Policy and doctrine (lilun, often translated as ‘theory’) run in parallel in the PRC’s Party-state. As policy over past years has increasingly focused on scitech autonomy and an innovation-led economy, the CPC’s doctrinal framework must also adjust.
Party leader Xi Jinping 习近平 first called for integrating resources to speed up developing NPFs (new productive forces) while inspecting Heilongjiang in September 2023. Centred on the growing strategic emerging industries (SEIs) and still-developing ‘future industries’, NPFs are unlike earlier growth drivers, as they
- are driven by tech innovation
- realise high-efficiency and high-quality
- do not rely on massive resource inputs
- break from the traditional growth model
Xi told a late January 2024 Politburo study session that NPFs further unfold Marxist doctrine. ‘High-quality’, a new mission for the economy and, above all, manufacturing, demands a makeover of society’s ‘productive forces’: centuries-old Marxian jargon for society's ability to produce goods and services. According to PRC doctrine, poor countries have underdeveloped productive forces. Socialism, in their mind, means developing productive forces to become prosperous and powerful.
All this, contends Xi, justifies the doctrinal evolution. Release is at hand from an outmoded economic model centred on large investments in real estate, infrastructure, and the antiquated industries connected to them, liberating productive forces. Nurtured by R&D and innovation, NPFs yield vast dividends in total factor productivity (TFP). Industries and their supply chains demand upgrading, not least via new productive relations, going as far as the institutions and property rights protocols that structure all development.
Dramatising NPFs flags Beijing’s commitment to remaking the national development model. Scholars and cadres in the policy sphere will, as ever, seize the space this creates to stake doctrinal claims, re-imagining the economic and social future. Policy innovation is sure to follow.
building a new economy
Launching NPFs comes as the world nears a ‘fourth industrial revolution’, driven by new information technology, explains Ma Xiaohe 马晓河 China Academy of Macroeconomics former vice-president. Tech revolutions historically drive surges in productive forces.
Proposing NPFs bespeaks a centre turning its attention to fusing tech innovation with the real economy, says Liu Yuanchun 刘元春 Shanghai University of Finance and Economics president. This was the primary task identified at December 2023’s Central Economic Work Conference. Innovation must be transferred to industry, balancing a current focus on SEIs with building future industries. Greater coordination is called for between
- primary, secondary and tertiary industry
- enterprises of different scale
- producers at different points of the supply chain
Skilled 'workers', notably scientists, will be a major element of building NPFs, argues Zheng Hairong 郑海荣 CASS Shenzhen Institute of Advanced Technology. Workers who can double as researchers and entrepreneurs will smooth the transfer of innovation to industry.
Focus on NPFs embodies the Party’s view that it guides the development of society’s productive forces, explains Liu Dian 刘典 Fudan University. It extends Deng Xiaoping’s 邓小平 maxim that technology is the first productive force and provides direction in transitioning the development model. Industrial capital is vital in developing NPFs by catalysing accumulation, capital allocation, and improving industry structure.
new productive relations
The ‘China Miracle’, attributed to reform and opening, boiled down to re-setting productive relations, explains Chen Binkai 陈斌开 Central University of Finance and Economics. This, in turn, transformed productive forces, a Party maxim from the time of Mao. That meant greenlighting the ‘socialist market economy’, conjoining the benefits of a strong state with a dynamic market and multiple forms of ownership. NPFs imply a new, higher round of reform.
Issues remain in intellectual property and basic research, notes Guo Yingfeng 郭迎锋 China Centre for International Economic Exchange. Policy and funds must solve them.
This is already on show in the new national system, contends Liu Yuanchun, with firms deemed primary innovators, albeit under state strategic guidance. More linkage must be urged in finance, innovation, and industry chains.
Future production will be more socialised, implying a growing market role in resource allocation, claim Huang Jin 黄瑾 and Tang Liu 唐柳 Fujian Normal University. Productive factors (land, labour, capital and data) will need fairer compensation for their contribution to production, known as primary distribution. At the same time, dual-circulation should be improved to catalyse the flow of resources.
heeding the call
Local cadres have heard the centre’s new direction. Authorities in Guangdong, Zhejiang, Jiangsu, et al. showed keenness to boost NPFs in their post lunar new year 2024 work meetings.
Guangdong seeks to position itself as ‘the new era’s Manchester’, centre of the first industrial revolution, boasted Huang Kunming 黄坤明 Guangdong party secretary. 2024 objectives include
- helping 9,000 firms upgrade
- furthering digitisation in 9,200 firms
- supporting future industries
- AI
- 6G
- quantum technology
- low-altitude aviation
- biotech
NPFs claim to provide doctrinal guidance for the PRC’s transition towards an innovation-driven economy. It will now be up to scholars, industry leaders, and cadres at all levels to decide its content.
profiles
Ma Xiaohe 马晓河 | China Academy of Macroeconomics former vice-president
NPFs are now decisive in economic and social development, argues Ma. But can the state create breakthrough technologies: the ‘0 to 1’ inventions that lead to further branches of innovation?
In this context, relatively scarce factors become strategic. New production techniques foster NPFs not only in new industries, but old ones as well. Automation and AI have turned the PRC’s looms from labour-intensive to capital-intensive, a step towards the kind of economy Beijing proposes.
Yet problems abound: inadequate human capital, global uncertainty, and institutional reform shortfalls. Guiding resources towards technological bottlenecks, widening the participation of all actors (state and private), and freer competition in the marketplace are needed to create the structures necessary to foster NPFs.
Ma, originally from Dali, Shaanxi, is among the influential agronomists educated at Renmin University in the early 1980s (others include Chen Xiwen 陈锡文, Han Jun 韩俊 and Tang Renjian 唐仁健). He led the agriculture section of the State Economic Development and Planning Commission (former NDRC) through China’s WTO accession. A former deputy director of NDRC’s Academy of Macroeconomics, he was on the drafting team for eight No. 1 Documents during the 1990s and 2000s.
Chen Binkai 陈斌开 | Central University of Finance and Economics School of Economics dean
Initiatives catalysed by NPFs will boost PRC competitiveness, generating new growth drivers. Far from simple, NPFs enhance the quality of labour, the materials used, and the equipment deployed.
Productive factors must be better allocated to realise the productivity jumps expected. Better platforms must be built to allocate these factors, relying on digitisation and resource savings. However, institutional reform requires deepening, ensuring that factors flow freely.
The chief beneficiaries of earlier industrial revolutions grasped the leading technologies of their age. Hence, the true meaning of scitech self-reliance is for the PRC to do the same in the current circumstances.
Chen took his PhD at Peking University, advised by Professor Lin Yifu. Working on development and macroeconomics, he has received support from the State Council and has advised the World Bank.