This year's "[Diagnosing China's 2026 Economy]" series will focus on the various opportunities and challenges of the inaugural year of the 15th Five-Year Plan period. As the opening piece of the series, John Ross, a Senior Fellow at the Renmin University Financial Research Institute, first analyzes the complex external environment currently facing China's economy. John Ross, a Western left-wing intellectual, is renowned both for his rigorous economic research and for his unique geopolitical insights gained from decades of political and academic experience in Europe, Russia, and China. Discussing the most significant achievement of China's 14th Five-Year Plan period, Ross believes the most important is that "China has become the first developing country in history to achieve technological leadership," a feat no other developing nation has accomplished before. Ross stated, "In the past, developing countries experienced very rapid economic growth. But China's capability, as a developing country, to become a technological leader—in areas like electric vehicles, solar energy, information technology, and partially in artificial intelligence—is something no other developing country has ever achieved. This is absolutely unique. Of course, this hasn't yet extended across the entire economy. I don't want to exaggerate. China is not the technological leader in all fields, but previously no developing country had ever become a technological leader in any major sector." What made this possible? Ross attributes the cause to China's high levels of research and development (R&D) expenditure coupled with high levels of investment. According to the latest OECD data, China's R&D spending accounts for approximately 2.6% of its GDP. This is almost double that of almost any other developing country—Turkey is next at about 1.4%. Therefore, China's R&D level is significantly higher. This is a manifestation of the socialization of labor, as it is closely linked to the large-scale development of science and education. However, there is no direct correlation between R&D spending and GDP growth. "There is a correlation between R&D and investment, because among the world's top 10 economies, there is a very close correlation of 0.95 between the share of investment in GDP and GDP growth. The higher the share of investment in GDP, the faster the economic growth rate." Ross said that the intellectual capabilities of scientists and R&D personnel in the US and China are comparable; there is no inherent superiority or inferiority in this aspect. So, what is the difference? "Comparing Chinese and American data reveals that China's investment as a share of GDP is higher than that of the US. Converting this into absolute amounts means China's total investment far exceeds that of the United States. In the US, for every dollar supporting an R&D worker, in China, there are two dollars supporting each R&D worker. This means that good ideas in China can be transformed into genuine innovation and investment much faster than in the United States." Ross stated that it is precisely the interaction between high-level R&D and high-level investment that has made China's technological leadership possible. Therefore, it can be determined that this trend will continue throughout the 15th Five-Year Plan period. Why is China performing so outstandingly in artificial intelligence, solar panels, and other new quality productive forces? Using the United States as a counterexample, Ross said that in the US, regarding solar panels, its private economic structure creates obstacles for their production development. One reason the US hasn't developed solar and renewable energy is that its oil companies do not want it, as they feel their profits are threatened. Similarly, in the field of artificial intelligence, every AI company in the US is trying to create a dominant monopoly. Ross said that perhaps there are some companies in China that wish to monopolize AI development like certain US companies do. But whether they want to or not, they cannot do so because the government would tell them they are not allowed. Therefore, China's socialist nature and its social mode of production enable it to develop these productive forces more effectively. "I don't know exactly how many technological fields China currently leads in, but during the upcoming 15th Five-Year Plan period, this number will double," Ross said.
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