ABSTRACT
The Chinese economy has progressed through several transitions since carrying out relevant economic reforms and its opening up policy. This progress is evident in the shift from restricting trade within national boundaries to opening trade to the international market, the change from the previous socialist system towards integrating the globalized system in the economic playing field, and the change from the planned economy to the socialist market economy, which is based on the premise that the foundational function of the market is the equal allocation of resources, as stated in the maxim “the government guides the market, the market guides the enterprises.” In the field of production, the change is from the state-owned economy and the collective economy to the diversification and development of the private-sector economy and the individual economy, as well as the change from agricultural production to industrialization. These successful transitions have revitalized Chinese commerce, making China the world’s second largest economy. However, this production-oriented economy is also facing substantial challenges that threaten its long-term development, such as high material and energy consumption, excessive damage to the environment, various conflicts of interest and disputes in trade relations, alarming rates of greenhouse gas emissions, low production output of value-added products, lack of knowledge input, low contribution rates of technological advancement, and the underdeveloped potential of the industrial economy. In order to make the transition from a nationalist economy to an international economic powerhouse, a transformation needs to take place in China. Although the transition from the production-oriented economy to the service-driven economy remains ongoing, the improvements in product technology and market elasticity, as well as upgrades in added value for products and their market leadership role, are urgently needed to develop the modern producer services. Actually, the advanced producer services, which are on both sides of the “smiling curve,” are the main indicator of increase and profit in the global value chains. Therefore, producer services have become the source of competition in the international economic playing field, as well as the new focus of the investment and industrial transfers of multinational corporations (Li et al. 2008). The big cities and the urban agglomerations have taken the lead as the main carriers and vanguard for China to participate in world economic competition; thus, we should provide an impetus for the economic transition in these big cities and urban agglomerations, as well as build the infrastructure of the urban economy with the intensive development of the producer service sectors.
