Stop 'pressing the brake and accelerator together'

It is high time for the government to change the policy of "pressing the brake and the accelerator together." China's economic growth has been mainly stimulated by investment, which cannot be made by the government alone. Government investment can only prevent economic recession temporarily. The final solution is encouraging private investment as well as government investment. The government should loosen the "brake" (monetary policy) and release the "accelerator" (government investment) to ensure normal economic development.

Currently, the three hottest topics in China are growth, transformation and consumption. I suggest that the government promote industrial automation and develop precision manufacturing.

Higher consumption mainly comes from higher wages, which workers can earn only when they can create greater value, and industrial automation can help them to do this.

The government should develop precision manufacturing, to drive economic transformation. Although China produces the largest number of cell phones, computers and color TV sets every year in the world, the embedded chips, the most valuable parts of the devices, are not produced domestically. Precision manufacturing is the bottleneck in China's real economy, but it hasn't gained enough attention.

Industrial automation and precision manufacturing can bring about substantial economic growth. They are more powerful than urbanization in stimulating growth. When the two issues are addressed, China will become a highly productive economy, and the Chinese people will earn higher wages. By then, consumption will naturally increase, and China will be able to transform its economic growth model.

The author is a project manager from the Chongyang Institute for Financial Studies, Renmin University of China.

This article was translated by Chen Xia. Its original unabridged version was published in Chinese.