Unique development path needed

Yuan Zhigang Head, Economics Department Fudan University Shanghai China Daily Asia News Network Beijing

China must take a new road to industrialization in order to build a society with a comfortable level of living in the next 20 years.

This was the message conveyed by former Party General Secretary Jiang Zemin's report delivered to the 16th National Congress of the Communist Party of China, which ended Nov. 14.

Since embarking on the opening-up and reform cause in 1978, China has advanced economically at a blistering pace, and its industrial structure has been constantly upgraded.

But due to its huge rural population, China is far from completing its industrialization.

So when outlining the development model for the coming 20 years, how to integrate industrialization, post-industrialization necessities and a knowledge-based economy is an issue that must be addressed.

As a developing country, China can avoid repeating the blunders committed by developed countries by taking lessons from their history.

As a country boasting tremendous markets and a cheap labor pool in an increasingly globalized world, China can utilize foreign capital, technology, markets, and management expertise to quicken its pace of industrialization and attain the goal in a comparatively short span.

However, China is expected to encounter substantial challenges along the new road to industrialization.

First, as stated in the Party's work report, science and technology as the primary productive forces, hold the key to industrialization.

This makes education reform, especially in the higher education system, more urgent because education serves as an incubator of technological innovation and the training base for human resources. Yet education reform has lagged far behind that of other sectors in the past two decades, leaving plenty of room for systematic reform.

Second, the rapid pace of globalization has led to a heavy flow of production elements back and forth among countries. Properly seizing this opportunity would help ease the bottleneck in fields such as capital acquisition, management expertise and information technology.

But developed countries have set stern criteria for technology transfer, to the detriment of developing countries, most of which are technology-starved.

In the short term, China could make good use of the imported technology, but in the long run it must establish its own knowledge and technology innovation mechanisms, in order to be free from any disturbance in volatile international relations.

Third, because of its vast territory, China suffers from unbalanced regional economic development, ranging from the prosperous coastal areas to the backward western regions. In the race to industrialization, the gap between the regions is expected to widen.

The pressing task of containing this unwanted trend can be achieved through tax and fiscal transfer in order to help less- developed regions catch up with the advanced areas while maintaining development momentum.

Under such circumstances, the government should end regional protectionism and foster industries with comparative advantages.

Fourth, the deliberate industrialization process is expected to usher in a new era in industrial evolution.

The flow of production elements, especially labor forces, will surge in an unprecedented way, both in scale and speed, causing massive population migration to the cities.

If the current trend is maintained, mega-metropolitan city belts are likely to emerge on the Yangtze River and Pearl River deltas, forcing China to confront this new kind of internal migration problem and the ensuing urbanization woes.

Fifth, how to realize sufficient employment will be a formidable task and the most challenging job facing China during its industrialization process.

With greatly improved productivity helped by the advancement of information technology and a quickened pace of scientific innovation, enormous labor forces have been freed from agriculture and secondary industries.

To absorb those redundant labor forces, the country should take advantage of the cheap labor costs and of globalization to grow the manufacturing industry.

Tertiary industry should also be vigorously supported to enable likely areas to enter the post-industrialization stage at an earlier date.

And the modern service sector, in particular, should be developed to broaden the scope for employment.