The 2021 Zhenghe Island (Guizhou) Changemakers Annual Conference and Industry Xingqian Conference was held in Guiyang on October 14-16. The theme of this year's annual meeting is "Digital intelligence is precious, industry helps".
This article is a condensed version of Wang Lin's keynote speech "The Third Opening Curtain Will Begin, China Ushers in a New Period of Strategic Opportunities" at the "Trend Forum" on October 15, and the content has been deleted:
Narrator: Wang Lin, deputy director of the Central Economic Commission of the China Democratic Progressive Party and chief economist of Zhenghe Island
Editor: Yu Xinfeng
Source: Zhenghe Island
01, the curtain of the third opening opened
I am very pleased to have the opportunity today to share some prospects for the current situation and the future.
First of all, I would like to talk about two key words: one is change, and the other is entrepreneurship.
The market is never short of change. But this year, there are 3 situations in the market that have been more frequent and acute than ever:
The first is the plate rotation; the second is the style switch, which gives relatively little buffer time for some problematic industries, such as the education and training industry; and finally, the market shock brought about.
In this case, many people ask: Where is China's economy going? Will China's future move in the established direction?
I think behind this is to see that its logic is changing. What it reflects is that the investment logic based on the dividend of the times is undergoing major changes.
On the one hand, we do see some uncertainty; but on the other hand, we must also see that the general direction of the whole country has not changed, and it is still moving firmly in the established direction.
On behalf of the Chinese government, the Minister of Commerce has now made a formal request to the CPTPP – an application to join the CPTPP. This should be a decision we made after assessing a large number of risks
Because reform is "changing the law." When we joined the WTO that year, we revised more than 10,000 laws, national and local regulations; to join the CPTPP, there may be more than 20,000-30,000 laws that need to be amended, which will be relatively risky.
But what kind of background is there? Joining the CPTPP heralds China's "third opening up" since the Opium War of 1840.
Judging from the nature of openness, the first opening after the Opium War was forced to open, when we were opened by Western artillery; and the second opening, which began in the 1980s and led by Comrade Xiaoping, was an active opening.
The current third opening is very different from the first and second openings. It is not only a voluntary and institutional opening up of China, but also a unilateral opening up in many fields.
The third opening up is a deeper level of opening up, not only to solve the traditional problems of quantity and quality of investment and trade, technological upgrading and innovation, but to compete for China's international discourse power and rule-making rights - we must participate in the formulation of the rules of the world's game. Because competition for rule-making power is at the heart of today's international competition.
An important lesson in the history of reform and opening up over the past 40 years or so is that opening up to the outside world often becomes an important driving force for our domestic reforms. There are two things worth noting:
1. Strengthen the impetus for reform
Our opening up to the outside world not only brings opportunities for trade, goods and services, but also introduces more advanced management concepts, economic systems and more perfect international rules in the world.
Thus, to a large extent, the pressure of international rules is being harnessed to increase the impetus for domestic reform.
2. More high-level technology flows into China
In addition, considering the fact that the diffusion of technology is inseparable from the flow of capital, we should be more open to foreign capital.
Whether we like it or not, it is an indisputable fact that in modern times, most of the original technology has come from western countries. This situation has not changed fundamentally so far.
Therefore, if we do not open up, we are likely to take the high-end technology dividends that have been introduced to the West, and after gradually exhausting, it may take another 10-20 years to catch up with the current world level.
With the opening up to the outside world, more high technology has flowed into China.
I think that our third opening up now will have a very obvious feature, that is, there will be quite a certain aspect of unilateral opening up.
Unilateral opening and reciprocal opening, the United Kingdom and the United States are the two best examples: the United States is always talking about reciprocal openness, only other countries open to the United States, the United States is open to them; Britain is not, the reason why Britain became a "sunrise empire" in those years, relying on unilateral opening, even if other countries are not open to Britain, Britain is also open to them.
Unilaterally open, tolerant is large. Of course, unilateral opening up also requires conditions, and our country is not talking about unconditional unilateral opening. But in general, the pace of China's opening up will become faster and faster as it applies to join the CPTPP.
So, after the marketization and opening up, we will face the second big question: what to rely on as a driving force?
As we all know, the reason why we have such a rapid development now mainly depends on 5 aspects: one is the division of labor, the second is the development of science and technology, the third is marketization, and the fourth is globalization.
Another key is the "entrepreneurial spirit", that is, the founder of Zhenghe Island, Liu Donghua, has been holding high, "rational idealism". Such an entrepreneurial spirit is an important driving force for our economic development.
02, in the era of great changes, the 4 "way out" of enterprises
We know that since the dawn of mankind, until 1800, economic growth around the world has been largely "stagnant." 97% of our human economic achievements have been achieved in the last 250 years, that is, in the 0.01% of the time since the birth of human beings.
The growth curve rises sharply. The red line in the figure is east and the yellow line is west. One set of data that can be seen from this is that the world's per capita GDP has been almost stagnant for a long time, which is the "great stagnation" in human history.
After 1800, it began to grow greatly, and the per capita GDP began to grow in a straight line, and in just over 200 years, the wealth created by people even exceeded the sum of the previous thousands of years, entering the "great growth" of human history. Under the market economy system, people have created unprecedented wealth.
A very important driving force behind this is "entrepreneurship". What is an entrepreneur? People who have the courage to take risks, uncertainties, and innovation as their responsibility.
In the historical period when great growth replaced great stagnation, there was a "great divergence" between countries and regions, and in the same 250 years, under such great economic achievements, some countries grew rapidly and some countries stagnated.
A big reason for this is that the degree of development of enterprises, the growth environment of entrepreneurs and the growth rate determine which countries and which industries will stagnate, which countries will develop which industries.
Because the enterprise is not only an economic organization, the market economy system is not only an economic system, it is also a value system and a cultural system.
Let me give you an example, Hu Xueyan was once rich enough to rival the country, without him there would be no victory for Zuo Zongtang's western expedition. But he was only a businessman, not an entrepreneur.
Who are the entrepreneurs in China's modern history? I'll give you two, Zhang Xiao and Rong Desheng. They don't just do business. If entrepreneurs are just doing business, then they are not called entrepreneurs, they have a significant impact on society as a whole.
In this case, entrepreneurs not only provide employment and wealth for society, but also entrepreneurship is the driving force for social progress.
In today's meeting place for entrepreneurs, I would like to say that entrepreneurship is the key to solving China's development challenges. Today, we are gathered here with the entrepreneurs of the island, and we have a historical responsibility.
The theories of the Western economist Schumpeter are very familiar to everyone. He believes that entrepreneurship is the engine of economic development, and entrepreneurship is a spirit of continuous innovation.
And he said: "Entrepreneurs achieve creative destruction by introducing new production functions, thereby undermining the existing market equilibrium and market structure." Therefore, in this sense, the innovative behavior of entrepreneurs is the root cause of economic development and the driving force of social development. ”
One driving force for social development is entrepreneurs, and the other is the development of science and technology, especially pure science. Like the three major Nobel Prizes just announced, the physics prizes, chemistry prizes, and medical prizes are all pure sciences, all of which are what some people call "useless science", but useless use is the biggest use.
We say that scientific development and entrepreneurship are important driving forces for the growth and progress of human wealth. Therefore, when many entrepreneurs ask me "what to do in the era of great changes" and "how should enterprises choose", I always tell them 4 ways:
1. Forge ahead in the face of difficulties
Be brave enough to face uncertainty on a new track. I take Jobs as an example, who died too early, at the age of 56.
Jobs never saw himself as an entrepreneur, he wanted to change the way humans live, and he made innovation his mission.
His innovative products, you can take a look:
Apple, opening the era of personal computers;
Pixar Computer, which transformed the entire animation industry;
the iPod, transforming the entire music industry;
The iPhone, changing the entire communications industry;
iPad, changing the PC industry.
It's all about subverting the past. This person is always innovating.
When Jobs learned that he had pancreatic cancer, his first reaction was anger: Why me? After the anger, he quickly entered the thinking: Why do people die? In the end, this inspired his desire to innovate.
He believed that death was nature's best arrangement for human beings. Jobs often asked himself, if today was the last day of my life, what would I do? Under this assumption, the way of life will be different from others.
To this day, Jobs is still influencing us, and we are still using his products.
2. "Specialization" on the traditional track
The more traditional the industry, the more vitality; the more high-tech the industry, the easier it is to be subverted by others.
Don't think that traditional industries have no prospects, they must do high-tech, in fact, not necessarily. At the very least, "food, clothing, housing, and transportation" will always have vitality, and the industry that provides the most basic needs of human beings is often the industry with the longest life. The key is to refine it.
Here I quote a Japanese saying that "a lifetime of suspense." Why are Japanese things so exquisitely made? Because they relate what they do to their own lives.
For example, the Japanese tree research industry. In 1998, the company produced the world's first gear of 100,000ths of a gram, and in 2002, Shuyan Industries mass-produced ultra-small gears weighing one millionth of a gram.
So far, this kind of powder gear has no chance of being used in any industry, but they are actually produced. That's what it takes to get to the extreme.
There are also many such examples in China, such as Cao Dewang only making automotive glass, "making a piece of Chinese own glass"; DJI does drones, and now it has achieved a world share of 70%, which is very remarkable.
3. Strengthen the industrial chain
It is necessary to lengthen the industrial chain and connect the upstream, midstream and downstream. As we all know, the company with the largest market share of milk powder in China is called China Feihe, with sales of 21 billion yuan last year, and sales this year should exceed 28 billion yuan. Why? It strings together the chain of upstream agriculture, including land and cattle raising, to the final milk powder.
4. Do disruptive technology
To quote Einstein, "You are asking the problem from the perspective, it is impossible to solve the problem".
This sentence has a philosophical flavor. From the point of view of the question, the dimension of your view of the problem has not changed; there may be many things that you have considered, but the only thing that has not been considered is that your "dimension" has not changed.
Some problems, standing in the same dimension, are unsolvable and can only be solved by moving to a higher level.
In 1916, Frank Knight, founder of the Chicago School, pointed out in his doctoral dissertation at Cornell University, "Risk, Uncertainty, and Profit": "Perfectly competitive markets will not have profits and no losses, and the real source of profits is uncertainty." ”
Because there is uncertainty, there is profit. This is a great test for entrepreneurs. Musk, an entrepreneur known to everyone, drew 5 blueprints:
1. Neuralink, brain-computer interface. Because man is never the opponent of the machine. A person with a super good memory, not as young as a young man who takes a mobile phone Baidu, is immediately killed by a second;
2. openAI, artificial intelligence;
3. SpaceX, StarLink Program. We're doing 5G now, Musk is doing Starlink, a ground network, and a Skynet, launching 42,000 satellites, 12,000 of which are low-orbit satellites. When the signal cannot be received on the ground, the satellite signal of skynet can be connected;
4. Solarcity, photovoltaic power generation;
5. Boring's vacuum tunnel train.
So back to the point, economic development, in addition to relying on the power of the government, there is also a very important force is the power of enterprises.
Including the Jobs just mentioned. In a sense, Apple is even more stimulating to the U.S. economy than the quantitative easing policies implemented by the Federal Reserve. Take the iPhone 5 phone as an example:
When Apple launched the iPhone 5, more than 5 million units were sold in the first 3 days, when the total sales of all iPhone models reached 27 million units;
In just a few months, iPhone 5 sales contributed 0.5% to U.S. economic growth;
Apple created or supported 599,000 U.S. jobs, an increase of 80,000 compared to a year ago.
As the saying goes:
"Jobs's business is clearly depicting the country's path out of the trough, lonely and gorgeous."
That's the power of business.
03. Conclusion
Finally, considering the potential for opening up, plus China has a huge market. China's opening up in any one area is enough to change the flow of international capital.
In fact, this is also true:
In January 2021, the UNCTAD report showed that China had replaced the United States in the first place for decades as the world's largest inflow of foreign direct investment in 2020, attracting $163 billion in capital inflows. The Chinese market has become the "ballast stone" of the global economy, and it is also the main market for the performance growth of many multinational companies in 2020;
In December 2020, Starbucks said it would expand its global stores from 33,000 to 55,000 over the next 10 years, with China being a top priority.
In 2020, BBA (Mercedes-Benz, BMW, Audi) sales in China have increased significantly, creating the best sales record since entering the Chinese market;
In 2021, a survey by HSBC Qianhai Securities shows that nearly two-thirds of the more than 900 institutional investors and large companies in the world plan to increase investment in China by an average of 25%.
A basic starting point for business decision-making is to "know yourself", who you really are, where your main resources are, and what your main abilities are, which is the most important.
Although at present, in the face of the uncertainty of the epidemic, in the face of fierce Sino-US trade frictions, in the face of the economic downturn, in the face of industrial policy, regulatory policies and other aspects of some new situations.
But I still want to say that all companies should face the future with confidence in the face of uncertainty.
I'm going to talk so much today, thank you.