Member of the National Committee of the Chinese People's Political Consultative Conference and researcher at the Chinese Academy of Social Sciences Institute of Economics, Huang Qunhui: Establish a multi-level financing system with a fault-tolerant mechanism

Securities Times Two Sessions Coverage Group

This year’s Government Work Report emphasizes developing new quality productive forces “adapted to local conditions.” Huang Qunhui, a member of the National Committee of the Chinese People’s Political Consultative Conference and a research fellow at the Institute of Economics, Chinese Academy of Social Sciences, said in an interview with a Securities Times reporter that developing new quality productive forces needs to strengthen the position of enterprises as the main innovators, nurture a good ecosystem for coordinated innovation among “elephants,” “unicorns,” and “gazelles” enterprises, and rely on government guidance funds to leverage market-based patient capital, risk capital, and innovation capital, thereby forming a multi-tier financing system with a built-in failure-tolerance mechanism.

Huang Qunhui pointed out that in 2024, the value added of economic activity driven by new industries, new forms of business, and new business models accounted for 18% of China’s gross domestic product, and some fields already have internationally leading R&D and manufacturing capabilities. However, in areas such as integrated circuits, industrial mother machines, high-end instruments, basic software, advanced materials, and bio-manufacturing, key core technologies still urgently need to be breakthroughs. Efforts should be increased to provide sustained and stable support for basic research, with a marked increase in the proportion of funding for basic research in total R&D spending. Further, increase the share of government fiscal expenditure on education as a percentage of GDP, and in particular encourage enterprises to increase their investment in basic research, promote deep integration of the innovation chain, industrial chain, capital chain, and talent chain, and improve the institutional framework and mechanisms that support comprehensive innovation.

“Suggest that we scientifically grasp the innovation positioning of different types of enterprises, guide all kinds of enterprises to work together to promote the development of new quality productive forces, encourage central enterprises to focus more on R&D for industry-common core technologies, do well on this big article of technology finance, rely on government guidance funds to leverage market-based patient capital, risk capital, and innovation capital, and form a multi-tier financing system with a built-in failure-tolerance mechanism.” In Huang Qunhui’s view, we need to both support and cultivate a sufficient number of “gazelles” and “unicorns” enterprises, fully leverage their role in unleashing market vitality, and also support “elephant” enterprises with large scale in seeking “new growth curves,” so they can play their role in stabilizing the overall economy’s performance; ultimately, a thriving situation of “value co-creation” among enterprises of all types will be formed.

The Government Work Report lays out a plan around “accelerating the cultivation and growth of new drivers.” Huang Qunhui said that this includes optimizing and upgrading traditional industries, cultivating and expanding emerging industries and future industries, expanding capacity and improving service quality in the services sector, and building new intelligent economic forms. On one hand, we should promote the transformation and upgrading of traditional industries toward digitalization, intelligence, high-end development, and integrated development. Fiscal policy should make good use of guidance funds to support enterprises and the digital transformation of traditional manufacturing industries; the services sector also needs to develop in an integrated manner. On the other hand, we should establish a mechanism for increasing investment in future industries and sharing risks. Loosen regulatory oversight of capital markets on the development of future industries, create patient capital and failure-tolerant capital, and let capital that emphasizes long-term returns and has a failure-tolerance mechanism support the development of future industries.

A large part of traditional industries consists of small and medium-sized enterprises. On how to empower them for a brilliant transformation, Huang Qunhui believes: first, use standards to empower small and medium-sized enterprises with digital-intelligence and green technologies, promote technological transformation and upgrading of small and medium-sized enterprises, advance the digital-intelligence transformation of manufacturing, and develop intelligent manufacturing, green manufacturing, and service-oriented manufacturing; second, deepen reform of the R&D and scientific research system, and build technology innovation research institutes that serve small and medium-sized enterprises; third, improve the quality of productive services by expanding opening up of the services sector, and advance productive services toward specialization and the high end of the value chain around the needs of small and medium-sized enterprises, thereby promoting high-quality, diversified, and convenient development of people-oriented services; fourth, provide new types of public infrastructure for the development of small and medium-sized enterprises, including information and communications networks, a nationwide integrated computing power network, major science and technology infrastructure, and so on.

When discussing the economic growth target expectations mentioned in the Government Work Report, Huang Qunhui said that in the “15th Five-Year Plan plus Five Years” period, the main goals for economic and social development emphasize that economic growth should remain within a reasonable range. If by 2035 we basically achieve socialist modernization, calculations show that per capita GDP will reach the level of moderately developed countries, and the average growth rate should be 4.3% or above. Considering that the first year of the “15th Five-Year Plan plus Five Years” period is a time to adjust the structure, prevent and defuse risks, and promote reforms, we need to leave some room, so the expected growth rate is 4.5%–5%. This growth target matches China’s growth potential. It not only leaves space and policy flexibility to respond to various uncertainties, but also helps guide all parties to focus their efforts on high-quality development and promote economic restructuring toward higher value, better quality, and superior transformation. Because regional development gaps are relatively large, some major provinces in the economy need to shoulder bigger responsibilities and strive for better outcomes.

(Editor: Wen Jing)

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