China’s Vice Premier and economic tsar He Lifeng has ramped up the government’s call for citizens to focus on the need for coordinated government and market moves to develop “new productive forces”.
President Xi Jinping and He Lifeng appear determined to transform the country’s vast industrial sector and bolster scientific research and technological advancements. This change of tack was reaffirmed at the recent Communist Party plenum.
In an article published by the People’s Daily this morning, He Lifeng urged his fellow citizens to get cracking, saying that while new productive forces is a long-term task and a systematic project, “we need both historical patience and a sense of urgency that time and tide wait for no man.”
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He emphasised the government’s role in creating layout and rules, and providing fiscal and tax support to prevent overcapacity and resource wastage due to repeated construction. He also highlighted the importance of the market mechanism in fostering technological and industrial innovation.
“It is necessary to give full play to the decisive role of the market in resource allocation, strengthen the dominant position of enterprises in scientific and technological innovation, and make all types of enterprises become the main force in the development of new productive forces.”
China’s private sector has been under pressure. Private sector investment grew by a mere 0.1% in the first half of 2024 from a year earlier compared with a 6.8% gain in state-sector investment for the same period.
‘Unbalanced development’
Even if China’s gross domestic product per capita ranked forefront among middle-income countries in 2023, He said “we should see that the problem of unbalanced and inadequate development is still prominent and, the scientific and technological innovation capability is not strong yet.”
“The gap in income distribution is still large, resource and environmental constraints are tightening, and the limitations of traditional productivity and growth models have become increasingly prominent.”
He said developing “new productive forces” was a response to the call of the times to win the initiative in development, as the US and other western countries’ suppress China and try to decouple and de-link from it.
“Currently, in the face of fierce competition from major countries, China’s future industrial development faces a situation: if we stop moving forward, we fall back; if we move forward slowly, we fall back too.”
- Reuters with additional editing by Jim Pollard
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