new economy

　　

"The wind starts at the end of Qingping, and the waves become between the waves." On October 8, Professor Paul M. Romer won the 2018 Nobel Prize in Economics. The new growth theory based on it points out that the progress of science and technology is an inexhaustible source of economic growth. Precisely at the moment, following this law, the new global economy is ushering in "transformation" under various signs.

    For the boost to total factor productivity, the new economy has both "information optimization effects" and "technical progress effects." According to the relative strength of the two types of effects, the development of the new economy can be divided into two major stages. The first stage is a decade of crisis. The "information optimization effect" is dominant, and the "technical progress effect" is in a secondary position, causing the development of the new economy to be out of sync with the overall trend of the economy. The second stage is the post-crisis era, when the status of the two major effects reverses. The new economy urgently needs to break the path dependence and realize the deep integration with the traditional economy through technological innovation, in order to open up new space for development. Looking forward to the future, under the dual guidance of market forces and policy supervision, "transformation" will bring pain and new life. In the new stage, areas with more potential for "technical progress effects" in the new economy will usher in broader growth prospects. The combination of technological innovation on the supply side and industrial upgrading, and the combination of demand side and consumption upgrade will generate the most dynamic investment opportunities, and China's new economic development will also gain corresponding comparative advantages.

    Two major effects and two major stages of new economic development. According to academic theory, long-term economic growth mainly depends on the continuous improvement of total factor productivity. The development of the new economy can produce two major positive effects. One is the "information optimization effect." By alleviating the problem of information asymmetry, the new economy uses information flow to guide the flow of factors, break market distortions, and optimize resource allocation. The second is the "technical progress effect." With new industries, new business formats, and new business models as the starting point, new and energetic companies have emerged one after another, accelerating investment in new technologies, thereby accelerating the progress, transformation and diffusion of science and technology, and this effect is particularly in the high-tech industry Significantly.

    From the perspective of the relationship between the two, the essence of the "information optimization effect" is the actual partial optimization. After the "information optimization effect" is fully brought into play, it is necessary to use the "technical progress effect" as the engine to move from lower-level optimization to higher-level optimization in order to achieve a further increase in total factor productivity. From the perspective of specific practice, the main providers of "information optimization effect" are Internet companies, which are concentrated in e-commerce, platform economy and sharing economy. The main providers of the "technological progress effect" are R&D companies of smart devices and high-tech, and accordingly support the rise of strategic emerging industries such as artificial intelligence, new materials, new energy, and new medicine. Although the "information optimization effect" and the "technical progress effect" complement each other and proceed at the same time, the relative magnitude of their contributions changes with time.

    Looking forward to the new stage, the "technical progress effect" will take the lead, and the "information optimization effect" will play a supporting role. Following this model, the new economy will be deeply integrated with traditional fields such as manufacturing, service industry, and agriculture. Through large-scale transformation of the traditional economic and financial system, the positive spillover of technological progress to the entire industrial chain will be realized; and the innovation-driven and service economy will be strengthened. Overall, in order to expand their own development space. From the perspective of external performance, this trend will be reflected in the increased correlation between the development of the new economy and the overall recovery of the real economy.

    When the "transformation" of the new economy is underway. As stated in our previous report, with the onset of a real global recovery, the supply-side reforms of economies such as China, the United States, and the European Union are in full swing around the improvement of total factor productivity. Since the beginning of 2018, out of the desire for the "technological progress effect" of the new economy, and the improvement of policy space after the crisis, governments are using both de-blocking methods to break the above-mentioned path dependence and promote the development and transformation of the new economy. As far as the United States is concerned, on the one hand, the Trump administration has condemned Amazon, which has a prominent "information optimization effect". On the other hand, it has adopted tax reforms to guide the return of overseas profits of technology companies and feed back domestic manufacturing investment. Set a moat for the high-tech industry in the United States through trade frictions against intellectual property rights. As far as the European Union is concerned, on May 25, 2018, the GDPR officially took effect, building the most stringent personal data security protection system in history, and restricting the abuse of the "information optimization effect" by the new economy in all aspects.

    And China has steadily strengthened the role of the new economy in promoting intelligent manufacturing, accelerated the return of unicorns, and built a positive cycle of "unicorns-capital markets-new economy". At the same time, in recent years, for some Internet giants, the layout for this "transformation" has actually been launched in full swing. For example, Baidu and Google are aggressively marching toward artificial intelligence, NetEase is testing modern agriculture, and Tencent and Ali are fighting fiercely in the fields of big data and cloud computing, vying to provide modern information technology services for the manufacturing industry.

    In view of this, from a global perspective, the "transformation" of the new economic development to the second stage has become a general trend. In the new economy, areas with more potential for "technical progress effects" will usher in broader growth prospects. Among them, the combination of technological innovation on the supply side and industrial upgrading, and the combination of demand side and consumption upgrade will generate the most dynamic investment opportunities. Following this perspective, based on China's steadily advancing industrial structure upgrade and relatively abundant consumption upgrade potential, China's new economic development will present a corresponding comparative advantage in the new stage.