The market-oriented allocation of factors promotes the transformation of industrial structure

　　The 2023 Central Economic Work Conference clearly stated that it is necessary to lead the construction of a modern industrial system with scientific and technological innovation. Adjusting and optimizing the industrial structure and comprehensively promoting industrial intelligence, greening, and integration will provide strong support for the construction of a modern industrial system with integrity, advancement, and safety. In addition to technological progress and capital deepening, the improvement of factor allocation efficiency is another economic force to promote the transformation of industrial structure. At present, the mainland economy still has problems such as inefficient allocation caused by factor mismatch, and accelerating the reform of market-oriented allocation of factors and improving the efficiency of factor allocation will add new momentum to the adjustment and optimization of industrial structure in the new development stage, and form a reform dividend for building a modern industrial system.

　　Multiple mechanisms to improve the efficiency of element allocation

　　From a theoretical point of view, technological progress and capital deepening are the basic economic forces that promote the transformation of industrial structure, and their core theoretical mechanisms are price effect and income effect. The price effect refers to the fact that the process of technological progress or the process of capital deepening will change the relative prices of different industries or different factors, promote the substitution of industries or factors, and promote the transformation of industrial structure from the supply side. The income effect refers to the fact that technological progress and capital deepening have promoted economic growth and the increase of residents' income, promoted the continuous change of consumption structure, and promoted the transformation of industrial structure from the demand side. In the new stage of development, the mainland will continue to promote the transformation of its industrial structure, and technological progress and capital deepening will continue to play an important role, but in addition, the improvement of factor allocation efficiency is another potentially important economic force. To improve the efficiency of factor allocation, it is necessary to break down all kinds of institutional and institutional obstacles that hinder the market-oriented allocation of factors and exacerbate the degree of factor mismatch, give full play to the decisive role of the market in the allocation of factors, and realize the market determination of factor prices, independent and orderly flow, and efficient and fair allocation.

　　First, the efficiency of factor allocation should be improved, and the transformation of industrial structure should be promoted by accelerating the mutual substitution between industries. Improving the degree of market-oriented allocation of factors in specific industries will directly improve the total factor productivity of the industry and reduce the production cost and relative price of output of enterprises in the industry. This creates a price effect that encourages the industry to replace other industries, and its share of real output rises. The decline in output prices will also enhance the comparative advantage of the industry, replace the output of similar industries in other countries in the international market, and then expand the share of the industry's export trade and enhance the expansion of the proportion of the industry by the price effect.

　　Second, the efficiency of factor allocation should be improved, and the transformation of industrial structure should be promoted by accelerating the mutual substitution of factors. Reducing the flow cost and entry and exit barriers of a specific factor between different industries will enable the factor to flow from the industry with a lower factor price to the industry with a higher factor price, and then reduce the relative price of the factor in the inflow industry. This creates another price effect, prompting the inflow industry to replace other factors with them. With the increase of the proportion of this factor in the allocation of the inflow industry, when the substitution elasticity between factors is high, the allocation proportion of other factors in the outflow industry will also increase correspondingly, and when the substitution elasticity between factors is low, it will also pull other factors into the industry.

　　Third, the improvement of factor allocation efficiency will promote the transformation of industrial structure by promoting the upgrading of consumption structure. Optimizing the factor allocation structure and reducing the degree of factor mismatch will not only improve the total factor productivity and increase the remuneration of various factors, but also narrow the remuneration gap of the same factor in different industries, improve the factor distribution structure, and achieve the dual goal of balancing efficiency and fairness. On the one hand, the growth of factor remuneration will help to increase residents' income and promote the upgrading of consumption structure. On the other hand, a more reasonable distribution of factor income is conducive to narrowing the income gap, thereby expanding consumer spending and promoting the upgrading of the consumption structure of low- and middle-income groups, and effectively promoting the transformation of industrial structure from the demand side.

　　Fourth, the efficiency of factor allocation should be improved, and the role of technological progress and capital deepening in promoting the transformation of industrial structure should be strengthened. Increasing factor remuneration can effectively motivate enterprises to increase investment in R&D and innovation, accelerate technological transformation and equipment renewal, significantly improve the investment rate of enterprises, and then promote the accumulation of technology, capital and other factors, and improve the ability of scientific and technological innovation and the speed of capital deepening. This will strengthen the price effect and income effect, and accelerate the process of industrial structure transformation. Therefore, the improvement of factor allocation efficiency can strengthen and form a synergy with technological progress and capital deepening to jointly promote the transformation of industrial structure.

　　We will continue to deepen the reform of market-oriented allocation of factors

　　Judging from the actual situation, there is still a certain degree of mismatch between traditional factors such as labor, capital, and land on the mainland, and the market-oriented allocation system and mechanism of new factors such as technology and data also need to be formed and improved. Therefore, deepening the reform of market-oriented allocation of factors will help improve the efficiency of factor allocation, and the continuous release of reform dividends will be a major advantage for the mainland to promote the adjustment and optimization of industrial structure.

　　Deepening the reform of the market-oriented allocation of labor factors is conducive to the formation of a secondary population dividend. The mismatch of labor factors in mainland China is mainly manifested in the existence of a certain degree of barriers to the entry and exit of labor between urban and rural areas, regions and industries, and the labor supply structure is difficult to meet the needs of industrial transformation and upgrading and technological progress. The reform of market-oriented allocation will help reduce the cost of labor flow and optimize the structure of labor supply. On the one hand, by promoting new urbanization, we should accelerate the urbanization of the agricultural transfer population, provide sustained growth of human resources for the adjustment of the industrial structure in urban areas, and enhance the demographic dividend to promote the transformation of the industrial structure. On the other hand, by alleviating the structural employment contradictions, strengthening the support of technical and skilled talents for industrial transformation, and releasing the talent dividend that promotes the transformation of the industrial structure.

　　Deepening the reform of market-oriented allocation of capital factors is conducive to improving the quality and efficiency of financial services for the real economy. The mismatch of capital factors in mainland China is mainly manifested in the long-term inefficient occupation of financial resources in some industries and fields, and the problems of "shifting from real to virtual" of funds are more prominent, which exacerbates overcapacity and debt risks. The reform of market-oriented allocation will help optimize the capital supply structure, promote high-level financial opening, and improve the efficiency of capital use, and will increase the proportion of service-oriented manufacturing by encouraging more capital to serve the manufacturing industry, digital economy and green development, accelerate the high-end, intelligent and green transformation of the manufacturing industry, and consolidate and strengthen the foundation of the real economy.

　　Deepening the reform of market-oriented allocation of land elements is conducive to enhancing the elasticity of construction land supply. The misallocation of land elements in mainland China is mainly manifested in the fact that the supply structure of construction land is difficult to adapt to industrial and regional development, some stock land is used inefficiently and the mobility is not high, and the autonomy of land allocation in the region is relatively low. The reform of market-oriented allocation will help expand the effective supply of land. On the one hand, by reducing the cost of land for enterprises, we will promote the integrated development of advanced manufacturing and modern service industries, and promote the formation of new advantages in industrial competition. On the other hand, by reducing the cost of living for residents, accelerating the process of new urbanization and the growth of residents' consumption expenditure, the transformation of the industrial structure will be promoted on both the supply and demand sides.

　　Deepening the reform of the market-oriented allocation of technology and data elements is conducive to giving play to the leading role of scientific and technological innovation. At present, the degree of marketization of independent intellectual property rights in mainland China is not high, the development of the data element market is in its infancy, technology, data and capital have not yet been deeply integrated, and the conversion rate of technology and data elements still needs to be improved. The reform of market-oriented allocation will help to innovate the supply mode of technology and data elements, improve the factor pricing mechanism, improve the technology intensity of the whole industry through the formation of strong incentives for enterprise technology research and development and data utilization, accelerate the promotion of industrial digitization and digital industrialization, and form a new quality productivity that promotes the adjustment and optimization of industrial structure.

　　Adhere to the key points and overall promotion

　　To deepen the market-oriented reform of factor allocation, improve the efficiency of factor allocation, and then accelerate the adjustment and optimization of industrial structure, we should accurately grasp the structural differences of different factors in terms of formation characteristics, degree of mismatch and economic impact, and adhere to the key points and overall promotion. The first is to speed up the construction of a unified national market, vigorously promote the construction of a new type of urbanization, gradually relax the restrictions on urban settlement, optimize the regional supply pattern of basic public services, improve the carrying capacity of the county economy and industry and the ability to absorb employment, break the local protection and administrative monopoly, and reduce the flow cost of various factors between urban and rural areas and regions. The second is to create a market-oriented and law-based business environment, accelerate the reform of streamlining administration and delegating powers, and combining decentralization with decentralization, protect the property rights of private enterprises and the rights and interests of entrepreneurs, vigorously promote the entrepreneurial spirit, smooth the flow channels of capital and talents to private enterprises and small, medium, and micro enterprises, and ensure that all types of ownership economies use all kinds of factors equally. The third is to deepen the structural reform of the financial supply side, strengthen the financial stability guarantee system, improve the multi-level capital market system, deepen the interconnection of domestic and foreign capital markets, and innovate financial products and services that directly reach the development of strategic emerging industries. Fourth, deepen the reform of the market-oriented allocation of construction land, improve the diversified supply system of industrial land, make full use of the market mechanism to revitalize the stock of construction land, give regions greater autonomy in land allocation, and expand the scope of paid use of state-owned land. Fifth, it is necessary to form a shared, open and standardized system for the development and utilization of technology and data, establish a system for the classified and hierarchical protection of intellectual property rights and data property rights, strengthen judicial protection and administrative law enforcement of intellectual property rights, and increase the security protection of key data and core technologies.

　　(This article is the interim result of the major project of the National Social Science Fund of China, "Research on the Impact of Major Demographic Changes on China's Income Distribution Pattern" (23&ZD044))

　　(The author is a professor at Lingnan College, Sun Yat-sen University)

Source: "China Social Science Daily" April 25, 2024 Issue 2880 Author: Guo Kaiming