Thriving ‘three new’ economy powers high-quality development

Source:Chinese Social Sciences Today 2023-09-30

China’s National Bureau of Statistics (NBS) recently released data indicating that the “three new” economy, encompassing new industries, business models, and forms of businesses, contributed an added value of over 21 trillion yuan (approximately $2.87 trillion) to the Chinese economy in 2022, marking a 6.5% increase from the previous year. This dynamic sector has emerged as a significant driver of China’s transition from high-speed to high-quality development.

Over the past five years, the proportion of the “three new” economy’s added value to the GDP has grown steadily, increasing from 16.1% in 2018 to 17.36% in 2022. Moreover, the year 2022 saw the figure hit the 20 trillion mark for the first time.

The remarkable growth of the new economy has substantively galvanized and powered China’s growth. To gauge the degree of economic development, the NBS has compiled the new growth driver index, with 2014 as the base year and a base value of 100 points. The index has consistently shown positive annual growth with rates of 23.5%, 26.9%, 34.1%, 28.7%, 23.4%, 35.3%, and 35.4% from 2015 to 2021. In 2022, the index reached 766.8, up 28.4% over the previous year, indicating that China’s economic vitality was continuously released, alongside the encouraging trend of deepening innovation-driven development.

The new growth driver index comprises sub-indices that measure the internet economy, innovation capability, economic vitality, industrial upgrade, and knowledge level. Among these, the internet economy index surged by 39.6% to reach 2739.0 in 2022. It made the largest contribution to the overall index growth, accounting for 91.6%.

In terms of the internet economy, the number of mobile internet users reached 1.46 billion by the end of 2022, while 590 million households had permanent access to internet broadband, representing respective increases of 3% and 10.1% compared to the previous year. At the same time, the market scale of e-commerce reached a new high. In 2022, the trade volume on e-commerce platforms amounted to 43.8 trillion yuan, up 3.5% from 2021; online retail sales hit 13.79 trillion yuan, growing 4% year-on-year; and cross-border e-commerce trading volume stood at 3.8 trillion, soaring by 74.3% compared with a year earlier.

The innovation-driven index witnessed a growth rate of 15.5% to reach 336.3 in 2022, with the second-highest contribution rate of 5.3% to the growth of the total new driver index. In 2022, China’s investment in research and experimental development amounted to 3.1 trillion yuan, approaching the average level of OECD countries. In addition, the country has achieved internationally influential breakthroughs in advanced science and technology, such as quantum information, stem cells, and brain science, with the sizes of such industries as solar photovoltaics, wind power, new display, and semiconductor lighting among the world’s largest.

Liu Xiangdong, a research fellow from the department of economic studies at the China Center for International Economic Exchanges, emphasized China’s evolving status and role in the global innovation landscape, saying that the country has not only become a key participant in cutting-edge international innovations, but also a significant contributor to jointly addressing global issues.

However, the contribution rates of sub-indices related to economic vitality, knowledge level, and industrial upgrade in the economic new growth driver index are lower compared to the internet economy and innovation-driven index. The combined contribution of these three sub-indices was only 3.1% in 2022, implying imbalances in China’s economic development.

Tang Duoduo, a research fellow from the Institute of Economics at the Chinese Academy of Social Sciences, suggested fostering the emergence of new growth points in all respects while promoting balanced and coordinated development. In addition to vigorously developing high-tech manufacturing, attention should be given to the service industry to accelerate the high-quality transformation and upgrade of the sector, thereby fully unleashing economic vitality.

Editor:Yu Hui

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