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Prof. Yao Yang: New-Quality Productive Forces Light up Path ahead for Chinese Economy

Jun 12-2024   



New-quality productive forces are those that enhance total-factor productivity as China transitions into a stage where economic development is comprehensively driven by technological R&D and innovations, said Prof. Yao Yang of the NSD in a recent media commentary.

 

He pointed out that before 2010, China had derived economic growth mainly from the addition of labor force and capital. The sharp rise of urbanization rate, from less than 20% in 1978 to today’s 65%, means that about 200 to 300 million farmer workers have moved into cities and participated in global circulation. Alongside export growth, capital accumulation has also played a significant role in driving economic expansion. However, the Chinese economy has treaded into an adjustment phase since 2010, said Prof. Yao. Adjustments to the economic structure have resulted in the elimination of some surplus capacity and pollution-engendering industries and the emergence of new productive forces and industries like electric cars. As export dwindles in importance, the economy has shifted to a growth mode powered by domestic consumption. The third change concerns promoting technological advancement and altering production modes, i.e., migrating from an extensive production mode to a technology-driven one.

 

Prof. Yao believed that all industries can develop new-quality productive forces. The garment industry, traditional as it might seem, has given birth to Shein, which is not merely a trans-border e-commerce firm but a behemoth specializes in flexible production. What the USD60 billion-worth firm has achieved shows that China has realized Industry 4.0 in the clothing industry, said Prof. Yao. He also stressed that platform enterprises can contribute mightily to new-quality productive forces by providing cost-saving platforms for the real economy, by giving birth to new technologies, and by generating immense network effect.

 

China still commands a potential economic growth rate of 5.5% or so in the next few years, of which capital accumulation will account for the mainstay at roughly 3.6%. Going further down the path, capital accumulation will taper off and eventually disposable incomes will rely fully on technological advancement for growth, said Prof. Yao. He believed that China’s advantage lies in its long-term planning: by spurring the development of new-quality productive forces, China is laying solid groundworks for achieving grander goals in the future.

 

Prof. Yao Yang: New-Quality Productive Forces Light up Path ahead for Chinese Economy

Jun 12-2024   



New-quality productive forces are those that enhance total-factor productivity as China transitions into a stage where economic development is comprehensively driven by technological R&D and innovations, said Prof. Yao Yang of the NSD in a recent media commentary.

 

He pointed out that before 2010, China had derived economic growth mainly from the addition of labor force and capital. The sharp rise of urbanization rate, from less than 20% in 1978 to today’s 65%, means that about 200 to 300 million farmer workers have moved into cities and participated in global circulation. Alongside export growth, capital accumulation has also played a significant role in driving economic expansion. However, the Chinese economy has treaded into an adjustment phase since 2010, said Prof. Yao. Adjustments to the economic structure have resulted in the elimination of some surplus capacity and pollution-engendering industries and the emergence of new productive forces and industries like electric cars. As export dwindles in importance, the economy has shifted to a growth mode powered by domestic consumption. The third change concerns promoting technological advancement and altering production modes, i.e., migrating from an extensive production mode to a technology-driven one.

 

Prof. Yao believed that all industries can develop new-quality productive forces. The garment industry, traditional as it might seem, has given birth to Shein, which is not merely a trans-border e-commerce firm but a behemoth specializes in flexible production. What the USD60 billion-worth firm has achieved shows that China has realized Industry 4.0 in the clothing industry, said Prof. Yao. He also stressed that platform enterprises can contribute mightily to new-quality productive forces by providing cost-saving platforms for the real economy, by giving birth to new technologies, and by generating immense network effect.

 

China still commands a potential economic growth rate of 5.5% or so in the next few years, of which capital accumulation will account for the mainstay at roughly 3.6%. Going further down the path, capital accumulation will taper off and eventually disposable incomes will rely fully on technological advancement for growth, said Prof. Yao. He believed that China’s advantage lies in its long-term planning: by spurring the development of new-quality productive forces, China is laying solid groundworks for achieving grander goals in the future.