Source: P9, The People's Daily

Currently, China encourages more social capital to enter strategic newly emerging industries. With policy motivation, some traditional manufacturing enterprises are shifting to new industry areas, and some other enterprises with abundant capital also want to make cross-over investment in these new industries, and these companies have supplied huge new production capacity. Some local governments have built platforms for local enterprises, and have provided various subsidies to help them seize the opportunities.

However, some regions and industries have fallen into the situation of industry development of “walking on the old road in new shoes”. For instance, Wuxi Suntech Power, and Jiangxi LDK, and other new energy enterprises have already gone bankrupt due to market reasons; now, the peril of production overcapacity of new energy automobiles cannot be neglected.

In order to develop those strategic newly emerging industries, the key is to cultivate new drivers of development that are based on important technical breakthroughs, and important development demands, to promote upgrade of the industry structure and change of economic development means, and to fundamentally improve the quality of product supply. In such a context, the policies for development of newly emerging industries must be precisely targeted. Firstly, the technical qualifications of entrants must be strictly controlled, so as to raise the entry threshold for technology, and to strictly prevent speculators from entering the market; secondly, layout of the industries should be scientifically and properly planned across the country, and a good play should be given to the central government's regulation and control function, and policy direction and assistance of local governments should be well coordinated; thirdly, financial institutions should strictly control capital support from the perspective of prevention and control of systematic financial risks.

(The author is the Executive Deputy President of Shanghai Academy, and Vice President of Shanghai University)