Boao discusses China's innovation "new changes," and international competition shifts toward horizontal division of labor

What industries will be reshaped by horizontal division of labor?

Looking back over the past five years, China’s GDP has increased from 110 trillion yuan to 140 trillion yuan, demonstrating a resilient growth curve with an annual average of 5.4%. By 2025, the economic increment created by China will be equivalent to the total economic output of a medium-sized economy for a year, with an expected contribution rate to global economic growth of around 30%.

New highlights and new driving forces are also emerging in economic development. The open-source model from DeepSeek has made a remarkable impact, Pop Mart’s trendy toys are being snatched up by young people around the world, and the humanoid robots from Yushu Technology have the highest shipment volume nationwide…

As we enter the first year of the “14th Five-Year Plan,” what new characteristics does high-quality development present? How can breakthroughs and innovations be achieved? On March 24, at the Boao Forum for Asia 2026 Annual Conference sub-forum “China Economic Outlook: Focusing on High-Quality Development,” several prominent guests engaged in in-depth discussions on this topic.

Huang Yiping, a distinguished professor at Peking University, director of the National School of Development at Peking University, and director of the South-South Cooperation and Development Institute, stated in an interview with Yicai that innovation is not just about green technology or AI; it runs through the entire process of economic development, aiming to enhance efficiency while continuously meeting people’s aspirations for a better life. For example, a number of emerging brands in the fast-moving consumer goods sector have mostly originated domestically. Their pricing is no longer lower than that of international brands, opening up many unexpected new tracks.

(“China Economic Outlook: Focusing on High-Quality Development” sub-forum scene. Photography/Yicai reporter Wang Fangran)

Hot Discussions on “New Changes” in Innovation

In 2026, China will face a range-based economic growth target: 4.5% to 5%. Previously, in 2016 and 2019, China also set such range-based growth targets. This year marks the first time that China’s GDP growth target has entered below 5%. This subtle change has drawn significant market attention.

At this sub-forum, Lin Yifu, former chief economist of the World Bank and director of the New Structural Economics Institute at Peking University, believes this target is set considering the economic growth potential and the actual conditions of the international and domestic economic situation. As long as no unforeseen major events occur in the international environment, it is entirely possible for China to achieve economic growth of 4.5% or even 5%; if all aspects are well managed, it may even exceed 5%.

“China maintaining growth between 4.5% and 5% can still contribute 30% to the world’s economic growth each year. China’s rapid development is not only beneficial to China but will also benefit the entire world,” said Lin Yifu.

Lin Yifu believes that based on factors such as China’s talent advantage in the Fourth Industrial Revolution, market scale, and complete industrial categories, China has an economic growth potential of 8% per year before 2035. However, since 2008, international economic growth has significantly slowed, developed countries have generally failed to recover, and the current trend of de-globalization and geopolitical conflicts has resulted in a less-than-ideal external environment, preventing the full realization of this potential.

Huang Yiping added that this process does not mean striving for short-term growth at all costs; more importantly, it involves reform and innovation. Especially in terms of general-purpose technological revolutions, such as innovations in artificial intelligence. If implemented well, it will not only achieve stable growth of 4.5% to 5% in the future but may even achieve higher.

How can this target be achieved? One high-frequency keyword mentioned by participating experts is: innovation.

Jiang Xiaojun, former deputy secretary-general of the State Council, director of the National Data Expert Advisory Committee, and honorary president of the China Industrial Economics Society, believes that in many past stages, the emphasis on new growth points has been on new industries related to innovation. An important shift during the “14th Five-Year Plan” period is to focus more attention on the transformation and upgrading of traditional industries, enhancing the output and competitiveness of existing stock through innovation. It is essential to pay attention to both new industries and the use of new technologies to transform traditional industries.

Lin Yifu emphasized that innovation must follow a basic principle, which is to promote it according to the comparative advantages determined by the factor endowments of each region. Innovating according to comparative advantages will make enterprises more competitive in the market, thereby laying the necessary foundation for coordinated, green, open, and shared development.

Lin Yifu further explained that innovation based on comparative advantages is very competitive, can accelerate economic development, and increase government fiscal revenue. At the same time, enterprises possess self-sustaining capabilities and do not need to rely on government protection, allowing the government to allocate more fiscal resources to invest in narrowing urban-rural gaps and regional disparities, as well as in the redistribution field.

Moreover, addressing the issue of “involution,” Lin Yifu pointed out that involution is an inevitable phenomenon in the process of economic development. Economic development relies on continuous technological innovation, sustained industrial upgrading, and the emergence of new productive forces. In this process, new industries with comparative advantages will continuously emerge. When a new industry forms, it will naturally attract a large amount of investment, leading to the competition we refer to as involution. This phenomenon is not only present in China but also exists in other countries. For example, during the rise of the internet industry in the 1990s, the U.S. and other countries experienced a surge in investment and intensified competition. This is a necessary process; if one tries to avoid it out of concern for involution, they will have to rely on planning to precisely control investment, which would result in a loss of economic competitiveness.

What Changes Will Occur in International Competition?

China’s new industries are developing rapidly, and the structure of foreign trade is also quietly transforming, with “the new three items” represented by new energy vehicles, lithium batteries, and photovoltaic products emerging strongly.

Jiang Xiaojun believes that during the “14th Five-Year Plan” period, the industry between China and developed countries will shift from the original complementary division of labor to a horizontal division of labor, meaning that both sides will engage in international division of labor at similar product quality and technological levels, shifting the relationship from complementarity to competition. This transition will change the perception of competitors, and the next phase of competition will become more intense, with industries and enterprises that benefit from openness also undergoing changes.

As “horizontal competition” gradually emerges, the world will seek new solutions. Lin Yifu pointed out that as China’s technological innovation and industrial upgrading progress, China will inevitably enter industries that were originally dominated by developed countries in terms of comparative advantages, leading to competition. In the face of this competition, developed countries can learn from the East Asian experience. After World War II, Japan started from labor-intensive industries and gradually shifted to the electronics industry. When China developed its electronics industry in the 1960s and formed competition, Japan did not stick to its original track but transitioned to equipment manufacturing and even the chip manufacturing industry, achieving a leap in productivity while transferring less competitive industries to other regions in Asia, thus creating new sources of profit and opening up larger markets for its own development. This experience shows that in the face of competition, the key is to open up new spaces through industrial upgrading rather than sticking to existing fields.

Zheng Yongnian, dean of the School of Public Policy at the Chinese University of Hong Kong (Shenzhen), former dean of the Qianhai Institute of International Affairs, and chairman of the Guangdong-Hong Kong-Macao Greater Bay Area Research Institute, pointed out from the perspective of development models that China’s modernization is an open-source modernization, where each country chooses a suitable model based on its own conditions.

He emphasized that this is different from the past when some Western countries, after developing themselves, tended to pull up the “ladder” and monopolize development opportunities. Instead, China chooses to extend the ladder after its own development, allowing, encouraging, and helping other countries to achieve development together. Taking the “Belt and Road” initiative as an example, China is helping local countries build the infrastructure needed for economic development, such as stadiums, hospitals, roads, and bridges, through large-scale infrastructure construction. From China’s foreign practice since the reform and opening up, China’s contribution to global economic growth is fundamentally different from the traditional Western modernization model. If sustained efforts are made, it is entirely possible to achieve more balanced global economic development.

(This article is from Yicai)