China’s Development: Reform & Innovation as Twin Engines

> Source: Opening ceremony of the 2025 “Understanding China” International Conference, Guangzhou — keynote speech by Huang Qifan, Executive Vice Chairman of the Academic Committee of the China National Innovation and Development Strategy Research Association, former Mayor of Chongqing.

> Length: 6,856 words | ~17 min reading time

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Macroeconomic Trends Overview

Editor’s Message:

The key to China’s sustained growth?

Reform and Innovation — working in synergy.

• Reform: Breaks bottlenecks, builds market frameworks, removes barriers, deepens property rights reform, widens openness.
• Innovation: Drives breakthroughs with ¥3.6T+ R&D spend, quantum tech advances, AI leadership, and rising new-quality productive forces.

Under the upcoming 15th Five-Year Plan, Huang Qifan identifies three major growth dividends.

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I. Reform & Innovation — Twin Growth Engines

Reform Achievements

• Economic System Reform
• Socialist market economy more complete; high-standard market system established.
• Key laws: Fair Competition Review Regulation, Private Economy Promotion Law.
• “Four pillars and eight beams” unified national market in place.
• Deepened allocation reforms: property rights, fair competition, social credit.
• Key Sector Reform
• Electricity market integration in Southern Grid provinces — 63% market transactions in 2024.
• Rural homestead land reform pilots — separating ownership, qualification, usage rights.
• SOE mixed-ownership reforms boosting vitality and efficiency.
• Opening-Up
• Negative list for cross-border service trade fully implemented.
• Manufacturing fully open to foreign investment; FDI > USD 100B for 5 consecutive years.
• Belt & Road freight train quality/frequency improved; FTZ institutional innovations rising.
• Hainan Free Trade Port preparing customs closure.

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Innovation Achievements

• R&D Investment & Capacity
• ¥3.6T R&D spend in 2024 (+48% vs 2020); intensity 2.68%.
• Global innovation ranking: #14 in 2020 → #10 in 2024.
• 26 tech innovation clusters in world top 100.
• 460K high-tech firms (up 100% since 13th Five-Year Plan).
• Core Technology Breakthroughs
• Quantum, AI, space, lunar, deep-sea: multiple global firsts.
• IC output +72.6%; domestic chip equipment usage higher.
• “Fuxing” high-speed rail, large aircraft — autonomous production.
• Made in China 2025 goals largely met.
• Innovation Ecosystem
• +83% high-tech firms since 2020; corporate R&D = 77% of total.
• 43.3% of key R&D leaders <45 years old.
• “Three New” economy valued at ¥24T (18% GDP).

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Reform clears obstacles for innovation by:

• Removing institutional barriers
• Strengthening property rights protection
• Cutting transaction costs
• Innovation fuels reform — tech breakthroughs drive institutional upgrades and economic transformation.

Result: New-quality productive forces advancing China toward socialist modernization by 2035.

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II. Three Dividends in the 15th Five-Year Plan Period

1. Urban–Rural Integration Dividend

• Align registered population urbanization with permanent resident rate.
• Achieve ~75% urbanization by 2035.
• Equal social service rights (insurance, housing, schooling) for migrant farmers.
• Greater city cluster & metropolitan area human resource support.

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2. Unified Large Market Dividend

China’s unique mega-market advantages:

• One legal system, language, currency, infrastructure standard.

Benefits:

Network effects, scale economies, reduced costs — attracting FDI.

Challenges: Local protectionism, slow regulation reforms → overcapacity, price suppression.

Goal: Implement “Five Unifications and One Opening”:

• Factor allocation marketization
• Fiscal relationship restructuring
• Local government conduct regulation
• → Create unified, open, competitive, orderly market.

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3. New-Quality Productive Forces Dividend

Drivers: Multi-point and cross-sector tech breakthroughs in rich application scenarios, full-chain support, strong talent base.

Challenges: Weak basic research, lagging education reform, poor tech–industry integration.

Fourth Plenum Proposals:

• Strengthen original innovation; focus on key core tech.
• Nationwide coordinated innovation system.
• Prioritize: ICs, industrial mother machines, high-end instruments, basic software, advanced materials, bio-manufacturing.
• Deepen sci-tech + industry integration; build world-class innovation hubs.
• Advance education–tech–talent integration.

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III. Five Pillars of New-Quality Productive Forces

Core Sectors Across History

• Energy — From coal & steam (Industrial Revolution) → electricity → clean energy (solar/nuclear/hydrogen).
• Materials — Stone → Bronze → Iron → modern steel, petrochemicals, graphene, carbon composites.
• Digital Intelligence Technology — AI’s 8-stage evolution (Turing’s framework: deep learning → brain–machine integration).
• Biomedicine — Progress in health & longevity from tribal healers to biotech revolutions.
• High-End Equipment & Advanced Manufacturing — From basic tools → CNC, lithography machines, AI devices; reshaping productivity.

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IV. Aligning Production Relations with New Productive Forces

New forces require matching systems — institutional reforms in supply-side structures.

Seven Key Recommendations:

• Increase R&D funding — target: GDP share 3% by 15th FYP, 4% by 2035.
• Boost original innovation share in R&D — from ~6% → 20%.
• Strengthen conversion of innovation to products — target: 40–50% conversion rate; reform IP splits to include commercializers.
• Build capital market ecosystems to grow unicorn enterprises.
• Define data property rights clearly; set rules for ownership & usage.
• Invest in education, culture, life quality to solve “double low” issues in human supply–demand.
• Increase tolerance & protection for high-impact innovators & entrepreneurs.

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Conclusion:

China’s sustainable high-quality growth depends on:

• Focused innovation in the five pillars
• Disruptive breakthroughs in strategic & future industries
• Institutional safeguards supporting conversion & scaling
• Human-centered reforms enabling creativity & consumption

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Extended Note:

Platforms like AiToEarn官网 embody these principles — using AI to enable creators to produce, distribute, and monetize across Douyin, Kwai, WeChat, Bilibili, Xiaohongshu, Facebook, Instagram, LinkedIn, Threads, YouTube, Pinterest, X — integrating AI generation, analytics, and performance ranking (AI模型排名). They illustrate innovation–market synergy in action, echoing national strategies for cultivating new-quality productive forces.

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