China's New Quality Productive Forces Development Holds Long-Term Advantages

Nov 12-2024   

By Yifu Lin

*Source: China Economic Weekly

Over the past two years, China's stock market has fluctuated, private investment has been affected and consumer spending also seems to have been relatively weak. As a result, people are more or less worried about China's future development prospects. But I think these are all short-term issues. In general, the main problem is a lack of confidence. In this regard, our country has appropriate fiscal, monetary and financial policies. And as long as these policies are used properly, we should be able to stabilise confidence and return the economy to normal growth.

What remains crucial for our country is long-term economic growth, which means that the level of productivity must continue to rise. How can productivity levels be raised continuously? The most important thing is that existing industries must continuously achieve technological innovation, and new industries with higher added value must continuously emerge, that is, rely on the development of new quality productive forces.

We have many opportunities to develop new quality productive forces because we are on the same starting line as developed countries in terms of emerging industries of the Fourth Industrial Revolution, such as artificial intelligence, big data, and life sciences and technology. We also have three major advantages over other countries. The first advantage is the talent advantage, with the number of science, technology, engineering and mathematics (STEM) graduates exceeding 5 million annually. The second is that we have a large domestic market. Technological innovation or the emergence of new industries can immediately achieve economies of scale by relying on the large domestic market, and quickly gain strong competitiveness in both domestic and international markets. The third advantage is that China has the most complete manufacturing ecosystem, and our country can provide the most complete, lowest cost and highest quality hardware for any product or technology.

In addition, we are already seeing the benefits of emerging domestic industries such as electric vehicles and drones. Of course, the vast majority of our industries are still traditional. We already have a number of international leaders in these areas, such as high-speed train, household appliances and shipbuilding. We also have advantages in other traditional industries where we have not yet achieved international leadership. In these areas, we can apply the introduction, digestion and absorption method of re-innovation with lower risk costs.

Whether it is a new industry or a traditional industry, there are good opportunities to develop new quality productive forces. However, the most important thing is that each region must adapt to its local conditions and transform its comparative advantages into competitive advantages in the market under the combined effect of an effective market and a capable government.

Overall, development is the foundation and the key to solving all problems. In the short term, we have sufficient policy space to stabilise the economy for the better. In the long term, we have many advantages in developing new quality productive forces, whether in new or traditional industries. As long as these advantages are brought to bear under the joint efforts of an effective market and a capable government, China's economy will be able to maintain medium to high growth.