China'S Economy Cannot Go Out: Innovation Alone.

In the past, G7 countries were strong in their unique advantages. After that, the cost of production in India and Vietnam was lower and caught in the middle. The Chinese economy was in an awkward dilemma. How to break through? Zhou Qiren, an economics professor at Peking University, said that only by innovation and without innovation can China's economy fail to go out.

In the context of globalization, we still have many opportunities.

The following is the full text of his speech:

"Once the rich economies and poor economies get through, capital and labor will be reconfigured, which is the source of all the problems of the world economy today".

Let me start with the simplest question: if there is a rich economy, there is a total of 100 thousand yuan of capital, a total of 300 people; a poor economy, only 10 yuan of capital, 3000 people.

If the two families are apart, they are just a good family and a bad day. But what happens if they live together?

It will form a large economy, which has 3300 people and 100010 capital.

Capital and labor force will be reconfigured. This is the source of all the problems and opportunities in the world economy today.

In the old rich economy, I have the opportunity of 1/300 to win 100 thousand yuan of capital, per capita output is very high, living standard is very high, in other words, the cost is very high.

But now I compete with 3300 people for 100010. The world is different from the past.

This simple example is reduced to the relationship between two national economies in Globalization: a high level of development and a low level of development. I call it the two sea level: for example, in 1980, we are low sea level, large population, scarce capital, poor, average annual income per capita is more than 200 dollars; high sea level is the United States, the average annual income is more than 10 thousand dollars.

Without reform and opening up, these two

It's isolated.

After the reform and opening up, the two economies got through.

What will happen if the two economies, whose income is several times the annual income, get through? The capital and technology of high sea level will go down because it is profit driven. If we go to scarce areas, the returns will be even higher.

Another phenomenon is the export of large quantities of products at low sea level.

Capital and technology are combined with cheap labor. Our products are very competitive. The word "poor" is not poor but open. It is the competitive advantage of low cost.

Therefore, the key to China's economic development is three factors:

When I studied agriculture in the past, I often worry about the surplus labor force. What force can pull them into the market? Once the reform and opening up, the problems are solved.

The reform has reduced the institutional cost of China and opened up China's participation in international competition.

Low cost of light and cheap manpower can not automatically become products. If the mind is not liberated and the system does not reform, it can not be done, nor can it be done.

Therefore, the second important experience of China's economy is to reform. After the Third Plenary Session of the 11 Central Committee, we will gradually unravel our hands and feet, mobilize all of us to work together, make money and exert our strength, and have private economy and small and medium-sized enterprises.

The third rule is that Chinese are good at learning.

Even if the system, labor and land are cheap, products must be of quality and quality.

This is not going to be done, that will not be done, so nothing will be done.

I have used warm kettle from small to large, and the iron shell has remained unchanged for decades. If one thing is built, it will not be changed. How can we make things better and better? So after the reform and opening up, what Chinese people see is fresh and will begin to be copied. This is a necessary stage for the development of any country. There is nothing to lose. Later, independent research and development, thanks to the Chinese people's love for learning.

Including China's nine year compulsory education population is a large number, which is also the reason why China's manufacturing industry can rise later.

Therefore, China relies on these three elements. Once it was too poor to look back, as long as it was open, there was information, technology, opportunity, market and rapid economic development.

At present, China's economy is based on the world and its cost is still the biggest advantage.

But world competition is not just about cost.

Sloan, President of MIT business school, said that either cost leadership or be different.

China has been in the 30 consecutive year from 1978 to 2008, with an average GDP growth of nearly 10 percentage points. In 2009, it became the second largest economy in the world, surpassing Japan, and becoming the world's largest exporter in 2010, becoming the world's largest trading nation in 2013.

I am a member of the Mao Zedong era. I went to the countryside for ten years in the Northeast countryside, but I didn't use hot water for a bath in ten years. The living standard of this generation has undergone unimaginable changes. These changes will certainly attract the attention of the whole world.

Because you are changing with the world, and you come up with this low sea level, that high sea level will go down.

The capital and technology of the United States have benefited greatly from globalization. Wall Street has been so developed in the past 20 years, because the whole world is going to take his money and accept his capital service.

Technology is also represented by Silicon Valley technology. Who can imagine that apple can sell so much? If China is not open and India is not open, it will not achieve today's success.

But the population at the bottom of Pyramid is suffering from the pressure of competition that has never been seen before.

The unemployment rate of young people in developed countries has reached 40%, or the technology genius has gone to Silicon Valley or the financial genius has gone to Wall Street. In addition to these two places, other places are poorer than those of the previous generation.

I visited the United States in 2006, passing through Detroit. The 70 year old narrator and old Ford employee told me the story of Detroit and saw that people there loved her company so much. I was a little touched. I said you love your company so much. What about Detroit young people?

He came down emotionally, saying that now the young people have failed, and Ford is not hiring at all.

Where does Ford recruit? China, capital is profit driven. Why invest in the US? How good to invest in Chongqing? How good to invest in Wuhan? Anyway, the market is also here.

Later I asked, "what about your child? Do you enter Ford?" he said no, he went to Asia to teach English.

At that time, I was shocked that we had to go all the way. Not everyone was benefited. It became a competition among 3300 people.

So Motorola boss said, "I compete with your products constantly and differently."

Why does the United States see intellectual property rights more and more seriously? Because you steal my ideas and create the same thing, which is cheaper than mine. It's terrible.

But this has made China face more severe challenges. Obviously, the unique advantages of G7 countries (the United States, Japan, Germany, Britain, France, Italy and Canada) have always been there, accompanied by rapid growth in China.

Gradually lost, has not yet formed a unique advantage.

At the same time, India and Vietnam are gradually opening up and the cost is lower than ours.

So, at the beginning, it was two sea level, now is a sandwich, China is sandwiched in the middle.

What is the way out? When the advantage of the advantage is not obvious, we must rely on the cost advantage. The most important thing here is to continue to reform the system and further reduce the cost of the system.

Institutional cost is the decisive variable of China's economy, and the cost of system is reduced and the economy is increasing.

So where is China's economic opportunity?

Our product quantity is no problem, price competitiveness is no problem, over the past 20 years, China's export products quality is better, but the quality of domestic products can not keep up with the requirements of domestic demand.

Why do we go all the way now to buy products from Japan and Germany? Because the quality of domestic products is too poor.

In addition, income increase is the rising cost of time, bringing new demands for service convenience.

The average income difference between China and developed countries is 10 times, and the per capita income is only eighty-fifth in the world.

In the new global pattern, China has great potential to open up new markets.

The world is huge, and many markets are not well developed. In the past 20 years, our manufacturing capacity is very strong and our business capability is not strong.

Although the global economy is slowing down, the share of emerging markets is on the rise.

Well done, look at HUAWEI, and set up offices in 180 countries and regions, including Iraq.

HUAWEI mobilized the generation to kill them.

It is a great challenge for you to engage in business activities in different civilizations, cultures, languages, laws, and interpersonal relationships.

It is necessary to learn how the foreign capital entered China when China started the reform and opening up.

Since the 90s of last century, China's urbanization has been accelerated and its achievements are enormous.

However, the last step of urbanization is more emphasis on urban land occupation, investment and building, and less attention is paid to the integration of more people into the city, the creation of higher quality urban life, and the planning of urban and rural areas.

Land urbanization is faster than population urbanization. There are great opportunities here.

I just came back from New York, the New York subway broke down like that, but the subway is four lines.

What is the four line? In the middle, the two is the express way, the two sides are slow trains, you go far away, and very quickly, there is no need to change trains.

Speed up and slow down and plan the maximum volume.

We have two lines in Beijing and Shanghai, and two hours between the two airports may not be able to arrive. How can we call it an international metropolis? So let's not say that we have no chance to make our city attractive and encourage people to live in it. Our knowledge, management, talents and regulations are all things to do.

"Whichever is caught

It is inseparable from innovation, and the idea of influencing the times is piled up.

At every stage of economic development, there are restrictions, but there are opportunities for space. The question is what kind of combat mode can really develop the next opportunity.

No matter which opportunity to seize, we can not get away from today's keywords, innovation.

Inpet, a Austria economist, believes that if there is no innovation, the economy will be mediocre.

The total amount of the economy may also increase, but the rate of increase will not be much faster than that of the population, so there is not much increment per capita.

Economics defines the continuous improvement of per capita income as modern economic growth.

When it is poor, large income is used to buy food. Only when per capita income exceeds the critical point will it lead to other consumption and drive the change of economic structure.

What is innovation? Pete listed five innovative types:

1, the introduction of new products, or change the quality of existing products, can not always be a product.

2, the introduction of new production methods or processes.

3, open up new markets.

4, seize raw materials and semi-finished products new sources.

5, the creation of new economic organizations, we call the business mode.

Why does innovation theory mean that without innovation, the economy is mediocre? A product, a new business, at the beginning, costs are high, because there is no volume, production is not complete, before and after are not proficient.

Then practice makes perfect, scale and equipment go down, producing one million pairs of shoes, the cost will be lower and lower.

But the story is not over yet. After a certain point, it will go up again.

Why? Because the scale is expanding to a certain extent, the competition is fierce. All the workers want, the land everyone wants, the additional increment will cause the price rise in the market, no matter how hard you work, the cost curve will still go up.

This is the so-called law of cost curve.

That's the problem. How to deal with this curve? An easy way to understand is to extend the process of cost reduction as far as possible. Second is to strengthen cost control when the cost curve appears to rise.

But economists say that if you use all your tricks, the cost will eventually come up.

Inpet said there is a way to avoid it: not moving on the same cost line, making another product.

You say that building a motorcycle is expensive, and making the same car manually is relatively inexpensive.

In the same way, it's expensive to build a car. You use these artificially to build a plane.

So we look at the whole idea of cost management: the first is to give a mode of production, which has room for cost saving, and some companies can last for a long time in the market.

But in the end, the cost will rise.

Finally decide whether your business can be evergreen, and whether you can always play a big role in the market. Is it possible for you to make your product not on a cost line, can you follow it up one after another and find new cost lines, so that the cost will continue to decrease.

The introduction of new products, all the cost parameters are the same as the original, but the economic meaning is different. This is the so-called innovation theory.

However, this theory does not say.

It will happen, and you can see that innovation in the whole history of economy, industry and technology is very rare.

How did innovation happen?

To have an atmosphere is very important. If no one responds to him, that idea will decay.

So a great brain is not produced in isolation. The idea that really influences the times is piled up.

Do not think that innovation can happen anywhere. It is important to get together.

You only have insufficient principles, because once the principles are applied, there will be key difficulties that can not be solved, and they will not become products.

Only scientists are not enough, inventors, supporting technology, intellectual property protection, investment and financing, craftsmen and entrepreneurs.

One less thing, many things can only be done halfway.

An idea is never mature to maturity, no group of equally powerful, or more powerful people than you to help you polish, high-frequency interaction, it is difficult to become an industry.

This group of people should have an atmosphere, which is a common psychological inclination. In the middle, a character is very important, that is, a bridge figure who can cross the boundary, be able to talk with engineers, talk with scientists, talk with the government, and talk with entrepreneurs.

Therefore, first of all, we must recognize the importance of innovation.

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