RESEARCH ON INNOVATION-DRIVEN DEVELOPMENT STRATEGY, COMPARATIVE ADVANTAGE AND INDUSTRIAL TRANSFORMATION AND UPGRADING

China is in the midst of a momentous economic transition from one of high-speed to high-quality growth. The industrial transformation and upgrading supported by extensive growth model that focused on -quantity parallel to has encountered bottlenecks. It's urgent to find a new model to promote new round of industrial transformation and upgrading. This paper, based on the current unbalanced industrial structure in China, analyzes the development strategy China has implemented since reform and opening up and its influence on industries. Conclusions are as follows: China has implemented an extensive forging ahead growth strategy that transcends comparative advantage. This has generated industrial structure deviations, longstanding factor price distortion, overcapacity and wave phenomenon and constrained industrial transformation and upgrading. Therefore, China should choose an innovation-driven development strategy that could unleash the potential of comparative advantage and drive industrial transformation and upgrading.