Fang Fuqian: Deepen Reform and Tackle with Changes from Four New Trends on China's Economic Structure

Chinese economy is in a period of rapid development and is experiencing great changes, and many changes have taken place on the economic structure. First, Chinese economy becomes more self-dependent, foreign trade and export dependence continue to decline, the contribution of domestic demand to economic growth has increased, the contribution of net exports to economic growth is generally negative. Second, consumption replaces investment as the main driving force for economic growth. Third, the consumption rate is low and is on a downward trend. Fourth, the proportion of household income and workers' remuneration in the national income distribution has decreased.

China needs to tackle with these new trends by further deepening reform, opening up, pushing forward the structural adjustment and accelerating development.

First of all, we should implement the"dual circulation" strategy, and make good efforts to implement major development strategies issued by the central government.

Secondly, we should do more to expand domestic demand. In this regard, we should: First, encourage entrepreneurship and generate employment opportunities for residents through deepening reforms, increase their income and wealth, and transform their potential needs or desire for happiness into effective demands. Second, on the basis of maintaining and developing the socialist public ownership economy, we should consummate the protection of private property rights, improve the construction of the social security system, reduce uncertainty and consumption risk faced by residents through elevating positive expectations for the future, and encourage individuals to "dare to consume" and "actively consume". Third, while broadening the channels for individual income-generating and income improvement, improve the quality of consumer goods and services, upgrade and optimize the supply structure, so that individuals can "consume" and are "willing to consume". Fourth, speed up the construction of infrastructure in the central and western regions, speed up the relocation of industries to the central and western regions, and promote the increase of consumer demand and investment in the process of promoting the economic development of the central and western regions. Fifth, increase rural infrastructure construction and increase the supply of public goods for farmers, such as farmland and land leveling, water conservancy, roads, bridges, public toilets, garbage disposal stations, rural schools, rural hospitals, networks and other construction. Sixth, we will steadily promote urbanization and absorb rural residents into urban areas, and promote the growth of investment rate and consumption rate in the process.

Finally, we have to carry out reforms to promote the growth of household income and workers' remuneration in a sustainable manner. In this regard, raising wages should not be the only way to increase the income of the population. If wages rise faster than the increase in marginal product of labor, it will inevitably lead to the cost of production rising too fast, which is not conducive to enterprise development and employment growth. This paper believes that there are other ways to improve household income and workers' remuneration: First, by increasing the mobility of labor, expanding workers' choice of employment and employment opportunities, laws and policies should allow workers to work part-time or have a second and third occupation (e.g., normal work during the day, after work at night stalls or taxis to obtain income) and other ways to increase workers' remuneration. Second, through the reform and development of the financial system, investors shall have a wider scope of investment channels, which will increase their business income and property income. Third, through the development of vocational training at all levels, workers can improve their skills and capability. The higher the level of human capital accumulation the more the job opportunities for residents, so that their income would continue to improve. In the long run, this approach is crucial. Fourth, we should further reform and improve the income distribution system, implement the principle of distribution according to labor and contribution in the initial distribution, implement the principle of fairness and justice in the process of redistribution, and let non-governmental organizations (NGOs) and non-profit organizations (NPO) play a greater role in redistribution process.

In short, deepening reform and further promoting marketization is the fundamental way to implement supply-side structural reforms, by coping with the current complex situation at home and abroad, we shall expect a stronger Chinese economy.