Nine major shifts are quietly taking place in the Chinese economy

Shift One: The "Three Horse Carriages" Give Way to the "Three Engines."
　　For a long time, many people have positioned the driving force of economic growth as the "three carriages" of investment, export, and consumption. In fact, we have indeed used the "three carriages" to drive economic growth, especially since the outbreak of the 2008 international economic crisis. When external demand was insufficient, we stimulated domestic demand; when investment faltered, we stimulated consumption. However, the "three carriages" are merely three components of GDP, the results of economic growth, not the causes. They are merely tools to smooth economic fluctuations during special periods such as economic downturns or crises, not means to drive economic growth in normal times. Long-term reliance on them will have huge side effects and sequelae.
　　The true driving force of economic growth can only come from the "three engines" on the supply side—institutional reform, structural optimization, and factor upgrading. This corresponds to the reform, transformation, and innovation emphasized by the new central leadership. These are the truly healthy and sustainable forces that drive economic growth by improving total factor productivity. In recent years, we have attached great importance to promoting comprehensive reform, structural transformation, and innovation-driven development, indicating that the driving force structure of economic growth has begun to undergo significant changes.
Shift Two: The Service Economy Surpasses the Industrial Economy.
　　Since the reform and opening up, the industrial economy has been the main force in the rapid advancement of industrialization. However, between 2001 and 2013, the average annual actual growth rate of the tertiary industry's added value as a percentage of GDP was 10.6%. In 2013, the tertiary industry's share reached 46.1%, exceeding the secondary industry's share of 43.9% for the first time. In 2014, the tertiary industry's share reached 48.2%; in the first half of 2015, it further increased to 49.5%. The era of the service economy dominating has quietly arrived. It is expected that the tertiary industry's share will reach over 55% by 2020.
　　The increase in the proportion of the service economy will have multifaceted impacts on the Chinese economy, such as leading to a decline in economic growth rate, reduced employment pressure, lower energy consumption, and improved quality of life.
Shift Three: Mobile Internet Disrupts Traditional Fields.
　　The new round of global technological revolution has made tremendous progress in the field of mobile internet, and China has also shown good performance in the research and development, especially the application, of mobile internet technology. Data shows that in 2014, the number of mobile internet users in China reached 730 million, an increase of 11.8% year-on-year, and the market size reached 1343.77 billion yuan, an increase of 183.8%.
　　Mobile internet has brought revolutionary impacts and shocks to human production and lifestyles, bringing disruptive impacts and shocks to almost all industries, especially traditional industries (such as commerce, media, communications, taxis, finance, etc.). Some traditional industries that fail to connect with the mobile internet will soon be abandoned by most consumers.
Shift Four: Urban Dominance Emerges.
　　Since the new century, China's urbanization has developed rapidly. From 2002 to 2011, the urbanization rate grew at an average annual rate of 1.35 percentage points. In 2011, the proportion of the urban population reached 51.27%, an increase of 1.32 percentage points compared to 49.95% in 2010, exceeding 50% for the first time. The urban population began to dominate. In 2014, the urbanization rate increased to 54.77%.
　　Although a portion of the urban population currently lacks registered residency, their actual place of residence, work, and lifestyle are essentially urbanized. Moreover, with the large-scale improvement of infrastructure such as transportation and communication, and with the increasingly frequent economic exchanges between urban and rural areas, many rural areas, especially suburban rural areas and rural areas along transportation routes, have become essentially urbanized, enjoying a level of urban civilization similar to that of city residents.
Shift Five: Regional Integration Becomes a Trend.
　　Although regional divisions such as administrative divisions, local protectionism, etc., still exist, and are prominent in some areas, the trend of regional integration or regional economic integration is becoming increasingly apparent. The "One Belt, One Road" initiative, the coordinated development of Beijing-Tianjin-Hebei, and the Yangtze River Economic Belt, which the new central leadership is actively promoting, are clear evidence of this.
　　In addition, there are the Harbin-Daqing-Qiqihar Economic Zone in Heilongjiang, the Changchun-Jilin-Tumen Economic Zone in Jilin, the Shenyang Economic Circle and the "Five-Point-One-Line" coastal economic belt in Liaoning, the Bohai Rim region, the capital-centered green economic circle in Hebei, the Taiyuan urban agglomeration in Shanxi, the Peninsula urban agglomeration and the Yellow River Delta in Shandong, the Yangtze River Delta, the Wanjiang Economic Belt in Anhui, the Hangzhou Bay Economic Zone in Zhejiang, the Western Fujian and Zhejiang Economic Zone, the Changzhou- Jiujiang Economic Corridor in Jiangxi, the Pearl River Delta in Guangdong, the Beibu Gulf Economic Zone in Guangxi, the Changsha-Zhuzhou-Tan urban agglomeration in Hunan, the Wuhan urban circle in Hubei, the Central Plains Economic Belt in Henan, and the Urumqi-Changji integration in Xinjiang.
　　There is increasing industrial cooperation and industrial transfer between these regions, increasingly frequent cross-regional population flows, increasing joint prevention and control of environmental governance, and increasingly strengthened transportation and communication connections.
Shift Six: The Demographic Dividend Begins to Disappear.
　　China entered the demographic dividend period in 1990. From 1990 to 2010, the demographic dividend gradually increased, reaching its peak in 2010 when the dependency ratio fell to its lowest value of 34.2%. After that, the demographic dividend gradually declined, and it is expected to decline to zero around 2030 and then transition to a period of demographic debt. The debt ratio will then gradually increase, and the dependency ratio will reach around 62% in 2050, with the debt ratio also reaching a new high.
　　The actual situation is that: according to the National Statistical Yearbook, in 2011, the proportion of the working-age population (i.e., the productive population) aged 15-64 in China's total population was 74.4%, a slight decrease of 0.1 percentage points compared to 2010, and the total dependency ratio increased from 34.17% to 34.35%. In 2012, the proportion of the working-age population was 74.1%, a further decrease of 0.3 percentage points compared to 2011. This means that the turning point of China's demographic dividend disappearance has already appeared.
Shift Seven: Green and Low-Carbon Development is Increasingly Strengthened.
　　In the early stages of reform and opening up, we focused our main efforts on promoting economic growth. After more than two decades of rapid economic development in China, the constraints of resources and the environment have increased. Therefore, starting from the 11th Five-Year Plan, we have included resource and environmental indicators as restrictive indicators in our planning.
　　Especially during the 12th Five-Year Plan period, the haze problem became increasingly prominent. We raised ecological civilization construction to an unprecedented height, promulgated the strictest environmental protection law, put forward action plans for air and water pollution, and made commitments to the international community to peak carbon dioxide emissions by 2030 and strive to achieve the peak earlier. It can be said that green and low-carbon development has become a new trend in China. Preliminary estimates suggest that the cumulative total emissions of major pollutants may peak during the 13th Five-Year Plan period.
Shift Eight: The "High-Cost Era" Has Quietly Arrived.
　　Since the reform and opening up, the "low-cost advantage" has been a powerful weapon for Chinese products to compete in the international market. However, without realizing it, the Chinese economy has entered a "high-cost era." Land costs, raw material costs, energy costs, environmental protection costs, talent costs, labor costs, capital costs, intellectual property costs, logistics costs, and transaction costs have all risen comprehensively, posing a huge challenge to industrial development.
Shift Nine: Demands for Fairness Exceed Demands for Efficiency.
　　In the early stages of reform and opening up, in response to the reality of a national economy on the brink of collapse, widespread poverty among the people, and the prevalence of egalitarianism, we emphasized "taking economic construction as the central task," "development is the absolute principle," and "allowing some people to get rich first," which was essentially a policy of "prioritizing efficiency while considering fairness." At that time, the demand for efficiency was much stronger. However, after more than 30 years of rapid economic development, while the efficiency issue has not been fully resolved, the issue of fairness has become more prominent, and the demand for fairness has become much stronger.
　　In reality, data from the National Bureau of Statistics show that China's Gini coefficient for residents' income gradually rose from 0.473 in 2004 to a high of 0.491 in 2008, and has since fallen year by year, reaching 0.481 in 2010 and 0.473 in 2013. Although it has fallen in recent years, it is still significantly higher than the warning line of 0.4. Therefore, in recent years, we have begun to attach great importance to coordinating urban and rural regional development, promoting reforms to the income distribution system and monopolies, capping salaries for executives in state-owned enterprises, and carrying out targeted poverty alleviation, in order to meet the demand for fairness. However, resolving the issue of fairness remains a long and arduous task.
　　The nine major economic shifts mentioned above contain rich implications. China needs to understand these changes, adapt to the new normal, lead the new normal, strive to seize new opportunities, meet new challenges, and create a brighter future.