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Summer Davos Spotlight: China's Shift to New Economy
Text by Liu Haile

June 26, 2016: Li Daokui, an eminent economist and director of the Center for China in the World Economy at Tsinghua University, speaks at the Summer Davos Forum.  CFP

The World Economic Forum's 10th Annual Meeting of the New Champions, also known as Summer Davos, took place from June 26-28 in Tianjin. Themed "The Fourth Industrial Revolution and Its Transformational Impact", the event attracted more than 1,700 business leaders, officials, and experts from over 90 countries.

As the global economy endures an extended downturn, few were surprised that China's economy became the focus of the Summer Davos. What is the economic situation in China? How will China conduct its economic transition? What will be the driving forces of China's development? These questions raised heated discussions between participants of Summer Davos.

China's New Business Context

With the arrival of the fourth industrial revolution against changing international and domestic backdrops, China now faces big challenges such as the growing elderly demographic and loss of labor-cost advantage, noted Ma Weihua, president of China Entrepreneur Club, at a session themed "China's New Business Context" during the 2016 Annual Meeting of the New Champions.

Ma added that weakness in innovation and technical commercialization is China's "Achilles' heel." "The key is enhancing the quality of GDP through technical innovation, especially in the field of manufacturing," he opined.

The core of economic reform is to allow the market to determine the allocation of resources, explained Xu Jinghong, chairman of Tsinghua Holdings. "To adapt to the changing world, China must perform constant innovation."

Innovation Highlighted at Summer Davos

China will continue to mold itself into an innovation-driven country using innovative concepts, growing the new economy and fostering new growth, declared Chinese Premier Li Keqiang at the opening ceremony of the 2016 Annual Meeting of the New Champions.

The country's promotion of entrepreneurship and innovation will amalgamate innovative activities by people from both elite circles and grassroots level, online and offline, as well as business and research institutes, said Li. He also noted that China will continue to promote mass entrepreneurship and "the Internet Plus" initiative to foster new growth engines.

Matthew Prince, CEO of U.S.-based internet company CloudFlare and co-chair of the meeting, highlighted the role of the internet in the fourth industrial revolution. "The power of the internet is to bring people together," he said. "China today has 25 percent of the world's internet population, which is making it one of the most creative engines in the world."

Travis Kalanick, CEO and co-founder of Uber, noted that the prevailing rules, which are mostly designed to protect existing players, are an impediment to innovation. As of how the online cab-hailing industry would change, he said, "I guarantee you that by 2025, you won't be waving at a car anymore."

Education is crucial for incubating innovation, stressed Shirley Ann Jackson, president of Rensselaer Polytechnic Institute. She talked about how many Chinese universities are eager to partner and collaborate with universities in the USA and around the world. "Many talents from China share their gifts around the world and bring their talent back to China to lead innovation."

 

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