On 05 March, a new slogan "New quality productive forces" was listed in the work report of the Two Sessions of the 14th National People’s Congress. President Xi coined the term in September 2023 during his trip to Heilongjiang province in Northeast China to project the requirement for a new economic development model based on innovation in advanced sectors. The slogan aims to support sectors such as electric vehicles, new materials, commercial spaceflight, quantum technology, and life sciences.

On 31 January 2024, President Xi Jinping, on the sidelines of the Politburo meeting, said that China needs to focus on innovation, stabilize supply chains, and integrate technology and industry to achieve self-sufficiency in the area of trade. He said, “transform and develop traditional industries, develop and expand new industries, as well as plan and build industries of the future.”

The idea of “Productive Forces”: A brief background
The term productive forces mean combining human labour with technology and infrastructure for societal progress under the Marxist theory. China has its own interpretation of productive forces, as its leader Deng Xiaoping said that socialism is about “emancipating and developing productive forces.” His successor, Jiang Zemin, continued ahead and introduced the “theory of three represents.” Through this, he meant that the legitimacy of the Chinese Communist Party (CCP) will be derived from its ability to represent the development trend of the country’s advanced productive forces. Therefore, the party and the leadership focused on using socialism towards economic development and not creating societal class differences.

The continuous breakthroughs in science and technology and the role played by emerging industries are critical in forming new productive forces. During the Politburo meeting, Xi said the new productive forces mean “advanced productivity freed from traditional economic growth models, features high technology, high efficiency, and high quality, and align with the country’s new development philosophy.” The government sees that the old productive forces can’t no longer support or boost the Chinese economy and instead is heavily relying on adopting technology to revive the country’s stagnant economy.

Innovation and technology are seen as the primary factors driving the new slogan, as it aims to achieve higher productivity than relying on existing traditional models of economic development. According to data from the National Bureau of Statistics, China's total expenditure on research and development (R&D) in 2022 grew by 10.1 per cent to over 03 trillion yuan in 2021. The data also indicated that the share of strategic emerging industries, such as new energy, high-end equipment, and biotechnology, in China's GDP rose from 7.6 per cent in 2014 to 13 per cent in 2022.

It is seen as a critical policy driver to foster self-sufficiency in science & technology. The approach is seen as an attempt to gain investors' confidence in the Chinese market through greater fiscal support from the government.

New Productive Forces: Old wine in a new bottle?
According to some analysts like Cheng Hao, fund manager at Zhejiang Feiluo Assets Management Co., who added that such a shift in the policy approach will take time to fructify. The growing Western sanctions by the US and its allied countries by restricting the supply of critical and emerging technologies like semiconductors will delay Beijing’s ambitions to progress in AI, which is critical in the government’s efforts to revive new productive forces. Despite the looming macroeconomic challenges, the current slogan is seen as a repackaged effort to enhance the country’s value chain.

One of the visible factors is the government's role in driving the new narrative amid the retreat of the market forces. This is in anticipation of strengthening its resiliency against external geopolitical risks, including sanctions, de-coupling, or de-risking away from the Chinese economy and market.

The new slogan is seen as an attempt to shift the focus away from the country’s ongoing economic challenges in the form of weak consumer demand, growing property crisis, and mounting local government debt. However, for China, the challenge remains in implementing this new vision, which is uncertain given the lack of clarity on its implementation and the type of institutional mechanisms to rely on for technological innovation and increasing productivity.  

References
Zhou Xin, “China’s ‘new productive forces’ concept offers fresh hope and impetus for economic transformation,” South China Morning Post, 05 March 2024
Dr Nadia Helmy, “China and the role of technological innovation and new productivity forces,” Modern Diplomacy, 13 March 2024
“Xi: Developing new quality productive forces does not mean neglecting traditional industries,” CGTN, 08 March 2024
“Explainer: What do "new productive forces" mean?” Xinhua, 21 February 2024
“Decoding Xi’s New Catchphrase Aimed at Reviving China’s Economy,” Bloomberg News, 18 March 2024
James Pomfret, Kevin Yao, and Ellen Zhang, “As Xi summons 'new productive forces,' old questions linger for the economy,” The Japan Times, 06 March 202