Priority for further reform

Restructuring the economy to maintain growth should improve people's living standards and narrow the wealth gap

China has been facing obstacles in various aspects of reform. If the 7 to 8 percent annual growth rate is not maintained, many social problems will come to the fore, the most challenging of which is unemployment. Only by "making the cake bigger" will economic restructuring be achieved and these problems solved. So the question is: How to restructure the economy to make the cake bigger?

The major economic restructuring needed is undoubtedly industrial upgrading. Today, China has become the world's factory, but the problem is that the value added to the product is too small compared to the gross export value of $1.8 trillion. "Made in China" products are still regarded as low-end, high-polluting and labor-intensive. With labor costs continually rising, the gap in production costs between China and the United States and Europe has been narrowing, while the cost advantage compared to the members of the Association of Southeast Asian Nations has vanished. That Chinese products can still occupy the global market is merely because of the limited production capacity of countries like Vietnam and the Philippines. As such, increasing the added value, ensuring product quality, enhancing enterprise productivity and gradually moving up the value chain is undoubtedly the only way to go.