract

With the rapid changes in the international situation, our economy is now facing many new challenges, many of which are serious challenges. Effectively addressing these new challenges not only concerns China's sustainable economic development, avoiding the middle-income trap and entering a high-income economy, but also concerns whether China's modernization will be interrupted again. How to effectively respond to new challenges? In both policy and business circles, there is a common recognition of the need to stimulate the dynamism of economic agents: companies. The reason is simple: when the dominant companies do nothing, economic activity is stagnant. Although economic development is not as simple as GDP growth, it is more difficult to achieve sustainable economic development if GDP is weak, which is why GDP is still the most important indicator to measure economic development in all countries. GDP is generated from economic transactions, that is, transactions between enterprises. Entrepreneurs are traders. If traders are "lying flat", GDP is out of the question.

How to activate economic entities? There is no consensus on this. We believe that the key is to find the root cause of China's economic problems, then establish a Chinese proposition, and then find a Chinese solution to China's problems. The reality is worrying. Although the problems facing China's economy have an international background, and even are largely caused by international factors, the root causes of China's problems under the international background still need to be found in China itself. In any country, external causes always work through internal causes. If all the root causes are attributed to the international environment, unless we can control or change the international environment, we will not find an effective way to solve the problem. From this point of view, although there is an international background to the emergence of China's problems, we still need to find the Chinese problems of these problems. China's thousands of years of historical development has accumulated enough experience and lessons for our reference to help China achieve sustainable development. If we do not examine China's embedded economics from any ideology imported from the West, we can find the root of China's economic problems, find China's proposition, and find China's solution.

Research Questions

  • New challenges facing China's economy
  • How does China stimulate the vitality of its economic entities