Government’s Role in New Industries

Since the launch of sev- en emerging strategic industries in 2009, it has become common for people – clear catchwords and definite policies from the central government, inspired local governments, crazy enterprises. Then, after a series of the speculation of the emerging industries’ concepts and following repeated investment, people found that emerging industries were actually the “upgraded”version of GDP.

Actually, emerging industries should represent the future changes of the world and society and play an important role in the blueprint of China’s “12th Five-year Plan”. However, the uncertainties of emerging industries in technology, industrial process, business pattern, market cultivation and so on require the government’s new function to make sure these emerging industries can outperform traditional industries.

China has laid its hope of industrial upgrade and economic transformation on the development of emerging industries. The “three-step” plan the State Council made for the emerging industries draw out a broad development outlook. But the basic principle of industrial development shows that emerging industries cannot be drawn out but only can be created. Therefore, people have to think about a question – what role should the government play in the development of emerging industries? The “doing and undoing”should be made clear.

“Undoing”: the government-led pattern should not be used in the emerging industries as in the traditional industries. The history has just proved that the government’s long-term interventions in an industry cannot solve its structural problem. If the “structural problem” is not cancelled, the industry will loose long-term efficiency.

“Doing”: the state-owned enterprises should be prevented from monopolizing emerging industries. Emerging industries are a big cake that could produce huge profits. For example, the new energy industry attracts a lot of state-owned electric power companies. As a technol- ogy-intensive industry, new energy field has high requirements for cost and the risk is too huge for ordinary private companies. The government should create fairer competition environment, encourage and help private companies to invest in these fields, lend hands to those private companies having prospect through loans, technology transfer and so on.

In addition, the industrialization is an important factor for emerging industries. The innovation-based industries in the U.S.A are so booming because the country has complete system of industrialization, which could quickly put technological achievements into use and spread them to the whole industry. In China, only 20% of technological fruits are turned into practical production in the industry while the proportion in developed countries reaches 60%-80%. Therefore, how to turn more fruits into industrial production power is an important issue for the government. And the government should be actively engaged in the study.