Economic development must not come to a halt.

As 2023 nears its halfway point, various economic indicators for the second quarter will soon be released. This “midterm exam” will serve as a key benchmark for assessing the momentum of economic recovery across different regions.

Against the backdrop of high-quality development, the sole focus on GDP has become a thing of the past.

However, GDP cannot be discarded outright, as relatively rapid economic growth remains vital for China.

On the one hand, establishing a high-quality development evaluation mechanism that neither abandons GDP nor judges success solely by GDP has become an inevitable trend. On the other hand, we must be wary of high-quality development becoming a “panacea” that is invoked to justify every action.

So, how exactly should we measure it?

In the view of GuChuan United, the level of high-quality development in a region can be assessed based on the following eight indicators:

1. Ratio of fixed-asset investment to GDP

2. Share of the private sector in the economy

3. Per capita GDP

4. Share of the tertiary sector

5. Energy consumption per 10,000 yuan of GDP

6. R&D Expenditures as a Percentage of GDP

7. Share of retail sales of consumer goods in GDP

8. Share of value added from high-tech manufacturing in total value added from large-scale industrial enterprises

Although these indicators are not perfect, they generally serve as a measure of a region’s development quality and have some reference value.

Ratio of fixed-asset investment to GDP

Endogenous development momentum represents a region’s “self-sustaining capacity” and is crucial for sustainable economic development.

We can measure this capacity using the “ratio of fixed-asset investment to GDP.” When GDP size and growth rates are comparable, regions that consume less fixed-asset investment demonstrate higher development quality and possess greater self-sustaining capacity.

Currently, many regions are experiencing "artificial growth," meaning their economic expansion relies primarily on investment.

While this approach can rapidly expand the overall economic scale, it requires a long period of patient cultivation to truly foster a robust industrial ecosystem.

In 2015, the national ratio of fixed-asset investment to GDP exceeded 80%; by 2018, it had dropped to 71%. In 2020, despite the impact of the pandemic, it remained as high as 51.9%. However, in Shenzhen—the city with the strongest endogenous growth momentum in the country—the ratio of fixed-asset investment to GDP was only 27.8% in 2022.

Should economic development rely on scientific and technological innovation, or on massive fixed-asset investment?

In regions where the industrial economy is still in its infancy, attracting major projects through investment promotion remains necessary in the short term. Meanwhile, those leading regional economies must pay particular attention to this key indicator, pursuing both major projects and new technologies simultaneously.

Share of the Private Sector in GDP

The private sector is clearly a vital barometer of a region’s economic vitality.

Guangdong and Zhejiang lead the nation in economic vitality, largely due to the robust self-sustaining capacity of their local private enterprises.

Regions dominated by the private sector face greater development challenges, yet it is precisely for this reason that their actual development quality is higher. The rise of Huawei, Tencent, and DJI in Shenzhen, and of Shanshan, Fotile, and Youngor in Ningbo, is by no means a coincidence.

What warrants caution is that many regions lack patience in supporting local enterprises and are overly eager to attract large corporations and major projects.

From the perspective of attracting investment and expanding overall scale, such efforts are indeed necessary. However, the development of local enterprises and small and medium-sized businesses deserves equal attention; we must not focus excessively on external “opportunities” while neglecting the “foundation” we already possess.

Share of the Tertiary Sector in GDP

The share of the tertiary sector is a key indicator of a country or city’s level of development.

In developed countries, the tertiary sector accounts for around 70% of GDP; in China, this figure reached 52.8% in 2022.

In fact, the share of the tertiary sector in some Chinese cities has already approached or even surpassed that of major cities in developed nations. For example, Beijing’s tertiary sector now accounts for over 80% of its economy, achieving a “3-2-1” economic structure.

The “Beijing Model” undoubtedly provides a blueprint for major cities eager to transform.

However, China remains a developing country, and at this stage, it must continue to prioritize the development of manufacturing. With the exception of a few major cities, the vast majority of Chinese cities should not—and do not have the conditions to—pursue the “Beijing Model.”

In particular, within the same metropolitan area, making the industrial structures of every city extremely similar is not actually the best strategy. Maintaining comparative advantages and establishing a rational division of labor is the superior choice.

Why is Suzhou’s secondary sector so strong?

Because Shanghai and Nanjing have taken on some of Suzhou’s service sector functions, allowing Suzhou to focus on developing its manufacturing sector.

Per Capita GDP

Is GDP generated through a “human sea” strategy or industrial upgrading? The per capita GDP indicator can provide some insight.

Of course, certain cities may rank high in per capita GDP due to specific circumstances—particularly those dominated by energy industries such as oil and coal (e.g., Karamay, Ordos, and Yulin)—and these rankings should be viewed objectively.

Furthermore, per capita GDP is typically calculated based on the permanent resident population (including both the working-age and non-working-age populations), which is somewhat unfair to cities where non-working-age groups—such as newborns and the elderly—account for a higher proportion of the population.

Energy Consumption per 10,000 Yuan of GDP

When generating the same amount of GDP, the lower the energy consumption, the higher the quality of development.

From 2013 to 2017, China’s GDP growth rate declined from 7.7% to 6.9%, while energy consumption per unit of GDP decreased by 3.7%, 4.8%, 5.6%, 5.0%, and 3.7% respectively, resulting in a cumulative reduction of 21%. As of 2022, China’s energy consumption per unit of GDP continues to decline.

Gold has its price, but green mountains are priceless.

China’s optimal development model for the future may be: moderate economic growth coupled with intensified environmental protection.

Strict controls below the threshold; full freedom above it. Neither destroying the environment nor holding back. The central inland regions, in particular, represent China’s largest future growth engine.

Balancing economic development with environmental protection, and balancing high speed with high quality, is the right path.

R&D Expenditures as a Percentage of GDP

The ratio of expenditure on research and experimental development (R&D) to GDP is a globally recognized indicator used to measure the intensity of investment in technology and innovation.

The economies with the highest global ratios are Israel (4.4%), Finland (3.9%), South Korea (3.7%), Sweden (3.4%), Japan (3.3%), the United States (2.8%), and Germany (2.8%), all of which are renowned for their high-tech industries.

China currently finds itself at a critical juncture, with developed nations in the West ahead and Southeast Asian and African nations behind. To avoid the dilemma of competing on two fronts, it is imperative to take the lead in achieving technological upgrading.

Where does the path lie? The answer lies solely in innovation.

In 2022, China’s R&D expenditure as a percentage of GDP stood at 2.55%, with a growth rate of 10.4%—far exceeding GDP growth. Technological and innovative development has entered a phase of qualitative transformation.

In terms of total investment alone, China ranks second in the world behind the United States. However, there remains a significant gap between China’s investment intensity and the average level of developed countries, which is around 3%.

Among key cities, Beijing leads the nation with over 6%, followed by Shenzhen at over 4%, and Shanghai in third place.

Hangzhou, Wuhan, Tianjin, and Guangzhou all reached 3%, continuing to align with global mainstream cities.

Ratio of Total Retail Sales of Consumer Goods to GDP

Total retail sales of consumer goods do not represent the full scope of consumption; they primarily reflect daily living and mass consumption, and can measure the driving force of physical consumption and the real economy.

In 2022, China’s total retail sales of consumer goods reached 43.97 trillion yuan, accounting for 36.3% of GDP, demonstrating a significant role in driving economic growth. With the release of the “14th Five-Year Plan” Implementation Strategy for Expanding Domestic Demand, domestic consumption is gradually becoming a decisive force in economic development.

Cities that strike a balance between production capacity and consumption capacity will have stronger momentum for future development. As the largest hinterland for China’s economic development, cities in the middle and lower reaches of the Yangtze River—including Chengdu, Wuhan, and Changsha—have all performed exceptionally well.

Purely production-oriented cities, however, are at a disadvantage. Although their overall economic data is robust, their consumer markets are prone to being siphoned off by surrounding comprehensive central cities.

It is worth noting that housing prices are intrinsically linked to a city’s consumption capacity. This is the primary reason why super-tier-one cities such as Beijing, Shanghai, Guangzhou, and Shenzhen struggle to pull ahead of other cities in this metric—particularly Shenzhen, where total retail sales of consumer goods account for less than 30% of GDP.

Share of Value Added by High-Tech Manufacturing in Value Added of Industrial Enterprises Above Designated Size

The resurgence of global industrial competition today centers primarily on the high-tech sector. In particular, the reshoring of U.S. manufacturing poses significant challenges for the future.

Faced with challenges on all sides, China needs to achieve breakthroughs in high-end manufacturing and break through the blockades and monopolies in cutting-edge technology sectors. One of the core missions of “Made in China 2025” is to improve the quality of manufacturing. Most of the ten key areas highlighted in the plan are concentrated in high-tech fields.

In 2022, the share of value added by China’s high-tech manufacturing sector in the total value added of large-scale industrial enterprises stood at 15.5%. Shenzhen performed most notably, with this ratio reaching an astonishing 60% or more. Additionally, Suzhou’s high-tech manufacturing sector also demonstrated exceptional performance.

Although Beijing is home to the largest concentration of research institutions and top-tier universities in China, the share of high-tech manufacturing value-added in its total industrial value-added (for enterprises above designated size) remains below 30%, slightly lower than market expectations. The high proportion of the tertiary sector may be one of the reasons for this.

Shanghai’s high-tech manufacturing sector has not shown strong growth, and it may face similar challenges.

It is worth noting that while the above indicators can be used to measure the quality of a region’s development, higher values are not necessarily better.

Especially in the context of regional development imbalances, a high score on a particular indicator may signify high-quality development in Location A but low-quality development in Location B.

There must be more suitable indicators that can better measure a region’s level of high-quality development. However, to seek the truth, someone must first take the initiative to spark further discussion. It is hoped that the eight indicators summarized in this article can provide a conceptual reference for everyone.