Shanghai High Quality Development Four Questions Xi Jinping | BAT | Elements

one

High quality development=low-speed development?

The Chinese economy has shifted from high-speed growth to high-quality development. Some people believe that since it is high-quality development, speed is no longer important and can be slowed down, even without further mention. In their eyes, quality and speed are an irreconcilable contradiction.

Undoubtedly, entering the stage of high-quality development and building a modern economic system, we must adhere to the principle of quality first; Indeed, the core of high-quality development is not speed. However, reasonable growth is still a goal worth pursuing.

This is determined by our vision of struggle.

There is no standard definition of "moderately developed countries" internationally. Based on data from several international authoritative institutions such as the World Bank and the International Monetary Fund, the threshold for "moderately developed countries" can be set at a per capita gross domestic product of 25000 US dollars. As a comparison, China's per capita GDP in 2022 was 12700 US dollars.

From this calculation, it can be concluded that in order to achieve the long-term goal of 2035, China's economic growth rate must reach over 5% between now and 2035. If we consider the synchronous economic growth of developed countries, China's economic growth rate will be higher.

Economist Lin Yifu believes that "the per capita GDP will reach the level of moderately developed countries by 2035" has another synonym, which is "the GDP will double on the basis of 2020 by 2035". So, from 2021 to 2035, the average annual economic growth rate needs to reach 4.7%.

Whether it is 5% or 4.7%, a certain economic growth rate is essential to achieve the 2035 long-term goal and further achieve the second centenary goal.

In fact, quality and speed may not necessarily be a contradiction. Ma Haiqian, Vice President of the Shanghai Development and Reform Research Institute, said, "Development is nothing more than allocating suitable resource elements to the right places. High quality development means that when we allocate resource elements, we no longer spare no expense as in the past, but only pursue high speed. High quality development is the reconfiguration of resource elements, so high quality does not necessarily mean low speed."

At certain times, fast speed, good quality, and low energy consumption are an "impossible triangle", meaning that only two of the three goals can be achieved simultaneously, but technological change is breaking the "impossible triangle".

Shanghai Electric Steam Turbine Factory, one of the "Four Great Kings" in Shanghai and in his 70s, has undergone renovation with the help of Shanghai Electric Digital Science and Technology. With the digital technology of the "Star Cloud Intelligent Energy Carbon Dual Control Platform", it has achieved joint promotion of production increase and energy conservation. It is expected to save 6 million yuan in electricity bills annually and recover investment costs within 5 years.

The steel industry was once a major energy consumer. In recent years, China Baowu has vigorously developed low-carbon metallurgical technology, actively researched and developed high-end technologies, and put into operation the world's first hydrogen rich carbon cycle oxygen blast furnace. Solid fuel consumption has decreased by about 30%, and carbon emissions have exceeded 20%.

Baowu Group Baosteel Baosteel's hydrogen rich carbon cycle oxygen blast furnace. Photo by Liu Jihong

"Greenization, like digitization, is the most important variable factor in promoting high-quality development." Ma Haiqian said, "In the past, emissions had no cost, but now environmental costs continue to rise, and the cost-benefit framework of enterprises has changed, giving rise to the value of greenization."

In the past 10 years, Shanghai has eliminated 500 to 1000 outdated production capacity projects annually. At the beginning of this year, the first batch of zero carbon benchmark enterprises in Shanghai were announced. In the future, more enterprises will accelerate their transformation into "green".

The new development concept has reshaped the logical relationship between speed and quality. Many practices have shown that Shanghai enterprises continue to exert efforts in high-end, intelligent, and green development, shaping their own competitiveness and pursuing high-quality development. The change in corporate development philosophy will also inevitably drive another profound transformation of the Chinese economy.

two

Miss BAT's Shanghai, is there still a chance?

Shanghai missed BAT. Baidu, founded in Beijing in 2000; Alibaba was founded in Hangzhou in 1999; Tencent was founded in Shenzhen in 1998. None of these leading enterprises in the Internet era was born in Shanghai.

"Why did Shanghai miss BAT?" Over the years, Shanghai has repeatedly asked itself and been asked this question. Shanghai has been trying to answer and surpass.

Many people say that missing BAT is equivalent to missing the Internet to some extent. In the next 20 years, the Internet industry in Shanghai was somewhat bleak compared with that in Beijing, Shenzhen and Hangzhou. Some people even worry that Shanghai, which missed BAT, will always be at a disadvantage in future industrial development.

"The question of BAT may evoke a question raised by British scholar Joseph Needham in 1954: 'Why did modern science not emerge in China?'"

This is the famous "Riddle of Joseph Needham" - China achieved more in natural knowledge and other fields compared to Western countries between the 1st and 15th centuries BC, but why did not it seize the opportunity?

Some people say that due to philosophical differences, while others say that due to ideological constraints, it is difficult to have a standard answer to this question. But now, people are more concerned about the answer to another question - when can China become a world science center?

Not every place can become a world science center, and every transition from old to new will not be easy.

In the face of unprecedented changes, China needs to make greater efforts to become a world science center. Shanghai - a city that has explicitly proposed the construction of a science and technology innovation center, has high expectations.

Science and technology innovation requires Shanghai. Shanghai has obvious advantages in basic research, talent aggregation, and enterprise innovation. At present, there are a total of 17 national major scientific and technological infrastructure projects in Shanghai. In 2021, the total social investment in basic research reached 17.773 billion yuan, accounting for nearly 10% of the R&D investment, nearly doubling from five years ago. In 2022, there were over 22000 high-tech enterprises in Shanghai, a year-on-year increase of 10%. There were 81 listed companies on the Science and Technology Innovation Board, ranking second in the country and the amount of funds raised ranked first in the country.

Shanghai also needs science and technology innovation. When the economy reaches a certain stage of development, relying on investment driven and technological imitation is difficult to support high-quality urban development. Shanghai must stimulate greater urban potential through technological innovation and provide new impetus for high-quality development.

Therefore, among the four major functions of Shanghai, the source of technological innovation is a key one. Among the five centers constructed in Shanghai, the Science and Technology Innovation Center is of utmost importance.

But in the past, simply introducing technology enterprises, landing technology projects, and investing in scientific facilities were no longer the focus of this city's future efforts. As a science and technology innovation center and source, Shanghai not only needs to gather the most advanced high-tech industries and the most innovative entrepreneurs, but also needs to create conditions for these science and technology elements to undergo chemical reactions together, continuously releasing energy to the outside world, and affecting the whole country and even the world. This kind of scientific and technological innovation is the new driving force behind China's technological progress and high-quality urban development.

The Zhangjiang Science Hall, which will be completed and put into use in 2022. Zhang Chi's camera

In the past 70 years, numerous top scholars at home and abroad have provided their own answers to the mystery of Joseph Needham, but consensus seems far from being reached.

What about the "BAT question" in Shanghai? There are also divergent opinions. In the future, there may be clearer answers. A few years ago, a self media person gave a little-known yet fair answer from the side:

"After 2000, when the Internet developed fastest, Shanghai devoted all its resources to supporting integrated circuits and filled Zhangjiang High Tech with various chip design, manufacturing and service companies, which once accounted for half of the country's output value. This road is undoubtedly the most difficult one, the most difficult one to achieve, and the one that should be adhered to most."

Almost simultaneously with BAT, a group of chip companies were founded in Shanghai: in 2000, SMIC; In 2000, Hongli Semiconductor; In 2001, Spreadtrum Communications; In 2004, Ruidike... 20 years later today, Shanghai's integrated circuit industry accounted for about 25% of the country's scale, making it truly the "first city".

Today, when the United States is trying to strangle China's chip industry, we should have a new understanding of the "question of BAT" and Shanghai's scientific and technological innovation when we look back at the millennial turn of the Internet industry.

three

Should Shanghai's gaze be inward or outward?

If summarized in one word, many people would say that the characteristic of Shanghai is its "westernization". The foreigners here are more densely populated than other cities in China, and the streets here look more European. The fashion brands here come from all over the world, and the number of coffee shops here is said to be the world's largest. Even the comparison objects of this city are often Singapore, New York, London, Tokyo... these world-class cities. Behind this adjective, which can be both positive and negative, lies a judgment: Shanghai's gaze is outward.

However, in recent years, facing the anti globalization trend, Shanghai, as an outward oriented hub, has suffered serious external shocks. Global resource factors may be forced to "cut off", industrial and supply chains may be forced to "cut off", and technological exchange and cooperation may be forced to "decouple".

Some people say that Shanghai's focus should no longer be on the outside, but on the domestic market.

But more people believe that opening up both domestically and internationally is not contradictory. Shanghai has the ability to serve as both a central node in the domestic circulation and a strategic link between domestic and international circulation.

A city has its own character. Shanghai, backed by the Yangtze River and facing the Pacific Ocean, has long been a pioneer in China's opening-up trend.

The open character determines that Shanghai is accustomed to looking outward and towards the global center city. Today's world has formed a global resource allocation network with major central cities as nodes. Shanghai regards the construction of a socialist modern international metropolis with global influence as its urban development goal and needs to occupy a more critical node position in this network.

Lujiazui, the landmark of Shanghai's opening-up to the outside world. Photo by Chen Fei

In 2019, when General Secretary Xi Jinping inspected work in Shanghai, he emphasized the need to promote high-quality economic development and required Shanghai to strengthen the "four major functions", the first of which is the global resource allocation function.

The so-called resource allocation function refers to the ability to play a decisive role in the flow, combination, distribution, and management of resource elements such as capital, land, talent, technology, and data. It emphasizes not quantity accumulation, but a kind of ability. Amidst the unprecedented changes in the world, the issue of resource allocation is particularly urgent. The world economic landscape is undergoing profound changes, and the value chain division of labor formed by the previous round of globalization may be reshuffled. Correspondingly, global resource allocation will also be adjusted.

Talent resources are the primary resource, and other resource elements such as capital, technology, and data actually flow around talent. Gathering talents from all over the world and utilizing them is Shanghai's past advantage, and it is also the key to further allocating global resources in the future. Recently, Shanghai has launched a series of "talent recruitment" service measures. In early May, Shanghai released more than 8000 postdoctoral and high-level scarce positions in public institutions worldwide, with finance, trade, shipping, technology, and every field waiting for vacancies.

Earlier, Shanghai proposed to comprehensively enhance the city's soft power and bring talents from all over the world closer and farther. The relevant documents express the vision that "the city will become a highland for quality living and a stage for achieving dreams, making those in Shanghai proud, those who come to Shanghai fall in love with it, and those who have not been to Shanghai full of longing." The future of Shanghai is a high-quality development of Shanghai, a city that embraces all rivers, and a city that gathers global resources.

Shanghai will also be the open Shanghai, both internally and externally.

four

Is the Shanghai government department managing too much?

In the mid-1980s, there was a popular saying: "It's better to find a mayor than a market." This sentence reflects the change in people's mindset at the beginning of the transition from a planned economy to a market economy. Today, nearly 40 years later, people seem less certain about this resolute statement from the beginning. Whether to find the mayor or the market is still a question.

At present, some people still insist that when enterprises encounter problems, it is better to look for the market than the mayor, because the market is the most effective means of allocating resources. The only thing that the government represented by the mayor needs to do is to create a fair business environment. They believe that the mayor should manage less.

But some people also believe that the "market" needs to be searched, and the "mayor" also needs to be searched. Because when the market fails, there is also a problem of the market being unable to provide public goods. In any system, the government is an indispensable participant in economic life. The socialist basic economic system determines that the Chinese government is a deep participant in economic development. They believe that the mayor should provide more solutions for businesses.

In recent years, Shanghai has focused on better integrating efficient markets with promising governments in practice, striving to ensure that the government is neither absent nor overstepped in economic development.

Sometimes, the government's efforts are reflected in solving practical difficulties for businesses.

Some startups require professional financial services, so the government brings in banks to connect with them; Some chip design companies cannot find wafer foundries to produce chips, so the government intervenes to match up; Some companies have reported that the procedures for applying for rental housing are complicated, so the government intervenes to coordinate

A government official in Shanghai who has been engaged in small and medium-sized enterprise services for a long time said, "In fact, what enterprises need most is companionship. Even if it cannot be solved, we can give them a shoulder to cry at their parents' house. The key is that the willingness of enterprises to confide in you is the biggest prerequisite for us to discover needs and do a good job in service. Serving enterprises is using heart, building trust."

Sometimes, successful governments are reflected in their judgment of future industries.

Returned scientist Guo Houyang has a bold idea: to commercialize nuclear fusion. However, nuclear fusion, a disruptive technology, is also very easy for entrepreneurs to "overturn". It can be said that "failure often rings the doorbell, success occasionally knocks on the door.". At present, Guo Houyang's project is in its very early stages and is expected to achieve significant breakthroughs at least until 2027.

But Shanghai is willing to wait. Since its establishment in 2021, Guo Houyang's Energy Singularity Company has received a series of support from Shanghai government departments, including being a centralized signing unit for the third anniversary project of the Lingang New Area and becoming a vice chairman unit of the Shanghai Future Industry Advanced Nuclear Energy Expert Committee.

Shanghai has laid out five major future industries, including future energy, future materials, and future space, and has identified 16 sub sectors including brain computer interfaces, synthetic biology, and new energy storage. At the Shanghai Industrial Technology Innovation Conference held in March this year, relevant departments of the Shanghai Municipal Government expressed a clear attitude - the laws of future industries are extremely difficult to capture, and the 16 sub sectors have strong uncertainty, but Shanghai's certainty lies in talent and soil. If, after 5 to 8 years of effort, several "nuclear explosion points" can be achieved in 16 fields, Shanghai's nurturing and nurturing will be meaningful.

Aerial photography of the harbor. Photographed by Meng Yuhan

At present, Zhangjiang, Lingang, and Daling Bay have become the first batch of future industrial pilot zones. Shanghai has also launched a global "Future Industry Star Competition" to compete for hard core projects and top talents. In the view of Li Yuhong, Director of the Technology Progress Department of the Municipal Commission of Economy and Information Technology, this is a tacit cooperation between the government and the effective market.

From reality to theory, the development of contemporary Chinese economy cannot be separated from the market, and similarly from the government. The Third Plenary Session of the 18th Central Committee of the Communist Party of China proposed to fully leverage the decisive role of the market in resource allocation and better leverage the role of the government. The market and the government complement each other.

45 years after the reform and opening up, when we revisit the debate between "finding the mayor" and "finding the market," we may still not be able to come up with a definitive answer, but undoubtedly we have gained a deeper understanding.