To Build a New Economy [] with Mass Entrepreneurship and Innovation as Orientation
Based on an Inquiry into national demonstration centers of Mass Entrepreneurship and Innovation ("MEI")
Binhai Development Institute of Nankai University
Nankai Institute of Economics
Collaborative Innovation Center for China Economy
May 20, 2017
Distinguished Guests, Friends from the Media, the Faculty and the Fellow Students,
Since 1978, the success of industrialization has driven China to become a "World Factory" in 2001. With nominal GDP surpassed Japan in 2010, China became the second biggest economy in the world and was regarded as "China Miracle”. To facilitate the transition from "Manufactured in China" to "Innovated in China", China officially proposed the strategy of building an innovative nation as early as 2006. After 2012, the government intensively formulated 22 documents centering on Innovation-driven Development Strategy and" Mass Entrepreneurship and Innovation (MEI)”. After growing to be a "World Factory", how to become an influential global scientific innovation center has become the core orientation of new national strategies.
I. Ongoing qualitative changes
In recent years, China has witnessed economic downturn, dropping from 9.5% in 2011 to 6.9% in 2016. Compared with slowing-down economic growth, a series of structural data pertaining to three industrial structure, new jobs, and the ratio of R&D investment to GDP showed that China's economy is in transformation and continuous development. Proportion of tertiary industry added-value to GDP in 2012 is same to that of secondary industry, reaching 45.3%. In 2015 and 2016, this proportion respectively reached 50% and 51.6%. In the context of slowing-down economic growth, new urban jobs have increased continually from 12.21 million in 2011 to 13.12 million in 2015. From 2012 to 2016, the average annual growth rate of R & D funds is 12.34%. R & D funds expenditure of 2016 reached RMB 1.55 trillion Yuan, accounting for 2.08% of the GDP.
In order to learn the real picture of the structural transformation of the Chinese economy, and take the opportunity of Third Party Evaluation of MEI demonstration centers, teams from Nankai University Binhai Development Institute and Nankai Institute of Economics have made series of investigation and study on Beijing Haidian district, Central Business Area of Tianjin Binhai New Area, Hangzhou Yuhang District, Shenzhen Nanshan District, Chengdu Tianfu New Area, Dadukou District and Liangjiang New Area of Chongqing. Apart from macroeconomic indicators, findings indicates that structural transformation of the Chinese economy at microeconomic level since the year of 2012 merits more attention. The ongoing qualitative changes indicate that the New Economy with Mass Entrepreneurship and Innovation as orientation is taking shape and developing.
Firstly, the State Council and related departments have successively issued 22 documents relating to "Mass Entrepreneurship and Innovation”. These documents involves systems and mechanisms of innovation and entrepreneurship, finance and taxation policy, financial policy, and employment policy etc. local governments are highly proactive and self-motivated in implementing the policies relating to "Mass Entrepreneurship and Innovation" . Local governments and its related authorities have issued more than 2000 policy documents relating to "Mass Entrepreneurship and Innovation”, generating a policy system including creativity cultivation, project support, enterprise incubation, enterprise growth and IPO. With the support of the government, the social atmosphere effectively facilitating the development of “Mass Entrepreneurship and Innovation” has taken shape.
Secondly, with mass entrepreneurship spaces as the points of application, a batch of "Mass Entrepreneurship and Innovation" clusters has taken shape. By September 2016, China has 3155 mass entrepreneurship spaces, ranking first in the world. Among others, 1337 are recognized by the Ministry of Science and Technology as state-level mass entrepreneurship spaces, accounting for 42.4% of the total. As for the regional distribution of the mass entrepreneurship spaces, Beijing, Shanghai, Chongqing, Guangdong, Zhejiang, Shandong, and Jiangsu have the most spaces. In particular, Beijing, Jiangsu, Zhejiang and Guangdong are flourished with "Mass Entrepreneurship and Innovation" spaces and activities.
Learned from the practical development experiences of different regions, "Mass Entrepreneurship and Innovation" carriers, such as the mass entrepreneurship space, have presented the trend of space clustering. for example, Beijing Zhongguancun Inno Way, Dream Town and Yunqi Town of Hangzhou, Liangjiang New Area of Chongqing and Chengdu Qingrong International Community. The inception and development of clusters of mass entrepreneurship spaces have driven the inception and improvement of the "Mass Entrepreneurship and Innovation" ecosystem and become the most vigorous new innovative area with "Mass Entrepreneurship and Innovation" as orientation.
Thirdly, entrepreneurial spirit of university students and scientific and technical workers are strengthening. The number of new and innovative enterprises, especially unicorn companies, grow rapidly.
Compared with the two entrepreneurial waves of 80s and 90s, entrepreneurial subjects of the New Economy are university students, returning brains and scientific and technical workers. as indicated by survey data from China Association for Science and Technology, the proportion of 2015 new graduates who choose to establish start-ups witnessed an nearly 100% increase; among the ten million plus Internet entrepreneurial groups around China, university students account for 60% . In 2004, 15% of nearly 400,000 returning brains choose to establish start-ups. Scientific and technical workers highly recognize "Mass Entrepreneurship and Innovation" strategy, and 50% of them are "Very Agreeable", and 47.1% “Agreeable". 49.1% of scientific and technical workers have a preliminary entrepreneurial desire, and 7.7% of them have preliminary entrepreneurial plan, and 2.5% have already established their own start-ups. The proportion of university students chooses to establish start-ups increased from 2.8% in 2013, to 3.2% in 2014, and to 6.3% in 2015.
2012年以来，在“双创”浪潮中，涌现出一批独角兽公司。2015年，Spoke Intelligence and VB Profiles发布的报告显示，全球共发现229家估值超过10亿美元的“独角兽”公司，其中在中国发现了33家，主要分布在北京、上海和杭州。中国独角兽公司的数量仅次于美国，高于欧洲的13家，印度的5家和新加坡的2家。
Since 2012, unicorn companies have emerged in the waves of "Mass Entrepreneurship and Innovation". As indicated in a report released by Spoke Intelligence and VB Profiles in 2015, there were 229 "unicorn" companies with the valuation over one billion U.S. dollars, out of which 33 are from China with the bases in Beijing, Shanghai and Hangzhou. The number of unicorn companies in China is just less than United States of America, but more than 13 in Europe, 5 in India and 2 in Singapore.
科技部火炬中心和长城战略咨询合作发布的《2016 中关村独角兽企业发展报告》和《2016 中国独角兽企业发展报告》显示，2016年全国共发现 131 家独角兽企业，其中中关村拥有 65 家独角兽企业，占比 49.7%。2016 年全国独角兽企业比 2015 年增加了 61 家，其中中关村增加独角兽 24 家，成为全国独角兽增加的主要来源。从创办的时间看，中国的大部分独角兽企业都是 2012 年后成立的。在中关村的独角兽公司中，2014 年及之后成立的有 24 家，占中关村独角兽企业数量的 36.9%。2012 年及之后成立的独角兽共有 35 家，占中关村独角兽企业数量的 54%，2011 年及之前成立的企业共有 30 家，占总数的 36%。
As indicated in the "2016 Zhongguancun Unicorn Enterprise Development Report" and "2016 China Unicorn Enterprise Development Report" jointly released by Torch High Technology Industry Development Center and Great Wall Strategy Consultants, there are 131 unicorn enterprises in China in 2016, out of which Zhongguancun have 65 unicorn enterprises, accounting for a ratio of 49.7%. The number of unicorn enterprises in 2016 increased by 61 than that of 2015. The number of new unicorn enterprises of Zhongguancun in 2016 reached 24, becoming the main source of China's new unicorn enterprises. Judged by the date of incorporation, most of China's unicorn enterprises are incorporated after 2012. Among the Zhongguancun unicorn companies, 24 of them are incorporated after 2014, accounting for a ratio of 36.9%. the number of Zhongguancun unicorn enterprises incorporated in and after 2012 is 35, accounting for 54% of the total; the number of Zhongguancun unicorn enterprises incorporated in and after 2011 is 30, accounting for 36% of the total.
Fourthly, new industry, new product, new styles of business and new patterns continue to emerge. New Economy and new drivers begin to take shape. Driven by innovative entrepreneurial activities, new industry, new product, new styles of business, and new patterns continuously emerge. As indicated by the data of 2017Q1 economy, high and new technology industries like electronic information, intelligent manufacturing, new energy, and new materials present the momentum of rapid growth. the widespread application of Information Technologies such as computer, mobile termination and Internet, and the emerging of new styles of business including third-party payment, on-line shopping, Online Car-hailing, online meal ordering and online medical service are changing from day to day, unceasingly improving people's life styles and driving the economic growth.
The influence of "Mass Entrepreneurship and Innovation” on the real economy is not only reflected by the emerging of new industry and new styles of business, but also the reflected by the reform of traditional industry or the rural areas. As indicated in a report of AliResearch, there are 1311 Taobao villages in China by August 2016, spreading over 18 provinces, cities and regions. The Taobao Village Phenomenon and the triggered rural collective entrepreneurship have become basic driving forces for continuing rural industrialization.
Fifthly, in order to adapt to the development of New Economy and new driving forces, system reforms relating to science and technology, education and commercial systems are being pushing forward at accelerated speed. To adapt to the development of Entrepreneurial and Innovative Economy, reform of commercial systems initiated by the government greatly promoted the innovative and entrepreneurial activities of market entities. As indicated by the survey data of China Association for Science and Technology, the reform of commercial systems in 2014 has remarkably influenced the entrepreneurial and innovative activities. Average time spent in registering a company was reduced from 26 days to 14 days. The award of a business licenses necessitate 5 days in Liaoning Province, 3 days in Beijing and only one day in Shenzhen. As the reform of commercial systems greatly reduced the cost of incorporating an enterprise, the average daily registration amount of enterprises after the reform was increased from 6900 to 11000.
Driven by the implementation of the "Mass Entrepreneurship and Innovation" policy, both scientific research institutes and universities have become the main battlefield of "Mass Entrepreneurship and Innovation”. According to an inquiry (2015) made by China Association for Science and Technology, 67.1% of university students believed that entrepreneurial atmosphere had formed in their respective universities. The entrepreneurial desire of staff from scientific research institutes and universities are greatly promoted. On May 16, China Iron & Steel Research Institute convened "Mass Entrepreneurship and Innovation Conference", established China Steel Research Dahui Entrepreneurial and Innovative Base, and issued "Policies and Implementation Opinions by Steel Research Dahui Entrepreneurial and Innovative Base of China Iron & Steel Research Institute Group on the Encouragement of Innovation and Entrepreneurship", driving the scientific research institutes and the Group to become a national team of "Mass Entrepreneurship and Innovation" .
As indicated by ongoing qualitative changes, China is transforming from manufacturing economy to innovative economy and the New Economy with Mass Entrepreneurship and Innovation as orientation is taking shape at rapid speed. The basic logic of inception and evolution of the New Economy with Mass Entrepreneurship and Innovation as orientation is as follows: based on the second new science and technology industrial revolution with Information Technology as dominant element, the "Mass Entrepreneurship and Innovation" activities will drive the industrialization of emerging science and technologies, help to adapt to the changes of consumption structures, and proactively push forward the supply-side structural reform, and the transformation and development of Chinese economy. Supported by the vigorous and efficient "Mass Entrepreneurship and Innovation" ecosystem, the convention and normalization of conducting Entrepreneurial and Innovative activities are the essential features of the New Economy.
II. Essence of the New Economy
The emerging and growing new economy is the outcome of a new science and technology industrial revolution dominated by the second information technology revolution. Compared with the development of manufacturing economy, the micro basis of new economy is the innovative entrepreneurial activities, presenting the convention and normalization of "Mass Entrepreneurship and Innovation”. Therefore the new economy is a typical innovative economy. As the normal form of a new technical economy, data and computing are the key elements to be invested in the development of the New Economy. With data and computing becoming key elements, the new economy no only presented the development of the emerging industries including big data and Cloud Computing, but also the integration and development of Internet and traditional economy.
In 2016, the duly proposing of a new economic concept means that the Chinese economy has entered into a new development phase. Scientific understanding and mastering of the essence and development logic of a new economy is the precondition and foundation to formulate new economic development strategy.
Firstly, the current emerging new economy is different from the U.S. new economy emerged in the 90s. On one hand, the new economy of the 1990s U.S. is the outcome of the first information technology and industrial revolution with IT industry as dominant element. Today's new economy is promoted by the second information technology and industrial revolution with Internet, Internet of Things, Cloud Computing and big data industry as dominant; on the other hand, the continuous integration between the Internet and the real economy constitutes the dominant logic of the development of the New Economy. Online and offline become the primary standard to distinguish traditional economy and the new economy.
Secondly, the emerging and development of the new economy relates to structure change of consumption. The New Economy is a series of new economic phenomena appeared when the Second-Information-Technology dominated new science & technology and industrial revolution adapt the supply-side to the consumption structure change. Among others, "Mass Entrepreneurship and Innovation” is the basic driving force of the development of the New Economy. Internet Plus and intelligent manufacturing are important. Features of the new economy.
Thirdly, the new economy has four characteristics in terms of industrial development: first, new science and technology and industrial revolution brought about by inter-penetration of various technologies dominated by breakthrough and application of information and technologies; second, information and data are the core elements of the development of the New Economy; third, further detailed social pision of labor with demand as orientation; fourth, integration and development of the three industries with intelligent manufacturing as forerunner.
In the end, New Economy is real economy, namely, the New Real Economy. Although some entrepreneurs and scholars believe that Internet economy is virtual economy, Internet is not virtual economy on the whole. Internet economy is the New Real Economy generated during the promotion of the real economy. With continuous penetration of the Internet into the real economy and the transformation of the real economy, the development of the New Economy will continuously bring about a series of new transformations including production method, production organizational form, circulation mode, manufacturing pattern and life-style.
For quite a long time, we excessively rely on the understanding of the traditional economy, especially the theoretical understanding of the logic of industrial and economic development during the formulation and implementation of developmental strategies. We can say that the thinking of industrialization is still affecting and hindering the thinking and methods of the current economic development. The scientific understanding of the New Economy will help us to break the old habitual way of thinking, re-consider the driving force and mechanism of economic development at the new stage, and formulate effective strategies.
III. Driving Force and Mechanism of the Inception and Development of the New Economy
Internet is a technological revolution with the lowest information cost until now. Based on the occurrence and development of the second information technology revolution, the new economy is greatly different from traditional economy in terms of micro structure, resource allocation and institutional structures. Judged from actual conditions, the characteristics of the development of the New Economy in terms of intrinsic driving forces and mechanisms are as follows.
(I) New innovative areas are the engines of the development of the new economy
Since 2012, regardless of Beijing Haidian district, Shenzhen Nanshan District or Hangzhou Yuhang District, it is the new innovative area but not traditional industrial parks and high & new technology parks that has become the engine of the development of the New Economy. With the further gathering of "Mass Entrepreneurship and Innovation" resources, new innovative areas are driving the transformation of the economically central cities into scientific innovation centers with world-wide influences. As clusters of the new economy and the birthplace of the new driving forces, the new entrepreneurial area is the new engine of China's economic development at new stage.
Since the reform and opening-up and at the first and third stage of industrialization, industrial clusters including villages and towns situated at suburbs and suburban districts, industrial parks and high & new technology industry parks are the major space carriers of China's economic development. With the emerging of the industrial clusters, the urban downtown area begin to decline. Since 2000, the main strategy we have adopted to deal with the decline of downtown area is to develop service industries including business, commercial service, finance, headquarters economy, culture, leisure and tourism through the development of residential and business real estate. Since 2012, new innovative areas have become the new direction of urban planning, renewal and transformation. Different from industrial parks and high & new technology parks, the new innovative areas, as clusters of the new economy, have the following characteristics:
(1) Compared with traditional industrial parks and high & new technology industry parks, new innovative areas are the cluster areas of universities, scientific research institutions, innovative enterprises, new and innovative enterprises, mass entrepreneurship spaces and accelerators. Intensive gathering of innovative resources is the typical feature of new innovative areas.
(2) Renewed or modified from downtown areas and sub-central areas, new innovative areas emphasize transportation, housing, and the distance and convenience of office, business and commercial facilities. Population, knowledge and various culture are the key elements to keep the new entrepreneurial district more innovative.
(3) Though new innovative areas are usually emerged spontaneously, elaborate planning by the government is also of great importance. For example, Zhongguancun Avenue of Beijing Haidian district and Dream Town of Hangzhou Yuhang District are both independently chosen by enterprises and benefiting from the accelerated development under government planning. The development of new innovative areas often present the unification between distinctiveness and high level planning.
New innovative areas are chosen to develop in the downtown because, on one hand manufacturing industry is no longer the key element of new science and technology and industrial revolution, but the gathering of knowledge, information, and talents is the most important element of development. The development of emerging enterprises and industries no longer need low-cost land and labor, but scientific research institutions, knowledge, creativity, related assets and perfect commercial supporting environment; on the other hand, the choosing of the location relates to the site-selecting preference of the talents and enterprises engaged in the new information technology industry. These enterprises and talents prefer to choose downtown areas with convenient and complete transportation and commercial supporting facilities, but not suburban areas.
To facilitate the development of new entrepreneurial areas, General Office of the State Council promulgated "Implementation Opinions on the Establishment of "Mass Entrepreneurship and Innovation Demonstration Centers", and listed the first batch of 28 Entrepreneurial and Innovative Demonstration Centers. The 28 state-level Entrepreneurial and Innovative Demonstration Centers include 17 regional demonstration centers, 4 universities and scientific research institutes and 7 enterprises.
The establishment of National Entrepreneurial and Innovative Demonstration Centers is to explore entrepreneurial and innovative patterns and typical experiences that can be replicated and spreadin the development of innovative economy, so as to promote the development of China's innovative economy. There are two considerations in the establishment of Entrepreneurial and Innovative Demonstration Centers: Firstly, rely on the advantageous areas gathered MEI resources and take the advantages of universities, scientific research institutes and innovative enterprises, guide the input of entrepreneurial and innovative elements, effectively integrate universities, scientific research institutes, enterprises, finance services, Intellectual Property services and social organizations to implement entrepreneurial and innovative policies and measures; support the establishment of a batch of entrepreneurial and innovative backing platforms and explore and generate different demonstration patterns; Secondly, take into full consideration of the conditions and features of entrepreneurial and innovative development of east China, the middle and the northeast, and explore and generate distinctive regional MEI patterns by taking respective advantages and resources. Along with the building and development of "Mass Entrepreneurship and Innovation" demonstration centers, innovation presents obvious polarization phenomenon.
(II) Internet and data platform: new mechanism of resource allocation
Compared with industrial economy, platform gradually becomes the dominant element of resource allocation during the development of the New Economy driven by the Second Information Technology Revolution. Full understanding of the leading role of platform in resource allocation is essential to understand the development and logic of the new economy.
At the preliminary stage of the development of the New Economy, the main function of platform is trading. As the leader dominating the transformation of retail industry, Internet trading platform has built E-commerce ecosystem through integrating businesses, Third Party service provider, upstream and downstream industry chains including logistics, making it possible to generate a massy amount of real-time online shared data.
Although trading platform generates a massy amount of real-time online data, it could not translate a mass of real time online data into shared data and computing through big data, Cloud Computing and data mining, and could not drive in-depth integration between Internet and real economy. The transition and evolution from a trading platform into a data platform is essential for the development of the New Economy. As the data platform develops, data and computing will become the new low-cost input elements following land, labor, capital, technology and systems. Powered by data and computing, data platform will continually promote the penetration of Internet into a real economy, generating a New Real Economy ecosphere with wider scope.
By changing the traditional chain trading, manufacturing and supply system, data platform could integrate design, production, circulation, trade and consumption into a network, unceasingly reduce transaction cost and production cost, facilitating accelerated further pision of social pision of labor. In the meantime, data platform unceasingly remolds innovative systems, driving the evolution from innovative system to innovative ecosystem. Data platform could smash the boundary between traditional innovative organizations and reduce the cost of knowledge restructuring, making MEI to become a "convention" of economic activities.
(III) Integrative Development of the Internet and Hard Technology
Internet entrepreneurship centering on business model innovation is the active domain of the current entrepreneurial and innovative activities. Internet entrepreneurial activities have promoted the efficiency of economic operations and gave birth to new business patterns. Compared with business model innovation, the integration of Internet and hard technology represents the trend of New Economy.
Two trends occur while Internet integrates with hard technology. Firstly, the rising and development of data platform as represented by IngDan. IngDan technology is an Offline+Online vertical platform in the field of hardware innovation. It provides entrepreneurs with a series of services including innovation information, supply chain know-how, and right supplier connecting. Thus, it is called the Alibaba in manufacturing. So far, IngDan has gathered more than 7000 intelligent hardware innovation projects, 3000 suppliers and 4 million fans of intelligent hardware.
Secondly, the emergence of MEI Hard Technology clusters, represented by Z-Park I-M-WAY. It foresees the rapid uprising of a batch of new innovation areas with MEI Hard Technology as orientation. Many innovative technology enterprises including G-wearables, Trustworthy and Han Tang Zi Yuan have settled in I-M-WAY since its opening in July, 2016. And these enterprises are busy with entrepreneurial activities like the intelligent manufacturing of Internet of Things, sensors, AI, virtual reality, 3D printing and robots. In order to serve these enterprises, Z-Park I-M-WAY has built many “intelligence-friendly” MEI ecosystems, covering agile manufacturing, industrial design, technical solution R&D, test and certification, small batch trial production, collaborative services and marketing. Such unique MEI ecosystems can satisfy hard technology enterprises’ every need from industrial design to marketing.
(IV) The Springing Up of New Mixed Organization of “Government-Industry-University-Research”
As China's investment in science and technology is consistently increasing, the transfer and transformation of original works become the motive power for the development of the new economy. The frontier research of original work transfer and transformation is to build an innovation community who share benefit and risk based on the establishment of a new mixed organization—Government-Industry-University-Research in order to realize collaborative innovation among scientific research institutes, between these institutes and the industry, and between China and other countries.
As a new mixed organization, Beijing Institute of Collaborative Innovation (BICI) has set an example in promoting the industrialization of scientific and technological achievements. BICI was founded in Aug, 2014. In more than two years’ time, it has developed into a big innovation community with focus on scientific innovation and industrialization project. This innovation community consists of 14 R&D institutions including Peking University and Tsinghua University, and more than 100 industry leaders and high-tech enterprises, such as COMAC and ENN Group. BICI has built up 18 collaborative innovation centers, covering intelligent robot, intelligent manufacturing, smart cars, semiconductor optoelectronics, modern media technology and virtual reality, future networks, photoelectric material and its application, energy materials and its application, carbon nano-materials, water treatment and soil restoration, energy conservation and emission reduction, modern pharmaceutics and biotechnology, medical equipment and diagnostic technology, food science and engineering and industrial design. BICI is also a pioneer in China in terms of industrializing original scientific achievements.
When it comes to industrializing original scientific work, BICI shows great advantages and applicability in operating mechanism and organization pattern. Firstly, BICI organizes researchers, IP owners, demand side, investors and intermediary organizations into an innovation community, and entrepreneurship is thus boosted, incentive and restraint mechanism generated. Secondly, in terms of resource allocation, BICI has set up a new market-oriented mechanism with "industry-university-research synergy" playing the leading role and government bolstering the market. Thirdly, BICI’s model is easy to replicate and popularize, with strong radiation effect. Within two years’ time since BICI was founded, a number of local governments and high tech industrial parks have visited BICI to introduce its innovative mode through learning and business negotiation. The replication of BICI mode nationally may lead to two effects during the development of MEI: accelerating the transfer and transformation of scientific outcomes by setting up collaborative innovation institutes in high-end innovation clusters; setting up branches in relatively lag-behind areas is good for the connection between resources and local industries and helping these areas in realizing Innovation-driven Development Strategy.
(V)The Unification of Openness and Inclusiveness
During the development of New Economy with MEI as orientation, China’s MEI activities shows openness and inclusiveness at the same time. The openness presents in the following three areas: firstly, the MEI of New Economy is the innovation of the age of information and knowledge instead of industrial economy, namely innovation 2.0. Innovation 2.0 centers on enterprises instead of clients, which focuses on the synergy among Government-Industry-University-Research. Innovation is to persify, which not only concerns enterprises and entrepreneurs, but also makers as inpiduals; secondly, MEI system is not only trans-regional, but also globalized. It is driven by global researches. China’s high-speed rails and the research and manufacturing of C919 are all the outcomes of global research.
Inclusive innovation means that China’s MEI is applicable to both cities, high-end markets, and rural areas and mid-and-low-end markets. China has vast territory and persified markets, which results in a kind of innovation with strong inclusiveness. There are two highlights:
One is that during the research and industrialization of new energy vehicles, there are electric sports cars, like Future Vehicle that rivals Tesla. At the same time, there are low-end electric automobiles which meet the demand of rural areas, e.g. low speed electric car from Shandong Province. Sophisticated technology portfolio is advocated in terms of technological path, but because of rural market demand, the industry is developing rapidly.
Another one is the Taobao Village during the development of E-commerce economy. Taking advantage of the new business ecosystem with Taobao as oriented, Taobao village has become an important way for rural areas to industrialize and to shake off poverty and become prosperous.
IV. Possible Challenges
With 10 years' exploration and endeavor, China has made important breakthrough in the development of innovative economy, but China is also faced up with challenges.
The first challenge comes from the concept of the development of industrial economy. The thinking relating to industrial economy is still restricting the formulation and implementation of the development strategy of innovative economy. In the accelerating industrialization stage, attracting investments and optimizing investment environment are the government's main strategies of develop economy. However, attracting talents, encouraging entrepreneurship, constructing innovative entrepreneurial environment and ecosystem are the new strategic choices for a government in developing innovative economy.
The second challenge is from the failure of lagged system reform and innovation to adapt to the development of a new economy. Institutional structure adaptable to an innovative economy includes three aspects: the first is market mechanism; the second is the system of laws and regulations including intellectual property protection and identification. In an innovative economy, institutional system with intellectual property protection as the core is just like the central bank, and is the catalyst of commercialization. Thirdly, systems and mechanism including the government, scientific research institutes and universities. In particular, the transformation and development of universities from traditional ones to entrepreneurial.
The third challenge is from the enterprises, especially the entrepreneurs. How to adapt to the Innovative 2.0 Age and generate opening-up, inclusive, and sharing enterprise innovative ideas and thinking is the key to stimulate entrepreneurship and the emergence of leading innovative enterprises.
The exploration of an independent innovative path dates from 1979 and continue during the entire process of China's economic reform and opening-up. Rural Contract Responsibility System, market-oriented progressive reform and continuous market creation during the industrialization are innovative masterpieces in the history of world economic development.
"China Miracle" generates from the key secret of a successful industrialization mastered by China, namely, to set the rural reform and industrialization as the first step of national industrialization. Rural reform and industrialization not only resolved food problem, but also, during the process of meeting huge market demand on light industrial products under shortage economic conditions, created energy, power and raw materials to start urban industrialization and initiated market demand on intermediate products such as equipment.
During the second industrialization stage with cities as the core, reform of state-owned economy and large-scale introduction of foreign capital met market demand generated in rural industrialization on intermediate products, and further created new demand for international market and contemporary service industry. In 2001, a Japanese scholar firstly put forward that China had already become a "World Factory". From the year of 2005, China entered the third stage of industrialization, shifting from manufacturing economy to innovative economy. Ten years have passed since the proposing of building an innovative nation in 2006. The embryo of the New Economy with Mass Entrepreneurship and Innovation as orientation is before us.
Regardless of industrialization or developing innovative economy, destiny of China is closely related to that of the world. As Chairman Xi Jinping pointed out at the Belt and Road Summit, we need to build the Belt and Road into an innovative road, and strengthen the cooperation in the frontier fields of digital economy, artificial intelligence, nanometer technology and quantum computer, contributing to thedevelopment of big data and Cloud Computing, the building of smart city, and the connection of the 21st century digital Silk Road. China is a big developing country with long historical and cultural traditions. During the process to become an innovative nation, systems and culture created by China will be more inclusive, and valuable to make contribution to the peace and development of the world.
 Since 2012, Teams from, Binhai Development Institute of Nankai University and the Institute of economics have conducted systematic investigation and study in Beijing, Shenzhen, Hangzhou, Chengdu, Chongqing, Suzhou, Shandong, Liaoning, Hebei, Qinghai and Tianjin to investigate the contents, structure and characteristics of the structural transformation of the Chinese economy. Investigation and study is directed by Professor Liu Gang from Nankai Institute of Economics, other leading members include Li Qiangzhi, Zhang Changling, Wang Chaoxian, Ma Ben, Cui Peng, Hong Wei, Zhu Yunxi, Wang Ning, Zhang Peng, Du Shuang, Liu Jie, Liu Chen, Wang Jinjie and Zhang Wei.