At the 19th National Congress of the Communist Party of China in 2017, a two-step approach was put forward on building China into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious and beautiful by the middle of the century. The following 30 years after 2020 will offer great opportunities for the transformation of the global industrial structure. China needs to seize the chances and develop its productive forces for the rejuvenation of the Chinese nation.

By that time, after overcoming the middle-income trap, China will rank among high-income countries. Its economic and social structure will show some unique characteristics. The country will fully realize industrialization and shift to post-industrialization after 2030 and to a large extent, become an information society. The urbanization rate will exceed 70 percent and most of the large agricultural population will get permanent urban residency.

The problem of the dual urban structure—consisting of urban residents and migrant workers—will be addressed and their differential treatment eliminated. People's income will grow steadily, with the middle-income group expanding to more than 60 percent of the population and becoming the main segment of society. Common prosperity will be basically achieved.

The system of socialism with Chinese characteristics will become more mature. China will also reshape its position in the international arena, becoming an influential country with a major say in international affairs.

The new round of scientific and technological revolution and industrial transformation will change the traditional production and service industries around the world, and promote the transformation of production and business models and the integrated development of industries and services. It will bring about breakthroughs in information technology (IT), biotechnology, new energy, new materials and intelligent manufacturing. Through the industrialization and commercialization of scientific and technological achievements, new industries will be born, traditional industries transformed and the industrial structure reshaped.

On the one hand, new information and intelligent manufacturing technologies will be integrated into the research, development, design and manufacturing processes. This will transform the manufacturing industry from mass standardized production into intelligent customized production, and boost its development.

On the other hand, those technologies, fully embedded in the manufacturing and service industries, will break the boundaries between different sectors and promote their integration in the industrial chain. With the integration of industries, new technologies, products, business formats and business models will emerge, and the reconstruction of modern industrial system will be accelerated. Those technologies will stimulate new industrial fields, which will generate new sources for economic growth and usher in a new round of global prosperity.

However, the application of some disruptive technologies may trigger changes in the global value chain, which will exert pressure on traditional comparative advantages and existing ways of allocating factors of production and institutional arrangements. The wide use of those technologies will break the already scaled and standardized mode of production. The comparative advantages provided by low-cost labor and the importance of traditional processing and manufacturing sector will be reduced, while innovation and research and development will become even more important.

The new round of scientific and technological revolution featuring IT application, digitization and artificial intelligence will need more well-trained professionals. It may cause serious structural unemployment and exacerbate the imbalance between oversupply of traditional tangible physical capital and rising demand for intangible capital such as data and knowledge.

It may also reform old productive forces and relations of production, as well as aggravate the contradiction between new productive forces and existing systems in educational, scientific, technological, employment, social security and legal spheres, challenging the global governance regime and the economic and social systems of all countries.

The new round of scientific and technological revolution and industrial transformation is an irresistible trend. China must firmly seize opportunities arising from these changes to transition from the primary stage of socialism to a higher one.

Full play should be given to the socialist system and the huge market potentials. Institutional barriers should be scrapped to improve innovation and factors of production, such as labor and capital, should be enhanced. Total factor productivity must be raised.

China needs to accelerate the establishment of an innovation-oriented industrial chain linking industries, universities and research institutes, and launch projects focusing on new technologies to enhance the capacity for innovation.

It also needs to accelerate institutional and policy innovation to build up its edge in the international competition for scientific and technological professionals, improve the quality of its workforce and increase the accumulation of human capital. In this way, China can address the shortage of skilled professionals in some key technologies, and the insufficiency of talented people in applied technologies and engineering.

The financial system needs to be improved. The financial structure should be optimized, construction of new types of infrastructure speeded up, and capital accumulation improved in response to the demand for information, data and intelligent capital.

China also needs to develop advanced manufacturing industries, promote modern services, and enhance the integration of industries as well as the international competitiveness of some high-end industries to deal with problems such as insufficient capacity in high-end manufacturing, weak competitiveness in the service industry, and a low level of industrial integration.

Finally, China needs to deepen reform of supporting systems and strengthen the application of new technologies in social governance for institutional innovation. It should enhance its capacity to adapt to, participate in and lead the new round of scientific and technological revolution and industrial transformation.

This is an edited excerpt of an article written by Yi Xin, a researcher with the Macro Economic Research Institute under the National Development and Reform Commission, and published in Economic Information Daily

Copyedited by Sudeshna Sarkar

Comments to dengyaqing@bjreview.com