Home IssueArtificial Intelligence Explaining China’s Focus on “New Quality Productive Forces”

Explaining China’s Focus on “New Quality Productive Forces”

by Yanzi Xu
China flag waving in the wind.

President Xi first introduced the term “new quality productive forces” in September 2023, and it has become a popular buzzword in China since then. In the latest Government Work Report, Premier Li Qiang stated that the government’s top task for 2024 is “striving to modernize the industrial system and developing new quality productive forces at a faster pace.” And in the recent Boao Forum for Asia (known as the “Asian Davos”), representatives from over 60 countries remarked on this term, which made it one of the hottest topics during the event. But what exactly does the term “new quality productive forces” mean?

The term describes China’s new industrial strategy of driving economic growth through innovation in frontier technologies. It is the next evolution of the “Made in China 2025” strategy which focused on reorienting China’s economic growth by upgrading its domestic manufacturing capabilities to produce higher quality goods more efficiently. The Made in China 2025 initiative has seen some success, with China now producing many of the technologies, such as electric vehicles, photovoltaics, and wind turbines, it set out to produce back in 2015. For example, more than 40 percent of the exhibitors at the 135th Canton Fair in April 2024—previously a place to source labor-intensive manufactured products—presented intelligent and green products (e.g., smart mobility, industrial automation, intelligent manufacturing), showcasing the nation’s progress.

The government put forward the concept of “new quality productive forces” in recognition of the limits of “old productive forces.” China is not going to achieve its next round of economic growth—or global power—through more debt-fueled spending. Instead, by embracing disruptive technologies that drive productivity growth, especially in advanced industries, the government plans to boost China’s global economic standing.

In order to cultivate new quality productive forces, the National Development and Reform Commission, a government agency responsible for restructuring China’s economic systems and formulating policies for social development, is focusing on forming a new industrial ecosystem. First, to obtain a high-quality technical and skilled workforce for future development, the Commission has called for collaboration between universities and companies, establishing open talent policies to recruit international professionals, and creating regional innovation hubs for technology-focused innovation and entrepreneurship. Second, the Commission has urged all companies to work with universities on technological breakthroughs and to apply advanced technologies in production processes. Finally, the Commission has suggested planning out the development of “future industries”—industries driven by cutting-edge technologies and currently in incubation. The goal is for China to gain market share in advanced industries to become a global innovation leader.

The embrace of “new quality productive forces” will entail more than a change in the mode of production. The wide-ranging implementation of advanced technologies across all sectors of the economy will create new jobs and replace others, which will impact the necessary skillsets for workers and those entering the job market. In addition, Premier Li Qiang’s emphasis on widespread adoption of advanced digital technologies like artificial intelligence (AI), reflected in the “AI+” initiatives brought up during the Two Sessions, means that AI and other data-centric technologies will eventually be embedded in everyone’s daily life. Thus, the development of new quality productive forces will fundamentally change not only China’s economy with new industries but also its society with a more digitally literate population.

China is steadily cultivating new quality productive forces to enhance its economy. China’s huge marketplace provides extensive opportunities for testing, applying, and improving new technologies and business models. Other countries should take note and recognize that hidden behind this new buzzword, China has begun to articulate a clear game plan for boosting its techno-economic leadership in the global economy.

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