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Balance between public, private sectors needed for double engine economy

(Xinhua) Updated: 2015-07-03 10:47

SYDNEY - Premier Li Keqiang's policy of China's new double engine economy is very appropriate given future development will come through public and private business cooperation, an Australian expert said on Wednesday.

In November 2014, Premier Li highlighted the twin roles of emerging and traditional industries to drive China's economic growth in the future -- the two engines the premier speaks of.

Speaking to Xinhua, Sydney's Macquarie University Professor of Economic Development, David Throsby, said the creativity spurred by smaller business in China will enable China's mass economic innovation.

Throsby said smaller firms, not larger corporations, are more flexible to consumer needs for products and services, such as crowdfunding - raising money via contributions from a large number Internet based sources - for creative business ideas.

"Crowd-funding is a way in which a funding for small scale innovative ideas can be found much more quickly than could have been got in the old days through large corporations," Throsby said.

"Creative individuals do work for big companies but the processes by which those innovations become commercialized is a long and often quite complicated and difficult process. If you have small firms, smaller to medium sized enterprises, customers feeding through information about the sorts of products and services they want, this is much more reactive."

Throsby said China's government provides the environment needed for mass innovation.

"The notion of mass innovation fits in very nicely with the idea of the double engine economy because it arises in the population at large, but in order for that to be successful, it requires the sort of infrastructure that only the state can really provide," Throsby said. "Crowd-funding is something that wouldn't have happened without the Internet and particularly also without social media."

"In order for small enterprises to be efficient, productive and dynamic, these days they need efficient and fast broadband access. "

As China's economy enters this new era, Throsby said China can learn from the mistakes of the west to achieve a balance between the private and public sector to stimulate creativity, and therefore innovation.

"Development has to be a balance process of getting the respective roles of the incentives and the stimulus for creativity - which comes from market processes - with the sorts of protection of the public interest, particularly protection of the consumers," Throsby said. "Giving more resources to the private sector to make decisions hasn't always necessarily been in the public interest."

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