In recent discussions surrounding the modernization of China's economy, there is a consensus emerging among scholars and industry experts that the pathway to high-quality industrial development is criticalAt the twelfth China Industrial Development Forum, held by the Institute of Industrial Economics at the Chinese Academy of Social Sciences, Professor Yang Ruilong from Renmin University emphasized that innovative production forces are pivotal for achieving the new industrialization model essential for China's modernization.

Technological innovation has often been at the forefront of discussions on development, particularly as China strides forward in the wake of over 40 years of reform and opening-up policiesEnterprises that have embraced technology have significantly shifted their earlier factor combinations for production, allowing them to ramp up their growth swiftly.

However, as the digital economy advances, it has become clear that merely relying on technological innovation cannot overcome the current constraints and bottlenecks

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This is particularly true in fields such as advanced microchips, software, algorithms, and other critical technologies often described as having significant barriers—commonly referred to as "chokepoint technologies."

In this climate, a pressing question arises: how can we harness innovation as a guiding principle to propel the development of a new type of productive force, thereby embarking on a pathway of new industrialization? This query pervades industry discussions.

Professor Yang highlights the necessity of establishing effective channels and mechanisms that integrate innovation with industrial developmentHe notes that the crux of this integration revolves around institutional frameworksFor example, Yang pointed out challenges associated with formulating data trading rules that strike a balance between data protection and open-sharing, thereby alleviating issues of data siloing and fragmentation while ensuring privacy and security are upheld.

He elaborated on the myriad problems faced by industries aspiring towards digital transformation

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These include issues stemming from both the innovation side and the industry side, alongside challenges in the transition of innovations into practical industrial applicationsAs Yang aptly states, while technological advancement is essential, institutional innovation must be prioritized in addressing such multifaceted challenges.

At the heart of the current discourse is a question regarding the primary agents of innovation: should the impetus for innovation come from entrepreneurs, or should it be government-led? The economist Joseph Schumpeter famously posited that innovation encompasses five key dimensions: product innovation, technological innovation, market innovation, resource allocation innovation, and organizational innovationThis indicates a significant role for entrepreneurial actors in fundamentally driving innovation in market economies.

Conversely, there exists a viewpoint advocating for government-led innovation, especially within the context of the digital economy

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In this perspective, many critical technologies entail considerable risks that warrant sustained investment in research and developmentDue to their inherently public characteristics, these technology systems can confront market failures, making it difficult for individual enterprises to lead innovations alone.

Yang argues that the resolution lies in understanding the different phases of innovationThrough research, he has identified that innovation is not a singular effort but a complex process divided into five distinct stages.

The first stage is the foundational research phase, characterized as a pure public good primarily led by governmental or non-profit institutions, such as universities or research laboratoriesThe second phase is application development, which also leans toward a public good and is typically government-ledThe third phase, which involves intermediate experimentation, has features of a quasi-public good and necessitates collaboration between government and market players, with a more significant role for the public sector

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The fourth stage transitions towards commercialization and is more of a private good, while the final stage, large-scale industrialization, is typically private in nature, driven by market enterprises.

Yang highlights that these different phases reveal the intertwined roles of government and market forces in the innovation landscapeThus, a simplistic narrative that either government or business solely drives innovation lacks comprehensivenessBoth sectors play crucial, yet distinct roles across the innovation continuum and need to function synergistically without either overstepping their bounds.

That said, the symbiotic relationship between innovation and industrial integration is crucial for the emergence of new productive forcesThis synergy calls for the dynamic spirit of entrepreneurship, as it is the entrepreneurs who often champion innovation amidst the evolving landscape of the digital economy.

As we further the development of the digital economy, fostering entrepreneurial spirit is essential

The vibrancy of the market is largely driven by individuals—the entrepreneurs—who infuse life into competitive spaces through their innovative approachesClearly, such advancements stem from those navigating the market’s competitive waters, equipped with a spirit of risk-taking.

Therefore, innovation in this context is inclusive of both technological and institutional dimensionsYang elaborates that while the emphasis remains on the necessity for entrepreneurs within innovation discussions, it is also crucial to underscore the need for institutional innovationBeyond the actions and adaptations of micro-level entities, institutional innovation requires a fundamental rethinking of property rights protection and industry regulation entrenched within traditional industrial paradigmsOnly through these transformations can a path toward high-quality economic development be realized.