SMM News: speaking at the New York Civic Budget Committee on Thursday, Powell called on all sectors of the US economy to encourage more labor to enter the market and further increase productivity to provide impetus for US economic growth.

For a long time, we may have paid too little attention to the key indicator of labor productivity, but we know that a country's labor productivity directly determines a country's economic growth. Under the condition that the input of production factors remains unchanged, the improvement of productivity is very important. Generally speaking, when an economy is gradually maturing, the input growth rate of production factors will gradually become stable, and if there is no direct improvement in production efficiency, total factor productivity will not be able to increase. At that time, the so-called "middle-income trap" will also come at the same time. So how to improve productivity, it is recognized that there are two ways, one is the efficient allocation of existing resources, the other is through technological innovation and progress.

We often say that science and technology are the primary productive forces. That is what we mean. The role of science and technology in economic development is incomparable. Economic development is divided into three stages: factor-driven, efficiency-driven and innovation-driven, of which innovation-driven is the most ideal and difficult stage, and our transformation needs to move away from factor-driven to efficiency-driven and innovation-driven.

According to an analysis by the National Information Center in 2018, the main reason for China's economic slowdown since the 2008 financial crisis is the decline in total factor productivity. This paper points out that the decline of total factor productivity is closely related to the fluctuation of economic cycle, the transformation of industrial structure, the slowdown of catching up with technological frontiers and so on. In the future, China needs to strive to expand the level of domestic demand, speed up the transformation and upgrading of industrial structure, continue to strengthen human capital investment, and constantly improve the policy environment for innovation and entrepreneurship, so as to ensure medium-and high-speed economic growth and cross-regional middle-income trap.

From the point of view of efficient allocation of resources and technological innovation, China must adhere to the decisive role of the market in the allocation of resources in the future, and the government should let the market price mechanism play a role after the establishment of a sound market management system. And be cautious about the introduction of macro-control policies. In addition, we should continue to improve the protection system of intellectual property rights, create a good environment for innovation, and enable real innovators to create gains. In short, adhere to the market as the main body, then the future will certainly get better and better.

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