Innovation, reform to revive global economic vitality

BEIJING - Placing reform and innovation at the top of its agenda, the G20 summit will bring new opportunities for not only China but also the world at large.

"Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy" is the theme that China, the host country, has chosen for the summit held in the eastern Chinese city of Hangzhou.

With global economy still in the doldrums, innovative growth has been conspicuously put on the G20 agenda for the first time.

Such a theme charts a clear course for the growth of the world economy and helps countries worldwide embrace the historical opportunities brought by a new round of technological and industrial revolution.

As an old Chinese saying goes, "to cure a disease, one should treat its root causes; to fix a problem, one should target its source."

Taking a closer look at today's global economy, we can see that the momentum generated by the last round of scientific and industrial revolution is waning and the potential for growth under the traditional economic system and development model is diminishing.

Meanwhile, the problem of uneven development is far from being resolved, and the inadequacies of the existing economic governance mechanisms and structures have become more evident.

These factors have weakened the momentum of global growth and dampened effective demands, causing a sluggish growth, rising unemployment, soaring debt levels, a slump in trade and investment, a deceleration of the real economy, excess leverage in the financial sector, and turbulences in the international financial and commodities market.

Both China and the world are now faced with a grave challenge to accelerate transition from old to new drivers of growth.

Economists have pointed out that the old approach of stimulating growth merely through fiscal and monetary policies has become increasingly less effective.

Historical experience shows that the dynamism and creativity unleashed through institutional reforms and the new industries and products made possible by advances in science and technologies have been essential for the world economy to turn the corner and recover from previous major crises.

Fully aware of the bottleneck of the old growth model, China is turning to innovation-driven development characterized by innovation, coordination, green economy, opening up and sharing.

By steadfastly implementing the strategy of innovation-driven development, China registered a GDP growth of 6.7 percent in the first half of 2016, remaining one of the major engines of global economic growth.

In 2015, China's R&D investment totaled 1,422 billion yuan ($212 billion), up 9.2 percent from the previous year, and the country totally granted 1.578 million patent rights, up 32.4 percent year-on-year.

China is now the world's second largest destination for venture capital after the United States. Helped by streamlined procedures, an average of 14,000 new businesses are being registered every day in China.

The state-owned firms are undergoing modernization and restructuring, coal and steel companies are slashing their overcapacity, and the government is ceding more power to the market.

The country also wants to advocate a new model of international development partnership that is more diverse, open and effective.

China's pursuit of win-win cooperation and common development is evident in many of its cooperative projects including the Belt and Road Initiative, the Asian Infrastructure Investment Bank.

China's efforts highlight a new perspective: A new model of economic governance featuring innovation, interconnectivity and inclusiveness is badly needed for the global economy to recover from sluggish growth and benefit more people.