China urgently needs to upgrade its industries by overcoming insufficient innovation to increase the contribution of technology to economic growth, Chinese business and government leaders concluded Sunday at a session on China's New Business Context at the Summer Davos in North China's Tianjin.

"Profound changes have taken place in our comparative advantages. In the past, we relied on labor-intensive industries to compete with global rivals, but now these sectors are under great pressure and will gradually shrink, be relocated or be upgraded," said Long Guoqiang, vice president of the Development Research Center of the State Council.

"The Fourth Industrial Revolution is upon us," noted Ma Weihua, president of the China Entrepreneur Club.

China faces big changes, including an aging population and reduced labor-cost advantages, said Ma, noting that "China's Achilles' heel is clear - our weakness in innovation and the commercialization of technology."

The transformation ratio for China's scientific and technological products  only reaches 30 percent. That ratio can be as high as 80 percent in some countries, according to Ma.

"Technology and innovation will increase competitiveness, especially in manufacturing," he said. "At the same time, the technology revolution is increasing productivity."

Under the 13th Five-Year Plan (2016-20), the Chinese government plans to increase funding for research and development to 2.5 percent of GDP.

China has to follow the same path as Japan and other industrialized Asian economies, which shifted from manufacturing to more capital- and technology-intensive sectors, said Long.

"The advance of technology is unstoppable," noted Liu Zhen, head of Uber Technologies Inc China. "The key for China is to feel empowered by technology and not overwhelmed by it," Liu noted.

China should embrace the digital economy, which could offer opportunities such as jobs for workers laid off from sunset sectors, she said.