Dear Advisors and Observers, Ladies and Gentlemen,
The closed-door conference of International Consultative Conference of Future Economic Development (ICCFED) of Guangdong Province 2007 now begins. First of all, please allow me to give a short speech.
Innovation is the greatest impetus to economic development, and is also the fundamental approach for transforming the mode of economic development and for improving the quality of economy. For regional development, innovation capability determines the overall strengths and competitiveness of the region.
With its 29 years of reform and opening up and high-speed growth, Guangdong has created economic miracles and is now facing the compelling needs to transform its development mode. In the year 2006, Guangdong's GDP was RMB 2.6204 trillion (US$328.8 billion approx.), and per capita GDP amounted to RMB 28,322 (US$3,554 approx.), both the figures reaching the level of high- and medium-income countries and regions. By taking the full advantage of the pioneer in reform and opening up, and seizing the great opportunity of international industry transfer, Guangdong has built up a processing base of worldwide influence. Its export of goods has been ranking the first in China's mainland for 21 consecutive years, taking up over 1/3 of the total in the country. It is undoubtedly the representative of "Made-in-China." Guangdong is now developing its industry toward the direction of moderate heavy industry and high level industry. It has to date shaped up its industrial system with IT products, electrical & mechanical, petrochemical, textile & garment, food & beverage, construction materials, forest & paper, pharmaceutical and automobile industry, altogether nine sectors as its key industries.
Meanwhile, we are also aware that the fast growth of Guangdong's economy is based upon its comparative advantage of lower cost. Most of the local industries are processing and manufacturing industries with low added value. Plenty of labor and resources & energy are consumed. Considerably bigger environmental cost is paid. In recent years, only 0.4 units of GDP are increased for each unit of increased investment in Guangdong, which is obviously lower than 0.67 units in industrial countries.
In Guangdong, the energy consumption for unit output of steel and cement is respectively 1/4 and 1/8 higher than international level. And water consumption for every 10,000-yuan GDP is even three times of that in the industrial countries. We have deeply realized that to construct a new model of Guangdong is determined by its current development stage. Our cost advantage in production is losing and the constraint in resource and environment is rising. Under such a trend, the extensive mode of economic development featuring high material and energy consumption and low technological input, though it did create economic miracles in the pass, is unable to propel Guangdong for a brighter future. Guangdong must turn, through innovation, its development mode into a new one of high sci-tech content, high economic profitability, low resource consumption, and less environmental pollution, and also in favor of fair and harmonious society.
In the year 2005, Guangdong clearly staged out its grand objective of constructing an innovation-oriented province, having innovation as the core for re-adjusting economic structure and transforming economic development mode. Implementation is now ongoing and initial progress is already out there. Guangdong has further improved its incentive policies on innovation in finance, credit & loan, and human resources. It is now implementing the 11th Five-year Plan on independent innovation of industrial technology. By 2006, Guangdong has built 408 research & development centers for engineering technology and technological innovation centers at provincial level or above, with the largest number nationwide. Guangdong has also topped in the country in the number of patent applications and authorizations for 12 consecutive years, in which the number of innovation patent applications has been keeping the first place since 2005. The number of applications for international patents in Guangdong was 1,722, accounting for 44% of the total in China. In Guangdong, the added value of hi-tech industry has been raised up to 25% of the industry. And the reduction of energy consumption for unit GDP and for unit industry added value has been taking the lead in the whole country. In China's Ten World Famous Brands, four are from Guangdong. "The Specification for Multi-channel Digital Audio Coding Technology" on which Guangdong has proprietary intellectual rights, was approved by China's Ministry of Information Industry in January 2007 to be the standards for the electronic industry in China.
In Guangdong, innovation just took place for very short time, and we still have a long way to go in transforming the development mode. To promote innovation, we are confronted by lots of barriers. First, we lack human resources, especially high-level talents. In Guangdong, of every ten thousand employees, only 35 are engaged in R&D, less than 1/2 in South Korea and 1/4 of that in Japan. Second, the contradiction between expansion of industry scale and lack of core technology is prominent, and the self-supply of key technology is low. Third, the corporate capability for technological innovation is weak and the technological level of the industry is relatively low. The majority of small- and medium-sized enterprises are limited by innovation technology and equipment capability, and the growth of investment into technological innovation is slow. Fourth, the mechanism for innovation input is not complete or perfect. Capital market, IPR protection and incentive mechanism also need improvement.
It is a systematic project to improve innovative capability and transform the development mode. We need to take comprehensive measures. To help transform Guangdong from a processing base into a critical hi-tech R&D base and sci-tech achievements application base, and basically build Guangdong into an innovation-oriented province by 2020, we have to fulfill the following tasks:
First, deepening the reform and improving the policies to create good environment for promoting innovation capability and transforming economic development mode. We shall deepen reforms on administrative system and investment & financing system, and give full play to market mechanism in the transformation of economic development mode. Change the evaluation system of governmental performance from the one purely pursing GDP results to one in favor of scientific development and innovation. We will also improve income distribution and consumption policy, and increase the contribution of consumption to economic growth. Change economic growth from being driven mainly by investment and export to by consumption, investment and export. We plan to improve investment policy and utilize financial funds, credit funds, venture capital, stock market, etc. to support corporate technological R&D and innovation. We will improve pricing mechanism for resources like water, electricity, gas and land. We are going to establish and improve the system of compensatory utilization of resources and the system of compensation for ecological environment, so as to encourage enterprises to save resources, protect environment and use the land intensively. We will improve the policies and regulations related to intellectual property rights and technological standards and strengthen the protection of intellectual property rights.
Second, re-adjusting industrial structure and developing modern industrial system. We plan to promote modern service industry and increase the proportion and level of service industry. We will change economic growth mode from being driven mainly by the secondary industry to by the first, secondary and tertiary industries. We will expand and deepen opening-up and better combine "inbound" and "outbound" to speed up the transformation of growth pattern of foreign trade. We are to focus on quality and promote the transformation and upgrading of processing trade. We will proactively develop service trade, creatively utilize foreign investment and optimize the structure of foreign investment. We are to highlight the role of foreign investment in independent innovation and industrial upgrading, greatly promote the integration of informationization and industrialization and to develop hi-tech industry and equipment manufacturing. We will pay more efforts in innovating and upgrading the traditional industries with high technology or advanced and applicable technology.
Third, strengthening the R&D of key technology and enhancing innovation capability for industrial technology. While supporting research on fundamental, front-line and common technology, we will also focus on the key technology in 10 major fields like consumer electronics, software and integrated circuit, biological medicine, major equipment manufacturing, advanced manufacturing, new materials, energy-saving and new energy, environmental protection and comprehensive utilization of resources, modern agriculture and modern service industry. We will build 100 provincial-level R&D centers for engineering technology and 150 corporate technological centers during the 11th Five-year Plan period. We will greatly promote the collaboration between provinces, ministries, industries, colleges and research institutes and step up cooperation between colleges and enterprises.
Fourth, centering on energy saving and emission reduction and enhancing the technological innovation to promote the construction of a resource-saving and environment-friendly society. In the 11th Five-year Plan period, Guangdong aims to reduce its energy consumption by 16%, its discharge of main pollutants by 15%, and water consumption, 20%. Therefore, we should strongly develop and promote applicable technologies for energy saving, substitute energy, utilization cyclic and pollution addressing. We will strongly promote clean production and recycling industries, and restrict access to some high energy-consuming industries like metallurgical, construction materials, petrochemical and paper-making industry. We are going to speed up the elimination of backward operation and production of electric power plant, steel & iron and cement industries and also speed up devulcanization and promote de-nitration in the electric power plants.
Fifthly, developing an innovative culture and cultivate creativity in the whole society. We shall create social atmosphere of respecting innovation, talents, and knowledge, and encouraging successes as well as treating frustrations properly. We plan to prioritize the development of education, strongly promote vocational training and improve the quality of higher education. We are to implement the program of creative talent development and introduction, and reform personnel system in science & research institutions. We will improve the incentive mechanism in enterprises and science & research institutions, as well as put efforts on the introduction, development and training of sci-tech talents, stimulating their wisdom for innovation and encouraging them to participate in innovation.
Dear advisors and observers, Guangdong will promote its construction of an innovation-oriented province with an open, practical and cooperative attitude. We expect all of you, as business leaders, experts and scholars, to present your valuable advice or comments, and contribute your wisdom and experience. We believe that the construction of innovation-oriented Guangdong will undoubtedly need enormous capital, technology, talents and management experience, which also means great business opportunity and potential. Let's join our hands together to promote technological exchange and cooperation, and share the great opportunities and value brought by innovation. Thank you!
(Full text of the remarks by Huang Huahua, Governor of Guangdong Province at the "2007 International Consultative Conference on the Future Economic Development of Guangdong Province" on November 15, 2007, as transcribed)