To revitalize the Internet economy helps to boost the real economy

A picture shows the front desk at Alibaba Group's Xixi base in Hangzhou, capital of east China's Zhejiang Province on March 14, 2014. (Xinhua)

On March 19, the People's Daily carried a front page report entitled "Positive change in Zhejiang real economy," which built around the fact that Alibaba, a web-based top representative of the new real economy, was rapidly rising.

Though the rapid new wave of e-commerce brings about great challenges to the real economy, they are really allies, not enemies.

At present, China is in the era of industrial transformation and upgrading. The Internet is redefining the value chain of manufacturing, research and development, design, production, sales and service. The new products, new processes and new services are appearing one by one based on Internet technology.

Meta-data, intelligence and information technology is the mainstream of the entity economy in the future, and there is an urgent need to revitalize it.

In fact, this is one of the major tasks of supply-side structural reform this year. It involves mechanism innovation of economic development based on the phased characteristics of China's economic and social development.

It shifts the focus of social and economic development from targeting users or clients, and puts more emphasis on the reasonable structure and solid foundation of entity economic development.

This mechanism has achieved remarkable results in deepening reform, decentralization, tax cuts, PPP, advanced manufacturing industry investment funds and other models, offering great support to the technological transformation and upgrading of enterprises.

In the optimization of the environment, the government's continuous reform and supervisory system accelerate the establishment of a legal system to provide protection for the entity economy, as well as promote the optimization of the market environment.

In platform development, there are 18 national new districts, and more than 40 national project laboratories and 89 national enterprise technology centers working for revitalization of the entity economy.

However, some people think that the impact of e-commerce is still inevitable. It has subverted the entity economy, and disturbs the price system. This view, in the author's opinion, is biased and ignores the dialectical relationship between the two economies. It should be recognized that the Internet economy belongs to the entity economy; moreover, e-commerce and traditional industries are two important components of China's overall economic development strategy, and what needs to be done is to form an effective linkage mechanism.

The entity economy and e-commerce are both different and linked. There are significant differences as to the economic model: The entity economy represents tradition -- the mainstream, macro, and integrated industry; e-commerce mainly targets online sales of traditional industry, and mainly relies on the Internet as a tool. It focuses on the micro-level and individual objects.

However, these two economies support and influence each other. The Internet economy is simply a new economic form based on information technology and closely related to the production, transportation, consumption and other economic modes of operation. It is more like the real economy and certainly doesn't belong to the virtual economy.

Its emergence not only lays a solid foundation for the development of the entity economy, but also further improves its technological transformation. The real economy remains the strong pillar of national development and service society.

Based on the entity economy and supported by the Internet and e-commerce, it has a chance of being revitalized, if we pay close attention to following three aspects:

Making systematic plans for the development of traditional industries and e-commerce, so the entity economy can develop properly. Traditional industries are the "foundation" of e-commerce and it, in turn, is a tool for the development of the entity economy.

For example, improving e-commerce is conducive to the traditional industry and quickens market docking; improving the electronic payment system is conducive to promoting the entity economic development; improving the anti-counterfeiting system is conducive to enhancing the Internet shopping environment, etc.

Reducing the cost of corporate taxes and fees so that the real economy can play its role in the market without burden. When enterprises face excess capacity, external demand downturn and the impact of e-commerce, their ability to bear taxes and fees is weakened, leading to complaints that "a lot of online retailers are messing up the price system of entity economics."

Promoting innovation-driven development. In the new era, the mainstream of the consumers is young with higher vision. If the enterprise products are not innovative, they will disappear. At present, China lacks original innovation.

Driven by innovation, the entity economy should make full use of the Internet in terms of sales models, product updates, corporate branding, etc. It is necessary to connect the Internet with traditional industry and boost the latter's development.

The entity economy is the foundation and the pillar of our national economy as well as the main driving force of China's rapid economic growth. To revitalize it is not to suppress the development of online retailers. Instead, to consolidate the basis of the development of e-commerce and to integrate e-commerce into the development of the real economy, is the effective strategy for the revitalization of the entity economy.

Zhang Shenglei is a PhD in International Relationships, Macau University of Science and Technology.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.