On November 17, 2019, Chinese Economists 50 Forum - Shenzhen Seminar kicked off to explore ways to develop "Shenzhen under construction as a pilot demonstration area for socialism". Leaders of the Standing Committee of Shenzhen Municipal Party Committee, academic members of the Chinese Economists 50 Forum, experts and other guests attended the Seminar and delivered important speeches on fresh positioning, fresh role and fresh development of Shenzhen in the new era. The Green Legal Global Alliance Research Institute sorted out the views of all parties in the Seminar and paid attention to the new development path of Shenzhen in the new era. 

Li Xiaogan: Shenzhen is seizing the great historical development opportunity of "two-area drive". 

Li Xiaogan, member of the Standing Committee of Shenzhen Municipal Party Committee and head of the Department of Publicity, said in his welcome speech that at present, Shenzhen is seizing the important historical development opportunity of building Guangdong-Hong Kong-Macao Greater Bay Area and pilot demonstration area for socialism with Chinese characteristics, striving to develop Shenzhen into a modern international innovative city by 2025, and a globally influential capital of innovation, creativity and entrepreneurship by 2035, and making efforts to make Shenzhen an city example of a modern socialist country. 

YANG Weimin: The key to the reform of Shenzhen lies in radical system construction. 

YANG Weimin, member of the Academic Committee of the Chinese Economists 50 Forum, member of the Standing Committee of the 13th National Committee of the CPPCC, deputy director of the Committee for Economic Affairs and former deputy director of the Office of the Finance and Economics Committee of the Central Government, mentioned in his speech that on the occasion of the 70th anniversary of the founding of the People's Republic of China and the 40th anniversary of the founding of Shenzhen, Shenzhen, as a model of reform and opening up, has been given a new orientation and mission to build a pilot demonstration area for socialism with Chinese characteristics. 

This is a fresh historical mission endued by the CPC Central Committee to Shenzhen based on the new situation, new goals and new tasks as China is about to start a new journey of building socialist modernization with Chinese characteristics in an all-round way and strive to realize the second centenary goal in the new era. From the perspective of the whole country, Shenzhen should provide a good example for the realization of socialist modernization across the country. For Shenzhen itself, it takes on higher requirements and heavier duties. "High requirements" mean that all undertakings and sectors of Shenzhen should seek conformity with the best and highest ones around the globe and strive to be a forerunner in the world. "Heavier duties" require Shenzhen to demonstrate and set an example in upholding and improving the socialist system with Chinese characteristics, and in expediting the modernization of China's national governance system and capacity. 

The General Secretary pointed out at the just-concluded Fourth Plenary Session of the 19th CPC Central Committee that the reform and opening-up in the new era holds many new connotations and that the system construction carries more weight. In order to build a pilot demonstration area for socialism with Chinese characteristics, Shenzhen should give more weight to the system construction and take fundamental measures as it did before. 

Cai Fang: The manufacturing industry is moving offshore and posing great dangers. 

Cai Fang, member of the Standing Committee of the National People's Congress and vice president of the Chinese Academy of Social Sciences, pointed out in his speech that the absence of continuous improvement of the manufacturing industry in a society would lead to either the absence of the middle-income group or the absence of a real high-end service industry. In this way, the sharing of economic achievements would make no sense. Today, along with the construction of the pilot demonstration area for socialism with Chinese characteristics and Guangdong-Hong Kong-Macao Greater Bay Area, Shenzhen should rebuild high-end manufacturing industry and make use of higher profit-making scale economy. 

When analyzing the development of the manufacturing industry, Cai Fang mentioned the "flying geese model" to describe dynamic changes of comparative advantages. According to his analysis, the competitive advantage of the manufacturing industry can be shifted among different economies, or among regions within a country. "In the past, Japan was the manufacturing center of East Asia and even the world. Along with the increase of labor cost, this center gradually shifted to Hong Kong of China, Taiwan of China, Singapore and South Korea, and then to the coastal regions of the Mainland China. Fortunately, Shenzhen has completely deduced the changes of this model." 

Cai Fang also put forward the "flying dragon model" of economy. One wing of the "flying dragon model" represents comparative advantage and the other represents scale economy. He mentioned that Shenzhen has incomparable advantages on these two wings. "Shenzhen has special advantages as the construction of Guangdong-Hong Kong-Macao Greater Bay Area produces the best and the most high-end scale economy agglomeration effect. Besides, Shenzhen relies on the human resources of the vast central and western regions. A wealth of labor resources in the long run in China and the so-called low-end population offers resource endowments. If Shenzhen employs these resource endowments, it follows the law of economics, while no employment leads to violation of the law and punishment, which further leads to the high-income trap mentioned above." 

Huang Yiping: It is essential for Guangdong-Hong Kong-Macao Greater Bay Area to build effective and efficient financial system to support innovation activities. 

Huang Yiping, vice president of the National School of Development at Peking University, pointed out that Guangdong-Hong Kong-Macao Greater Bay Area holds the gene and potential to be a world-class economic center as there is world-class financial market innovation ability and industrial foundation of the manufacturing industry. "New York Greater Bay Area specializes in finance, San Francisco in science and technology and in industry. Guangdong, Guangdong-Hong Kong-Macao Greater Bay Area make great achievements in all three aspects with good support." 

However, Huang Yiping stressed that to develop Guangdong-Hong Kong-Macao Greater Bay Area, the innovation-driven development strategy needs to be implemented as innovation has become the key while finance plays an important role in supporting innovation. "Without finance, innovation would fail to really support economic growth." He believes that Guangdong-Hong Kong-Macao Greater Bay Area must build an effective and efficient financial system that can adapt to and support innovation activities. 

He pointed out that a range of aspects of the current financial system need to be changed. The first aspect is how to control the risk of innovative enterprises. The second is how to increase of patience of capital. The third is that we couldn't tolerate failure in the past though innovation holds a higher failure rate. The key lies in whether market-oriented risk pricing can be made. "It doesn't matter if we fail, but the return can be assured as we understand risk and make effective decisions of market-oriented risk pricing." 

Wang Yiming: Shenzhen should comprehensively deepen cooperation with Hong Kong for further connectivity. 

Wang Yiming, deputy director of the Development Research Center of the State Council, believes that from a global perspective, Guangdong-Hong Kong-Macao Greater Bay Area gathers a wealth of innovative factors and has special advantages in technology transformation capacity. Especially, Shenzhen's technology industrialization takes lead around the globe. He suggests that at present, it is necessary to build a unique ecosystem in Greater Bay Area to be centered on science and technology with corresponding industry, finance and human capital inter-coordinated. 

When it comes to the positioning and functions of Shenzhen in the Greater Bay Area, Wang Yiming believes that Shenzhen has the following unique advantages. First, Shenzhen is adjacent to Hong Kong, which other cities in the Greater Bay Area do not have. Second, Shenzhen has strong and unique advantages in scientific and technological in the Greater Bay Area and has become a benchmark of innovative cities in China. Third, it has market-oriented and international leading advantages. Fourth, it has the advantage of attracting and gathering high-end elements, especially financial elements, which is incomparable by other cities. 

Wang Yiming put it that at present, the biggest barrier for the development of Greater Bay Area is "three tax districts, three laws and three currencies". This barrier is either a challenge or an advantage. Institutional innovation is required to turn this barrier into a unique advantage of mutual circulation of elements. 

Long Guoqiang: Shenzhen should try to set up a new system of scientific and technological innovation. 

Long Guoqiang, deputy director of the Development Research Center of the State Council, said that a forward-looking and comprehensive plan should be developed for a modern city in the information age. There are different subjects in different times. Today, most cities are the product of the industrialized age. He said that now as we are stepping into the information age, Shenzhen should develop into a modern city, rather than another New York or London. "Our city should no longer copy that of the industrial era, but be future-oriented. Therefore, to be a pilot demonstration area for socialism, a city should be a complex of technological progress and make clear how we can foresee this change and plan ahead." 

A new system of scientific and technological innovation should be planned in a forward-looking way. When it comes to the realistic conditions of China, China has not finished the tasks to catch up with and surpass developed countries in the traditional areas and has obvious gaps in key technology areas and emerging economies. We are faced with the strategic opportunities brought by the new technological revolution, many of which are cutting-edge. We should not just try to catch up with developed countries, but take the initiative in the new technological revolution. "In addition to the emergence of leading enterprises like Huawei and a variety of innovations, I think it's particularly important that under such a global context, as our system of scientific and technological innovation is changing, we should get well prepared." 

Explore the regulation and norms of digital economy in the information age. All technological advancements are a double-edged sword and information technology is no exception, which brings many challenges while greatly improving the operation efficiency, such as security of personal privacy and ethical problems. 

Xu Shanda, consultant of the China Certified Tax Agents Association and president of SEEC Research Institute, believes that China's tax system has defects in the tax payment of group companies, as it increases the tax burden of group companies and reduces their financial efficiency compared with that of western countries. 

Xu Shanda analyzed that as China follows a tax sharing system, enterprises are deemed as making contributions to the local government only after they pay taxes locally. If they pay taxes centrally, the local government would not get the tax, which would not be agreed by the local government. "All local governments make the branch a legal person to charge taxes here and check accounts. However, they give no concern to the overall efficiency as long as the interest of the government is assured." 

If the manufacturing group can't pay taxes in a centralized way and the legal person of each subsidiary calculates their own accounts, the financial efficiency would be quite low. "If one enterprise makes profits while the other makes losses, they pay taxes separately and no hedging is permitted." As a consequence, the financial performance of China's large-scale enterprise groups is quite poor compared with developed countries. "Under the same tax system and financial system, China's enterprises bear much higher tax burden and financial cost than those of developed countries." 

XU Shanda stressed that at present, under China's current tax system, much more consideration is given to local governments. "Basically, the rights and interests of local governments are safeguarded while the financial efficiency of enterprise groups are sacrificed. Compared with developed countries, China has a great institutional defect in developing groups." 

"We believe that we should draw on the experience of developed countries and adopt centralized tax payment by enterprises, but at the same time, a systematic tax distribution method should be available," XU said. 

Xia Bin: Shenzhen should make clear the areas that it can go first and areas that it cannot go first. 

Xia Bin, counsellor of the State Council and president of the National Economics Foundation, pointed out the following. First of all, the relationship between the demonstration pilot area and the adjustment and reform of the national policy system should be harmonized. He believes that the "Five Pioneers" are often associated with the reform of the policy system and that the policy system can be divided into three categories. The first is that the pilot demonstration area needs to make clear systems that cannot be modified, i.e. the unified national policy system. "For example, the principle of land red line and the exchange rate of RMB are not at the discretion of Shenzhen and thus Shenzhen cannot be a pioneer in these two regards." The second is that what is unique to Shenzhen. "For instance, Shenzhen has a stock exchange, which is not available in other places across China except for Shanghai." "The listing standard, trading range and standard varieties of the exchange are at the discretion of Shenzhen." The third is what is discussed and explored across the country given it is nor mature and clear." "It represents China's reform and Shenzhen can make breakthroughs in this regard." 

Xia Bin said that Shenzhen should make clear what can and cannot be piloted and make specific judgments when implementing policies and studying measures. 

Second, the relationship between the construction of Shenzhen Pilot Demonstration Area and the Greater Bay Area should be harmonized. He said that a path also exists in terms of the relationship between Shenzhen Pilot Demonstration Area "9+2" and other cities. For example, Shenzhen has a larger GDP than Guangzhou and has its fiscal revenue double that of Guangzhou. Its total amount of import and export has been the first in China for many consecutive years. The total amount of social retail sales in Guangzhou is 50% more than that in Shenzhen in 2018. From the perspective of employment, Shenzhen is a manufacturing-based city and still bears a lot of pressure to stabilize housing prices. Compared with Guangzhou, Shenzhen has a low consumption power but high housing price. 

Xia Bin believes that it is hard for Shenzhen solve these problems independently, so it is necessary to find ways to eliminate the traffic bottleneck around Shenzhen in the middle of the Greater Bay Area, attract more consumers and achieve the policy adjustment of land supply between Shenzhen and surrounding cities. 

"Breaking all kinds of unnecessary administrative constraints will certainly improve the efficiency of economic development in the Yangtze River Delta. I believe that cities in the Yangtze River Delta can do well and there is a large space for Shenzhen and 10 cities around the Greater Bay Area to center on economic construction and break administrative monopoly, administrative division and administrative level." He pointed out that here must hold a great space to overcome the uneconomical behavior centering on the administrative division. Therefore, Shenzhen should grow in tandem with surrounding cities to share development achievements together. "In a unified country, it is very tough to form an isolated pilot demonstration area." 

Third, the path to innovate the cross-border financial services should be made clear. He pointed out that as Shenzhen is adjacent to Hong Kong, maybe it is a good way for Shenzhen to take the lead in introducing asset management or wealth management services to attract overseas funds to invest financial products in China. "After piloting in Shenzhen, the popularization of these services will bear benefits for private enterprises to cope with difficulties in obtaining cost-effective financing." 

Source | finance.sina.com.cn