Land, labour, capital, technology and data are five factors that are key to high-quality economic growth. The official document "Opinions onimproving market-based allocation of production factors", issued earlier by the CPC Central Committee and the State Council,outlines plans to improve the markets for these five factors to further stimulate market vitality. Professors Zhou Li-an,Wang Hui and Tang Yao from the Department of Applied Economics, Guanghua School of Management have carried out in-depth police analysis related to the above report. Professor Tang Yao centers on the factors of capital, technology and data. This article summarizes Professor Tang's analyses.

1.Unleashing the power of capital to facilitate high-quality economic growth

The bond market is a key part of China's capital market and an important channel for the development of direct financing. At present, the varieties of China's bond market still need to be further expanded. As the regulations of corporate bonds and other bond varieties are not standardised, there is still room for regulatory arbitrage. Thus, we will have to further coordinate and promote the connection between different segments of the bond market, as well as to improve the allocative efficiency of funds. In addition, as a small number of companies in the market might experience operational difficulties, bond defaults are inevitable. Thus, China should aim to establish and improve the disposal mechanism of default bonds, hence providing institutional guarantee for bond investment and helpingcompanies with different operational risks to obtain financing from the bond market.

In terms of financing volume, about two-thirds of China's total social financing are made up of various types of loans. Banks remain the most important financing channel in China. However, as the main body of financing, large bankshave yet to attain sufficient ability to help small and medium-sized companies expand their business. Therefore, policy recommendations should consider ways to encourage large banks to engage in inclusive financing under the principle of marketization. At the same time, small and medium-sized banks should be supplemented with capital so as to maximise their strengths in serving small and medium-sized enterprises. Especially when facing theeconomic downward pressure at present, these issues should be dealt with through macroprudential regulation of parameters, as well as through refinancing and rediscount policies.

The opening up of the financial industry and the internationalisation of yuan will also help improve the efficiency of China's capital allocation. At present, many businesses in the financial industryhave been open to foreign-funded institutions, and great progress has been made in terms of establishing a pre-admission national treatment system for foreign investment and a negative list management system. However, it should also be noted that there are still some practical difficulties for foreign-funded institutions to carry out business,including the immaturity of the financial regulatory system and the low participation of foreign-funded institutions in the formulation of industry standards. To this end, China has gradually reduced its pursuit of export surplus, and strengthened the role of import through channels such ashostingthe China International Import Expo. The above measures have thus provided a more favourable environment for the internationalisation of the yuan.

In the past two years, important measures have been launched to regulate the capital and financial markets. These include the new edition of the "Securities Law" in 2020, the successful launch of the Science and Technology Innovation Board and its registration system in 2019, and the registration system of the Second Board Market in 2020. As we allow companies to enter the stock market, we also have to allow poorly managed companies to exit. In line with the principle of marketization and routinisation, China launched a new delisting system in December 2020, which strengthened the external constraints on corporate governance. These positive changes show that improvements to the allocated efficiency of capital are worth looking forward to in the future.

2. Enhancingthe supplyand transaction of technology through improving rights

At present, China has to improve on the supply of technological elements, its definition of property rights and income rights, as well as the regulations of its transactionsystem. On the supply side, despite the high output of technological elements such as patents, average quality remains mediocre. For example, in terms of international trade of intellectual property rights, China had a deficit of USD 27.8 billion in 2019, indicating that the supply of intellectual property rights requires improvement. One of the important reasons behind this phenomenon is the vague definition of the ownership of scientific and technological achievements at the practical level. Therefore, it is necessary to establish a mechanism to determine and allocate the rights of property, usage, disposal and income with regard to scientific and technological achievements, and clearly define the rights accorded to scientific researchers and their inventions. After these problems are solved, we will then be able to allow the circulation of technological elements, hence creating greater economic benefits, and ultimately fulfilling the key task to "strengthen national strategic technologies". Finally, there is a worldwide trend of deglobalisation at present, with a risk of decoupling in areas of science and technology. Thus, China should adhere to the principles of international cooperation and expand the international market for the transaction of technology accordingly.

3.Establishing a system to determine, use and circulate data

In terms of data, China will have to solve several pressing problems in order to strengthen and expand the digital economy. Firstly, we have to promote the sharing of government data, improve authorities'ability to collect and process data,and enhance the value of social data resources. The next step is to regulate the collection and use of social data resources andaddress the public's concerns. To this end, we can also take reference from the Internet regulations of others countries. Lastly, it is necessary to regulate and clarify the relationship between individuals who generate data, andthe use and earnings of data. Onlybased onthese clarified property rights and usage rights can we strengthen the integration and security protection of data?