Private Dynamism

Wang Wenbiao: member of the 11th CPPCC National Committee and Vice Chairman of All-China Federation of Industry & Commerce

To transform the economic development model is both a challenge and opportunity for the development of private enterprises. The challenge lies in three points: The first is how to develop a long-term view instead of just focusing on short-term interests. The second is how to break the bottleneck of the development of our private enterprise—including attracting talent, technology and capital. The third is how to properly deal with the relationship between the environmental protection and profit making.

These opportunities lie mainly in the realm of government support. The Central Government has attached more and more importance to the development of small and medium-sized enterprises by issuing a series of policies and documents for the fast and healthy development of the enterprises. The private enterprises have thus had more space and market potential.

After decades of development, private enterprises have gathered economic strength and grasped some good chances while exploring good development models—especially in the fields of recycling economies, ecological environment protection and energy conservation. For further development, I think the private enterprises should have three "transformations." The first would be to transform the ideas from focusing on small businesses.

The second is to transform development strategies. Our private enterprises have a common problem: how to grow big and strong sufficiently. We saw many enterprises holding the banner of being "the top 500 in the world as soon as possible." This is a result of impatience.

The third is to develop technological innovation within enterprises and increase the added value to the products.

Changing Ideas

Li Lijun: member of the 11th CPPCC National Committee and Deputy Director of the Supervision Department of Hunan Provincial Government

The importance of transforming the economic development model has been mentioned for a long time—while the measures of the transformation have hardly been put into practice. The fundamental reason, I think, is the traditional economic development model mainly focuses on extensive development and the increase of total output and the GDP has been the evaluation criteria for the government. This traditional model has helped for a period the fast economic development. But with time, more negative aspects have become apparent and became an obstacle for the transformation.

The first negative effect has been on scientific and technological development. Independent innovation is time-consuming and cannot make obvious achievements within a short period. While guided with a traditional model, local governments prefer to engage in short-term projects such as in the chemical industry and manufacturing and are not interested in efforts involving the latest technological research. This makes "independent innovation," as encouraged by the Central Government, a mere slogan. Consequently, chemical industries, which require little time but are more profitable, for example, have witnessed more development in many places at the expense of environmental safety and conservation.

The second is that there exists an unhealthy climate in terms of competition for attracting foreign investment. In order to draw foreign investment, that is, local governments frequently offer many preferential policies for the foreign companies while allowing for the deterioration of the environment in which domestic enterprises operate.

The third negative aspect is that this situation has led to many low-quality, redundant construction projects—while creating overcapacity.

My suggestion is that the development ideas at different levels of government should be fundamentally shifted from focusing on quantity increases to quality upgrades—and from short-term increases to more sustainable development, which involves high technology elements.

We should also change the evaluation criteria for the government officials to set up a more scientific evaluation system.

A Triangle Economy

(YUAN YUAN)

Tang Shuangning: member of the 11th CPPCC National Committee and Chairman of China Everbright Group

"Triangle is the most stable form" is a rule in natural science, and this rule also applies for social science. To keep a stable and healthy economic development in China, we also need a triangle development model.

One angle of the triangle is speed. We must put 8-9 percent of GDP growth as the medium- and long-term goal for economic development.

The second angle involves structure. In other words, in order to keep the triangle in normal shape, we must adjust economic structure. The investment, at present, should be put more on fastening the development of small cities, infrastructure construction, scientific and technological research and ecological environment protection.

The third edge of the triangle is safety—or the stability of the economic development. There are four elements that can threaten the safety of economic development. They are inflation, non-performing loans, fiscal deficits and an excessive foreign exchange reserve.

The shape of this triangle differs in different economic development period. Moreover, it is only when we adjust the economy within a triangle shape that the economy can stay stable and increase in a healthy way.

Low-carbon Goals

Jin Zhiguo: deputy to the 11th NPC and General Manager of Shandong Tsingtao Brewery Co. Ltd.

As the economic growth focuses on quality over quantity, energy efficient and environmentally friendly green industries are getting the chance to shine. And for many struggling industries, going low-carbon is not an option but a basic necessity if they wish to thrive in the future. Chinese alcohol makers, in particular, have lagged behind their foreign counterparts due to low energy efficiency and serious pollution problems.

But the dynamics are set to change. Many enterprises now are embarking on different routes to a carbon-constrained growth model, which is more sustainable and also profitable.

Tsingtao Brewery, for example, has adopted advanced technologies to improve energy efficiency and reduce costs. Carbon dioxide released during the beer brewing process is now collected and purified for use in the production of canned beer, effectively eliminating air pollution. Wastewater is also recycled and reused along the assembly line.

The green efforts are paying off as the company reported a robust 75-percent growth in profits last year while many domestic rivals struggled to survive.

As Chinese companies move up the value chain, they need to push forward research and development, as well as branding so that they can press ahead with innovation and lay a solid market foothold.

Tsingtao Brewery used to own more than 150 brands, but few of them enjoyed wide customer recognition. In an attempt to tackle the conundrum, we focused on a few high-end brands and made vigorous efforts in branding, marketing and after-sales services. Currently the top four brands command a stable consumer loyalty and make up more than 90 percent of our total sales.

Shanghai Goes Global

Zhang Zhao'an: deputy to the 11th NPC and Director of the Consulting Department of the Development Research Center of the Shanghai Municipal People's Government

Involving nationwide efforts to restructure the economy, Shanghai has always been at the forefront. The city looks to advanced manufacturing and its service sector for a more sustainable source of economic dynamism. The goal is to build the city into an international economic, financial, trade and shipping center.

The advanced manufacturing industries, including auto-making, bio-pharmaceuticals, information technology, steelmaking and shipbuilding, have largely relocated to suburban areas, leaving space for the service sector to prosper. The movement is also a needed boon for the underdeveloped suburbs to gather momentum.

The service sector now accounts for 59 percent of Shanghai's economy, well below that of developed countries. But Shanghai has deep potential to play a quick catch-up. Its huge population and growing economy are pushing up demands for all kinds of services, and the Central Government has also pledged a better policy environment for the sector to grow.

But the local government is still expected to remove some system barriers. For example, many manufacturers are also involved in service businesses like logistics and industrial design, and are eligible for a deduction in value-added tax. But if they separate the service businesses and set up an independent company, they would have to pay all the business tax. This has discouraged many enterprises from expanding their service businesses.