Focus on innovation to drive real economy

To strengthen the real economy is China's strategic choice for realizing high-quality development and coping with the new round of technological and industrial revolution. The manufacturing industry is the backbone and supporting pillar of the real economy and a series of reforms are necessary to push the high-quality development of the real economy.

China has long been the world's biggest manufacturing power and second-largest economy. However, there are two challenges: First, the share of the manufacturing sector dropped from 32.06 percent of the total economy in 2012 to 26.18 percent in 2020. Although the percentage rose to 27.4 in 2021, China seems to be deindustrializing too early compared with the developed countries.

Second, China's innovation capability needs to be enhanced, especially facing the fierce competition from the developed countries, which adopted re-industrialization strategies after the financial crisis in 2008.

Since 2012, the top leadership has been stressing the importance of the real economy, as well as the necessity of preventing funds from flowing into real estate and infrastructure.

As a result, China has grown stronger in basic research and original innovation, made breakthroughs in some core technologies in key fields, and boosted emerging strategic industries.

To push the high-quality development of the real economy requires reform of the science research system and the accelerated building of an innovation system, so as to enable the real economy to better innovate. In order to enhance China's innovation capacity, a number of major national projects that are of strategic, big-picture, and long-term importance are to be launched and basic research is to be strengthened.

The administrative procedures should also be simplified and the financing costs for enterprises should be reduced.

The efficiency of the real economy is determined by technology and the supply of talents. In order to render support to the real economy, it is necessary to deepen the education-oriented, talent-supported and innovation-driven strategies so as to provide fundamental and strategic support to the real economy.