Dear graduates, colleagues, family, and friends,

First, on behalf of Guanghua faculty and staff, my sincere congratulations to the 1,319 members of the class of 2020. The sudden strike of the covid-19 pandemic has profoundly changed the world, our lives as well as the way our graduation ceremony is held. For those who are attending via the Internet, we will reschedule your degree awarding ceremony to next May during our university’s anniversary. For those who still cannot make it somehow, you will receive a non-expiring invitation to attend any degree awarding ceremony to be held by our college in the future. We will never allow a hasty farewell between you and Peking University — this is forever your campus, your spiritual homestead.

The world has been changing rapidly over the past several months. The pandemic has been threatening our healths as well as our economy and living. No individual, household or country is spared. In the face of this global-scale incident, an individual’s fate becomes trivial, our routines and orders are disrupted, and the values societies have long held dear are being challenged. Suddenly, professionalism becomes a laughingstock, the once-trustworthy rational spirit is being ruptured between opposing views, and our belief in the tolerance of differences and pursuit of diversity are being challenged. The world turns noisy and unfamiliar, and we have seen many things that were so shocking and frustrating that we didn’t know what to do. Like what F. Scott Fitzgerald said in The Great Gatsby: The loneliest moment in someone’s life is when they are watching their whole world fall apart,and all they can do is stare blankly.

Thanks to social distancing and lockdowns, we can afford to slow down and have some quiet time to think. How does this world change? And why? Covid-19 has exposed the huge gaps among different social classes. We cannot help wondering whether human society is already lost in its modernization. Elites of our time have all the perfect answers, but do they really understand the questions?

In 1967, economist William Baumol described in American Economic Review what is later called “Baumol’s cost disease.” He found that higher labor productivity growth experienced in one sector will push up the cost in other labor-intensive sectors, leading to a phenomenon that sectors of lower labor productivity growth will take up a greater share of the entire economy. One unexpected consequence of this is that economic growth will ultimately be determined by sectors of low productivity growth. Just to clarify, I should not nor am I going to dwell on an economic model at a ceremony like this. I just want to share with you a revelation inspired by Baumol’s analysis: How well economic development is relies not in what we do well but rather in whether we can improve our weaknesses. The progress of our society may be constrained not by what we do well but rather by what is essential and yet hard to improve.

It is those things that are essential but hard to improve that determine our time. We habitually believe that modern economy has entered a phase of constant accumulation and unlimited growth, and people only need to reap the benefits from its development. Granted, the rapid progress in science and technology and soaring productivity have been bringing huge material enrichment, and humans have never before enjoyed such unlimited freedom. However, this pandemic has exposed the empire’s clothes on modern economy. Take the U.S. for example. Americans in the lower half of the earnings distribution saw no increase in their wages from 40 years ago,and the middle 40 percent saw a growth of only 0.9 percent. Meanwhile, highest earners enjoyed an annual income growth of 5.7 percent. Only half of Americans born in the 1980s earn more than the prior generation, while the proportion for those born in the 1940s was 90 percent. The American Dream might have been gradually fading, but the truth has never been this clear. While some youngsters protest loudly that lockdowns are limiting their freedom to enjoy a quality life, people on the other side of the earth do not even have daily necessities,not to mention basic personal health protection gears like masks. The pandemic reflects not only a public health crisis but also a social crisis of inequality and injustice. Does this mean our economic and social development mode is a failure?

Elites of our time have devoted practically all their wisdom and hard work to boosting scales and efficiency, and our prevailing mindset and knowledge structure also focus on how to enable faster growth. However, social mobility, income re-distribution and equal development opportunities are the things that are essential and yet hard to improve in our time.

Where are those things that are essential but hard to improve in our immediate surroundings? After more than 40 years of rapid economic growth, we have completed the industrialization drive.China accounts for 27 percent of the global manufacturing output, far exceeding the United States, Japan and Germany which account for 16,10 and six percent respectively, but our wealth is still in the middle and lower rungs of the world, severely dependent on foreign countries in core technology and key components. In 2019, Chinese companies account for 129 of the world’s largest corporations by revenue, surpassing the U.S. for the first time. While there is one Chinese firm in every four fortune 500 groups, how many instantly recognizable global brands do we have?

We have every reason to believe that 5G, AI, big data and the Industrial Internet will undoubtedly create more space for growth in the future, but it is those things that are essential and yet hard to improve that constrain our development. Our online sales account for 45 percent of the global total, and our trade volume through mobile payments is more than three times that of the U.S. However, we have to face the huge digital gap in our country as well as the gap of growth opportunities from social immobility behind the digital gap. China’s personal income tax threshold is 5,000 yuan, but only some 70 million out of 770 million Chinese with jobs pay taxes. If we raise the threshold to 6,000 yuan, only 50 million will pay. While agriculture amounts to only seven percent of China’s GDP, it employs 26 percent of the country’s labor force. And let’s not forget those 300 million migrant workers who shuffle between cities and villages in desperate search of some security. Without human capital increase, workforce redistribution and a mechanism to boost the free flow of elements, the dual urban-rural structure will continue to plague us like a stubborn disease and a sore spot in our development. While people are hotly debating “the coming wave,” how many of you have paid attention to this silent ocean? Social and economic development is not sports competition that is obsessed with getting faster, higher, stronger and, eventually, winning. The progress and temperature of a society is determined by how it treats the vulnerable.

Let’s cast aside, for once, those big topics like human society’s evolution, changing global governance structures, economic development mode and obligations to a family and a country, and focus on an individual. Those things that are essential and yet hard to improve are also constraining an individual’s sustainable healthy development, stopping people from becoming better and self-respected. This is an age when information and knowledge are easily obtained. Those third party data and knowledge providers are using big data, various algorithms and even marketing gimmicks to pressure people’s sore spots, repeatedly bombarding us with sensational stories and substandard information and reminding us of the unknowns and the unknown unknowns. When the process of obtaining knowledge and information becomes performing arts, the thought process is displaced. Without independent thinking,standard answers are spoon-fed into our brains even when we don’t know the questions. We become parochial, intolerant and overly eager to express our self-important opinions but forget how to actively listen. We easily occupy a moral high ground to crush opposing opinions and unknown facts while covering up our own inadequacy in logic thinking and knowledge. In an age riddled with information,knowledge and facts, have our thoughts and wisdom improved?

The class of 2020, Guanghua has stuck to its mission to cultivate business leaders, create management knowledge and accelerate social progress over the past 35 years. I hope that you can showcase your wills and abilities to change the world as you grow. The pandemic is pushing us to a turning point of history. No matter which path you choose and what life you lead, I hope that, from here on out, you will actively ponder these things that are essential and yet hard to improve and try to make it happen with your own efforts and actions. It might be a tough choice, but as William Faulkner said, you cannot swim for new horizons until you have courage to lose sight of the shore.

What really matters in life is not what you have encountered but what you have remembered and how you remember them. Do things that are essential but hard to improve. During that process, you will see yourself, know yourself, and ignite yourself. No matter if it is a royal road or an obscure path, it will always be crowded and your contributions are bound to be limited. It is the things along those obscure paths that, once improved, will bring profound changes to you, the society and our time. They are also what you will remember most fondly.

The class of 2020, from here on out — whether your life is smooth sailing or full of hardships, whether you are in the spotlight or the corner of the world — please occasionally pause and ask yourself: what is essential and yet hard to improve? Am I working on what is essential and yet hard to improve? Do that, and even the most mundane life will take on significant meanings.

© 2019 Guanghua School of Management Peking University