Proceedings of 32nd International Business Research Conference
23 - 25 November, 2015, Rendezvous Hotel, Melbourne, Australia, ISBN: 978-1-922069-89-4
On the Promotion of Economic Efficiency under the New
Normal
Huang Tiemiao*
Under the new normal, we shall pay more attention to the quality and efficiency of economic
growth rather than the rate of economic growth. It is necessary and possible to promote
economic efficiency in the following five aspects, namely advanced philosophy,
technological innovation, economizing management throughout the whole social production
process, law of market economy and structural reform.
JEL Codes: B510, O100 and P200
1. Background
Xi Jinping, the General Secretary of the Communist Party of China (CPC) , has proposed
that the new normal of economic development is a current study and judge of the present
and future economic development of China. It is also a significant guiding ideology for
formulating the new economic and social development strategy of China.
The new normal was proposed under certain significant background. From an international
point of view, the world economy has many variables, and there are no significant
indications of recovery. From the domestic point of view, for a long time China's growth
pattern of high investment, high growth, high waste, high pollution and low quality, low
efficiency make it difficult for the economy to sustain, which has caused serious waste of
resources and serious environmental damage.
Therefore, it is necessary to develop a high quality and high efficiency development model
with the effective investment, moderate growth, and beautiful environment. This is the
most essential feature of the new normal. Under the new normal, the rate of economic
growth shall not be taken as the major criteria, while the quality and efficiency of economic
growth should be attached great importance.
2. The Necessity and Probability of Promoting Economic Efficiency
under the New Normal
The slowing down of the rate of economic growth is decided by the resources and
environment of our country. As is known to all, China has maintained 30- year high-speed
development since its reform and opening up. From 1979 to 2012, the average rate of
national economic growth is 9.8%; Guangdong province is 13.3%, much higher than that
of the would during the same period, which is just 2.8%.
During this process, we have sacrificed enormous resource price. Data presented that our
GDP has increased by 10 times (at constant price) while mine resource consumption has
increased by 40 times. The mean consumption intensity of five kinds of resources
including fresh water, primary energy, steel, cement, common nonferrous metal is 90%
higher than that of the world. Meanwhile, it has caused serious ecological damage.
* Pr. Huang Tiemiao, Department of Economics, Guangdong Institute of Public Administration, Guangzhou
city, China, Email : 6666htm@163.com
Proceedings of 32nd International Business Research Conference
23 - 25 November, 2015, Rendezvous Hotel, Melbourne, Australia, ISBN: 978-1-922069-89-4
It is entirely possible to promote economic efficiency under the new normal. It mainly lies in
the low utilization ratio of resources in China. Data show that China's overall energy
efficiency is about 33%, 10% lower than that of the developed countries; China's coal
consumption accounts for about 30% of that of the world, electricity consumption about
13%, steel consumption about 25%, cement about 50%, while the proportion of China's
GDP only accounts for less than 13% of the world. As for the proportion of capital
formation to GDP, 34.9% in 1980, 40.8% in 1995, 42.7% in 2003 and 47% in 2013, which
is significantly higher than that of the United States, Germany, France and other
developed countries, in which the general level is about 20%. Other data show that the
consumption intensity of China's steel, wood, cement were 5 to 8 times, 4 to 10 times and
10 to 30 times that of developed countries respectively; there are four times saving space
for China's water resources, 5 to 10 times for a wide variety of other resources. As long as
the resource saving reaches the level of developed countries, China can double its GDP
under the condition of the existing resources. Hence, it is entirely possible that China
promote its economic efficiency and achieve rapid economic development through
conservation of resources.
3. How to Promote Economic Efficiency under China’s New Normal
First, promote economic efficiency with advanced philosophy. Philosophy is concept,
which leads to people’s actions. In order to do any job well, one needs the right
philosophy. To promote economic efficiency under China’s new normal also requires the
right philosophy. Promoting economic efficiency is the core of improving economy.
However, there have been biases against economic efficiency for a long time, when
people misunderstood that economic efficiency was the relationship between input and
output, that is, good economic efficiency meant more output with less input. As it is shown
in later analysis that the essence of promoting economic efficiency lies in economy;
viewing from the perspective of the relationship between input and output, economic
efficiency only contains saving the living labor and materialized labor required for unit
product. Obviously, this is not enough. On one hand, good economic efficiency should
include the saving of right investment, which means that the producer must produce
according to market demands, or he will suffer from great loss with his goods not selling
well even if they are cheep in production cost, favorable in price, and excellent in quality.
For a very long period, our nation wasted greatly in this aspect, such as “zheteng
economy” and excess capacity. On the other hand, a good economic efficiency should
contain saving resulting from improving quality. Karl Marx once pointed out that the value
of every commodity is decided by the working hour required for producing the standard
quality of the commodity, which means that only labor, means of labor and subject of labor
are up to standard quality can commodity meeting the standard of society demands be
made out. In China, there exist serious problems in the quality of economic development.
Quality problems in products, projects, service, environment and other fields caused great
harms to consumers. Therefore, under China’s new normal, having right philosophy is a
must. But, what can be regarded as the right philosophy on economic efficiency? The
author tries to propose that economic efficiency is the relationship between labor
occupation, labor consumption and the standard-quality product of labor that meets social
demands and is obtained during the exchange between human beings and natural
resources on the condition that the environment is under protection and natural resources
are made reasonable use of. The essence of economic efficiency is saving throughout the
whole social production process. In order to do so, following points should be attached
importance to: 1. rational investment without waste caused by blind investment; 2. produce
high-quality products; 3. produce low-cast products with least labor occupation and labor
Proceedings of 32nd International Business Research Conference
23 - 25 November, 2015, Rendezvous Hotel, Melbourne, Australia, ISBN: 978-1-922069-89-4
consumption; 4. environmental protection is prerequisite. Under China’s new normal,
economic activities should be conducted with such philosophy.
Second, promote economic efficiency with technological innovation. Science and
technology are not only productive forces, but also the primary ones. Seeing from the
history of science and technology development, the most important influence of science
and technology on a society’s economic development lies in that it can increase the
utilization of resources, thus realizing saving. The history of technological innovation is one
of improving efficiency and saving resources. The reason why technological innovation
has such a function is that “it puts great natural forces and natural science into production
and hence greatly improves production efficiency”—says Karl Marx. Nature contains
enormous natural forces, such as water, fire, wind, geothermal energy, lightening, etc.
Only if people can apply these natural forces to production and life, it will dramatically
relieve people’s burden of work and greatly improve production efficiency. For people can
use these natural forces to invent means and equipments of production with enormous
energy, a wide variety of functions, high efficiency and fast speed. These equipments can
fly into the sky, work under the ground, land on the moon and dive in the sea. Science and
technology can continually explore and expand the usages of natural resources. It can
utilize reasonably and fully and recycle limited natural resources to reduce people’s
demands for natural resources and save resources. Science and technology is the very
reason for rapid development of modern productive forces and tremendous achievements
of our reform and open-up policy. However, the contribution of technological innovation in
China is not enough. In developed countries, technological innovation contributes 60% to
the economic growth while it only accounts for 30% in China. Consequently, to promote
economic efficiency under the new normal, we must attach great importance to
technological innovation that should focus on saving and efficiency. Firstly, stick to the
philosophy that “science and technology are the primary productive forces”. Governments
and Party committees of all levels should hold study seminars and trainings for Party and
official cadres to realize the economy and efficiency functions of science and technology
and then attach high importance to saving resources in production as well as in life.
Secondly, establish a system beneficial to performing the economy function of science and
technology. Most importantly, the market must play a decisive role in resource allocation.
Only in this way can market players think about and act upon the economy of resources
and can the utilization of resources be greatly expanded. Thirdly, establish a mechanism
good for the performance of the economy function of science and technology. Science and
technology investment, financing, appraisal and transformation must highlight the
economy function and efficiency. Fourthly, perfect and implement policies helpful to the
performance of the economy function of science and technology. Our government should
set up goals for resource economy, and establish industry policies, finance policies and
talent policies. Mostly importantly, our government should encourage science research.
Finally, set up a law system beneficial to the performance of the economy function of
science and technology. In this way, science and technology innovations have laws to
refer to and to seek protection from. Also, illegal conducts in the name of science and
technology innovation shall be fought against according to relevant laws.
Third, promote economic efficiency through strengthening economy management
throughout the whole social production process. Report of 18th CPC National Congress
pointed out that we should utilize resources economically and intensively, promote the
fundamental transformation of mode of resource utilization, strengthen the management of
economy throughout the whole social production process, dramatically reduce the
consumption of energy, water and land, and promote utilization efficiency and benefits.
A
The management of economy throughout the whole process G  W Pm
can be
analyzed from different perspectives. According to Karl Marx’s capital circulation theory,
the whole process consists of three stages. The first stage is supply, also called the
investment stage. At this stage, the producer put his capital into circulation in accordance
Proceedings of 32nd International Business Research Conference
23 - 25 November, 2015, Rendezvous Hotel, Melbourne, Australia, ISBN: 978-1-922069-89-4
with social demands to purchase means of production and labor, thus making preparations
for production. The management of economy at this state is crucial for the market plays a
decisive role in resource allocation. This stage is essential, for it decides whether the
investor’s decisions are right, whether his goods will sell well, whether his value will be
realized, and whether his investment will succeed. At the meantime, the quality and
quantity of the means of production and labor are very critical, for they will decide the
production efficiency and product quality. So, to avoid waste at the investment stage, the
investor must make careful and thorough researches, not only to choose the right market,
but also to pick the right market of raw materials, equipment, and labor. The second stage
A
is production, also known as W
. At this stage, production
Pm • • • P • • • W ’
factors are put into production. The management of economy focuses on lowering
production cost and ensuring product quality. This stage is the core of the management of
economy. The producer must set up a series of systems to prevent waste of production
factors and try all means to promote production efficiency and quality so as to ensure that
products are put into the market with quality and quantity guaranteed. The last stage is
sale, that is, W’－G’. At this stage, the products are put into the market, equally important
for the producer’s realization of economic efficiency. Karl Marx once said that the W-G
stage is a risky leap for the products; if it fails, it is not the product owner that is broken
instead of the products. At this stage, the most important part is to sell the products as
soon as possible and as much as possible, realizing the value of the products. Otherwise,
every effort once put in is in vain. Therefore, the producer must make scientific choices
and innovation in the market, means of transportation and mode of marketing. In recent
years, E-business developed rapidly, creating wonders for selling out the products and
bringing unprecedented economic efficiency for the producer. It is a good way worthy of
promotion.
Fourth, promote economy efficiency from the law of market economy. In the market
economy, favorable economic efficiency of the business runner shall be realized through
the market. The market is regular. Therefore, to understand and make good use of
economic laws, one should comply with the requirements of General Secretary Xi Jinping.
He said that one should learn and make full use of political economics, recognize and
better comply with the economic development laws in order to improve the ability to
enhance the economic and social quality and efficiency. The law of value, the basic law of
market economy, is also the basic law for the business runners to make prosperity. The
main function for the law of value is to save. In quantity, it includes the macro and micro
aspects. From the macro aspect, the save of the total social labor time shall be realized by
following the rule that the social production shall be developed in proportion to promote the
optimization of the economic structure and overcome the waste caused by blind
production. From the micro aspect, the save of the labor time for per unit production shall
be gained by reducing in all means the consumption for unit product to make sure that
certain investment can gain more output. In this way, it can provide more products for the
society and gain more profits for the business runners. In terms of quality, the law of value
requires that the producers of the goods can provide products which can meet the quality
standard that shall be achieved according to the social productivity of that time. In this
way, these kinds of products will not be wasted due to the poor quality. The saving
function of the law of value is realized through competition. That is to say, in order to play
the role of the law of value, full competition shall be carried out. The government plays a
key role in this part. First of all, the government shall create competitive conditions for
enterprises. Competition is the opposite of monopoly which excludes competition. This
requires the government to break the monopoly and provide all the enterprises with fair
opportunity to compete. The government shall completely get rid of the “father-style” care
for the state-owned enterprises during the planned economy period and help those
competitive enterprises to survive while eliminate those enterprises without competition.
Proceedings of 32nd International Business Research Conference
23 - 25 November, 2015, Rendezvous Hotel, Melbourne, Australia, ISBN: 978-1-922069-89-4
Secondly, the government shall neither be an athlete nor be a referee. It is the government
who formulates the rule. If the government plays the role of the athletes, it will work out
some unfair rules. Meanwhile, since the government is not the main element of the market,
it will not try its best to compete. In addition, what we should mostly pay attention to is the
fact that the governmental officers are easily get corrupted regardless of its role as an
athlete or referee .Thirdly, the government shall try to play the role of a good server. In the
market economic, the responsibility of the government is to formulate fair and reasonable
competition rules and release market information promptly and correctly. Meanwhile, the
government shall enhance the infrastructure construction according to the market needs.
On the basis of the value rule, the government shall try to play its economic function to
exert effective macro control and to optimize the economic structure. As for the
enterprises, if they want to make progress in the market economy, they shall go through
in-depth research and make use of the economic laws consciously to continuously
enhance the ability to control the market economy.
Fifth, promote economic efficiency from deep reform of the system. For a long time, the
low economic efficiency of our country has profound economic, political and legal
institutional reasons. From the perspective of economical system, the main reason lies in
the fact that there is not clear distinction of the property, that is to say the public production
means does not have a real owner which results in the fact that some people could use
public production means irresponsibly. This not only leads to the waste, low efficiency and
low efficiency, but also become a major source of the corruption in China. The current
issue of corruption revealed is so appalling and thought-provoking. Such serious and
pervasive corruption shall never exist in a society which has clear distinction of property
rights. Therefore, during the process of promoting economic reform of mixed ownership,
the clear distinction of public property rights shall be regarded as the core. To achieve this,
we shall carry out the joint-stock reform to quantify the operating state-owned assets to
person while the use right shall be centered to the company. We shall implement the
concept of “rebuilding individual ownership” proposed by Marx which shall be an effective
way to solve the problem of the unclear property rights. From the perspective of political
system, the reason that results in the low efficiency is that GDP is taken as an important
element for selecting the cadres. the new normal concept proposed by General Secretary
Xi Jinping has fundamentally changed the fact that the government cadres at all levels
have blind pursuit of the economic growth rate. However, the attitude and practice of
simple pursuit of GDP formed from a long time will continue to occur which require special
attention currently and in the future. From the perspective of legal system, waste without
being punished by law is an important cause of the serious waste problem in China.
Therefore, it is necessary for our country to formulate “anti-waste Law” and “Law to
Improve Economic Efficiency”. The former one is to solve the problem of waste in the
whole society while the latter one is to eliminate waste of all aspects in the production
process with the form of legislation and to standardize and guide the producers and
traders to improve economic efficiency with the form of law.
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