China targets emerging sectors to drive growth
A sustained focus on supporting innovation in emerging sectors, future industries and traditional industries should be high on the agenda as China advances its economic structural reforms, according to leading economists and entrepreneurs.
Huang Hanquan, head of the Chinese Academy of Macroeconomic Research, said that fostering high-quality production was of vital importance in promoting sustainable economic growth and boosting total factor output.
“Various regions and departments across China have embraced this approach to drive economic progress, which will significantly accelerate technological innovation, enhance industrial application and facilitate the shift of growth drivers from old to new ones,” Huang said.
A new report says that despite geopolitical upheaval that is impacting on China’s economic growth momentum, the country is achieving success by boosting investment in science and technology, as well as by refocusing its efforts to enhance capabilities in emerging industries including artificial intelligence, autonomous vehicles and electric vehicles.
According to the Milken Institute’s Best-Performing Cities China Index, cities that were home to a significant number of tech hubs displayed a high level of economic resilience. The report said Chinese cities that have strategically invested in emerging technologies will continue to thrive, even as the broader economy faces challenges at home and abroad.
Huang called for more efforts to achieve breakthroughs in core technologies by investing more in fundamental research and by stepping up reforms in science and technology and education.
Looking ahead, Huang said the country should foster new pillar industries, including next-generation information technology, new energy vehicles, new energy and new materials, to offset the impact of the decline in real estate on China’s economy and create new growth drivers.
Justin Yifu Lin, Dean of Peking University’s Institute of New Structural Economics, said that regions with development gaps should measure their progress compared against their own past.
There are two types of new productive forces — one that invents new technologies and one that applies them, Lin said. Therefore, applying new technologies in traditional sectors should be treated as part of the drive to harness new quality productive forces, he added.
“Regions with gaps in development should use new technologies to improve productivity. It’s essential to follow the principle of seeking truth from facts and develop according to competitive advantages,” Lin said.
China, which recently released guidelines on improving access to its market, is taking steps to optimize its business environment and foster new quality productive forces, he added.
The guideline details 10 measures, including improving the negative list management model, strengthening the coordination of policies for domestic and foreign-funded enterprises, and optimizing the market access environment for new forms of business and new sectors.
Liu Qiao, dean of Peking University’s Guanghua School of Management, said that high-standard opening-up and deeper institutional reforms will create immense room for improvement in resource allocation efficiency, leading to an increase in the growth rate of total factor productivity.
Liu said there are two paths to achieving this objective. He explained: “The first route involves leveraging revolutionary technological changes to foster strategic emerging industries and future endeavours, including sectors associated with energy transition and digital transformation, as well as future-oriented industries like quantum computing and AI-driven big data. These will create new momentum, aiding in the acceleration of total factor productivity growth.
“The second path involves opportunities brought about by China’s transformation and upgrade of traditional industries. Currently, the productivity in China’s agricultural and services sectors, for example, is relatively low, offering significant potential for increasing total factor productivity,” he said.
Global executives have praised China’s reforms aimed at fostering new productive forces, saying that they present opportunities for global stakeholders.
Nancy Wang, country manager at LinkedIn China, said that China’s “vigorous pursuit of new quality productive forces aims to foster an innovation-driven economic growth model centred on technological advancement, sending a signal of China’s readiness to face the challenges of globalization and technological revolution with greater openness, inclusivity and innovation”.
And Victor Tsao, vice-president of open-source solutions provider Red Hat Greater China, said: “We believe that through further deepening reform and opening-up, and optimizing the business environment, China will continue to attract more foreign enterprises.”