TIANJIN, China, Sept. 10, 2014 /PRNewswire/ -- China today faces an inflection point: the ingredients that propelled its rapid expansion and unprecedented development over the past 30 years won't fuel its expansion over the next three decades. Instead, China faces an opportunity to transition to a new wave of prosperity.
In order to move up the "value chain," it must evolve from relatively commoditized manufacturing and lower-skilled assembly to a more innovation-based economy, which includes design, logistics, financial and business services, high-tech industries and life sciences. This is according to Deloitte Touche Tohmatsu Limited's ("Deloitte Global") latest competitiveness report, Competitiveness: Catching the next wave in China.
"There is no question that China's economic transformation over the last three decades has been remarkable," says Gary Coleman, Deloitte Global Managing Director for Industries. "To grow to even greater heights, China today must embrace new sectors and strategies for growth, as well as build a culture of innovation, in order to maintain its comparative advantage."
The report maintains that in order to thrive amidst today's global economic challenges, China must transition from labor- and capital-intensive activities to those that utilize knowledge, innovation, design, IT sciences, software, and marketing. The sectors driving China's "next wave" of growth should focus on more specialized and innovative production:
The report also discusses the role of government and its revamping of economic policies. Among these is the opening up of markets to increased foreign investment—critical to China's continued growth trajectory and its ability to take its place on the world stage as an important trade partner and global leader.
"Deloitte China has been in the marketplace for almost a hundred years. We have witnessed the evolution of different industry sectors and worked with many companies to help them overcome the difficulties of transformation and realize the gains," says Clement Hung, Chairman, Deloitte China. "This report reaffirms that innovation is pivotal to China's sustained transformation and economic growth in the 21st century. The key to instilling impactful and disruptive innovation in the marketplace is ongoing policy development in important sectors including education, intellectual property protection, and market reform."
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