By Xu Zhaoyuan, DRC

2017-1-9

For enterprises, thanks to increased consumer demand, the employment performance in China is generally sound, and with the upgrading and renovation of the manufacturing industry, considerable domestic demand is to be generated and superior businesses will have adequate space for development. Despite the beneficial prospects of the real economy in 2017, the base isn’t solid as there is not going to be obvious increase in external demand after Donald Trump assumed office as US president.

First, besides the slow increase in macro demand, three major factors have restricted China’s real economy development. 1. The lack of market expectations. 2. Capital input is affected by the imbalanced returns rate between the real economy and the virtual economy; 3. The enterprises and the government are still following a scale-expansion mode of growth.

Second, new momentum is displayed mainly in three aspects. 1. The quality improvement in the manufacturing industry. 2. The emergence of new industries and new business forms. 3. The increase in overall productivity driven by optimized allocation of production factors. With regard to economic scale and industrial chain, China has the world’s most complete industrial categorization, and local industrial clusters as well as division systems have taken initial shape, which is a powerful source of competiveness for made-in-China products. This is the most important reason why made-in-China products are still strongly competitive in the global market.

Third, in order to promote real economy, efforts need to be made in the following aspects. 1. The government needs to straighten out market orders, and intensify supervision to boost market expectations. 2. The government needs to take measures to reduce cost. The local governments need to transform the growth mode and flesh out management system, change their management concept from focusing on attracting business and investment to fostering a sound business environment, and enhance their service for the enterprises. 3. In terms of industrial policy, the government needs to adopt more inclusive policy measures for industrial development with the exception of some strategic industries.

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