China is expected to promote its plan to achieve “new productive forces” for 2024 in the coming “Two Sessions” meetings, which will begin in early March.
The Two Sessions – as the annual meetings of the National People’s Congress (NPC) and the National People’s Political Consultative Conference (NPPCC) are termed – will kick off on March 4 and 5, respectively.
Some Chinese economists expect the central government to set its gross domestic product (GDP) target at around 5% again for 2024 during the Two Sessions. But according to a Reuters poll of 58 economists, China’s economic growth may slow to 4.6% this year and 4.5% in 2025, given that the country is still suffering from its property and local debt crises.
Last September, Chinese Communist Party (CPC) General Secretary Xi Jinping raised the idea of building “new productive forces” for the first time.
Some US websites translated the program’s name as “new quality productivity” or “high quality development” but state media said the translation cannot fully describe China’s plan.
Xinhua said the term new productive forces refers to China’s plan to leverage science and technological innovation to generate new industries and speed up the country’s economic development.
“New productive forces mean advanced productivity that is freed from traditional economic growth mode and productivity development paths, features high technology, high efficiency and high quality and comes in line with the new development philosophy,” Xi said in a group study session of the politburo of the CPC Central Committee on February 1 this year.
He said sci-tech innovations should be applied to specific industries and industrial chains in a timely manner. He said efforts should be made to transform and upgrade traditional industries, foster emerging industries, make arrangements for future industries and improve the modern industrial system.
Yu Fengxia, senior economist at the State Information Center, a think tank affiliated to the National Development and Reform Commission, further elaborates on the idea in an article published on the government’s website on February 6.
She says the only way to achieve new productive forces is to use China’s “whole nation” effort to make breakthroughs in core technologies.
She says more investments should be made in advanced technologies to update the country’s sectors that produce fundamental parts, materials and software, high-end semiconductors and industrial software, especially the industries that are facing suppression of foreign countries.
She says China should nurture its own technology firms and research institutions that are engaged in work on artificial intelligence, the next iteration of the internet (termed the “metaverse”) and the making of humanoid robots and brain-computer interfaces.
She adds that China should use AI, internet of things (IoT) and big data to increase the competitiveness of its advanced manufacturing sectors.
Criticizing the US
On Tuesday, several Chinese academics published their articles about new productive forces. Without naming any foreign countries, they all said that China came up with this new idea after some developed countries were trying to decouple with it.
Nanjing Forestry University’s Ma Yuting and Wuhan University’s Ye Chusheng co-write an article saying that China had been enjoying “late-mover advantage” when cooperating with developed countries in the past.
However, they say, after the Chinese economy grew to a certain size, some developed nations tried to suppress its growth by “decoupling” and halting scientific cooperation with China. They say this is why China needs to achieve new productive forces to enjoy “first-mover advantage.”
Last August, the United States refused to extend a 45-year-old science and technology agreement (STA) with China by another five years. It only extended the STA by six months. Nature magazine reported that the US and China will probably delay the renewal of the STA, which will expire on February 27.
The US and its allies in recent years have also encouraged their companies to diversify their new investment to countries other than China.
China’s direct investment liabilities, an indicator of incoming foreign investment, rose by US$33 billion last year, according to the latest data released by the State Administration of Foreign Exchange (SAFE). The gain was 82% down from the level in 2022, and it was the lowest since 1993.
In comparison, Vietnam’s foreign direct investment surged 32% year-on-year to US$36.6 billion in 2023.
Slowing economic growth
In late January, the Provincial People’s Congresses had already held their annual meetings and published their government work reports.
Of the 31 Chinese municipal cities, provinces and regions, 17 failed to meet their GDP growth targets in 2023. For example, Heilongjiang province recorded 2.6% economic growth last year, far below its 6% growth target.
On January 30, the 31 provinces and regions announced their growth targets for 2024, which range between 4.5% and 8%. Only four of them set targets higher than last year’s while 16 lowered theirs. The remaining 11 maintained their growth targets.
Last year, China’s GDP grew 5.2% year-on-year, beating the target of 5%.
Li Chao, chief economist at Zheshang Securities, said the Chinese economy will be able to achieve 5% growth this year, given that the central government will continue to boost domestic consumption, upgrade its supply chain and nurture new businesses.
He said local governments will unveil their supportive measures to boost the catering, retail, new energy vehicle, tourism and elderly-care sectors. On the national level, he said, the central government’s plan to develop the advanced manufacturing sectors will be a main theme of the “Two Sessions.”
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