China's economy has been transitioning from a phase of rapid growth to a stage of high-quality development. To propel the country into this new stage, incentives of entrepreneurs and employees will play more important roles than incentives of the officers, according to Xu Chenggang, Professor of Economics at Cheung Kong Graduate School of Business.

Professor Xu, who is also the recipient of the 2016 China Economics Prize, divided the population into three groups: officers, entrepreneurs and employees. The incentive of each group is important in his opinion. 

“At the early stages of Chinese economic reforms, the most important incentives would be the incentives of the officers, because they control the resources,” he said. 

However, under new circumstances, Xu stressed that the incentives of entrepreneurs and employees are even more significant than those of the officers.

Xu said China's private sector today contributes to more than 60 percent of GDP, and private firms employ more than 80 percent of employees. “So the incentives of the entrepreneurs are going to affect most of China's GDP and the large majority of employees.”

He highlighted the role of private businesses in tech, in terms of stimulating regional economic growth. 

“If we compare the interior regions to coastal regions on what they have done, what they didn't do well… then we find that the most striking difference is the private business, in particular, the private businesses in tech,” Xu added.

“Take the coastal regions for example, they all share a common feature, which is that you have a large concentration of private business in high tech. So you have talented people, talented entrepreneurs and inventors, concentrated in these areas... But when we look at the interior regions, we don't have this,” he said.

“This comparison is a good illustration about what the interior regions should do,” Xu told CGTN.

(CGTN's Michael Wang also contributed to the story.)