New quality productive forces to modernize industrial system

BY GAN CHUNHUI and LIU LIANG | 04-11-2024
Chinese Social Sciences Today

A rooftop photovoltaic power plant operates at the Anji Industrial Park, Zhejiang Province. Photo: TUCHONG

Accelerating the formation and development of new quality productive forces has become an important strategic requirement for China, as it constructs its modern industrial system. A contemporary industrial system is the material and technological foundation of a modernized country, which includes the modern industrial structure system, modern industrial capacity system, and modern industrial security system. 

Among these systems, the industrial structure system consists of subdivided industries, a seamless correlation and coordination between upstream and downstream links in the industrial chain, and the industrial layout of traditional industries, high-tech industries, strategic emerging industries, and future industries. The industrial capacity system includes “endogenous capacity” and “exogenous capacity,” with the former referring to technological innovation capacity and production capacity, and the latter market development capacity and upstream and downstream industrial organizational capacity. Lastly, the industrial security system is influenced by factors such as infrastructure (transportation infrastructure, public infrastructure, data communication infrastructure, etc.), factor conditions (ecology, energy, minerals, land, labor, capital, etc.), production space, and institutional arrangements.

‘Three components’

In the modern industrial system, several Chinese industries are at the forefront of innovation in terms of technology. These industries are excelling because they are complete, advanced, and have high levels of security created through synergistic development between industrial systems. In particular, the new round of technological revolution and industrial transformation has launched a rapid application and development of the internet and the digital economy. New trends lean towards intelligent, green, and integrated development. This is precisely where the innovation-driven requirement for new quality productive forces lies.

New quality productive forces are advanced productivity forms generated by revolutionary technological breakthroughs, innovative allocation of production factors, and deep transformation and upgrade of industries. It is led by innovation, with rapid advancement of laborers’ skillsets, labor materials, labor objects, and an optimization of their combined forces. Its hallmark is the significant improvement of total factor productivity, which breaks away from traditional economic growth models and outdated productivity development pathways, forming “new capabilities” in the development of modern industrial systems, featuring high technology, high efficiency, and high quality.

At the industrial level, new quality productive forces become “new manufacturing,” a sector characterized by new scientific discoveries, new manufacturing technologies, new production tools, new production factors, and new products and functions. This is further represented by “new services,” especially high value-added productive service industries, and “new business models,” brought about by globalization and digitization. These components constitute the most active and innovative parts of the modern industrial system.

Industrial capacity system

To form a modern industrial capacity system, it is necessary to prioritize technological innovation, thereby making the first move in industrial development by actively developing new quality productive forces.

First, experts must focus on basic research to enhance national strategic scientific and technological strength and solidify the innovation foundation for China’s modern industrial system. National strategic scientific and technological strength embodies the national will, national demand, and the highest level of a nation’s technological innovation. Research is the foundation for fostering national key core technologies, cutting-edge technologies, and disruptive technologies, and it is also the key to solving major bottlenecks in national economic and social development. Sci-tech research has become a focal point in the competition among global scientific and technological powers. 

Second, leveraging the advantages of China’s national system will strengthen the supply of high-level autonomous technological elements. With the deepening of development occurring in the new round of technological revolution and industrial transformation, we are seeing more strategies which pursue innovation. National competition, industrial competition, regional competition, and enterprise competition are all intensifying. The previous global value chain trade and industrial gradient transfer mode of “introduction—absorption—digestion-re-innovation” is rapidly shifting to a global contest in technological strategies and international industrial development. This international competition urges the development of productivity in China to achieve a qualitative leap. 

Finally, it is necessary to cultivate and enhance new quality productive forces from the perspective of innovation, creating an industrial ecology, digital ecology, R&D ecology, entrepreneurial ecology, financial ecology, and service ecology suitable for the development of new quality productive forces. Meanwhile, it is crucial to enhance the efficient allocation of science and education resources, intellectual resources, industrial resources, factor resources, service resources, and fiscal resources, forming an innovation ecosystem based on “data-driven + platform empowerment + intelligent terminals + scenario services + social life + agile supply,” and promoting resource synergy and enabling potential  individual breakthroughs. 

Industrial structure system

It is crucial to closely align with the key goal of high-quality development and build a modern industrial structure system that is more globally competitive. The modern industrial system will carry new quality productive forces. Therefore, the “quality” in new quality productive forces lies in accelerating the advancement of an industrial structure which is strategic, future-oriented, development-oriented, opportunity-oriented, and problem-oriented, as this will modernize the industrial system.

First, it is essential to accelerate the development of strategic emerging industries and cultivate new engines for industrial development. This demands intense focus on key areas within strategic emerging industries, such as the core basic components, advanced basic processes, key basic materials, and industrial basic technologies. Furthermore, it is time to construct an industrial development path centered around “leading enterprises in the innovation chain—industrial chain—industrial cluster,” to promote deep integration of innovation chains, industrial chains, capital chains, and talent chains, and achieve productive cycles of “education—talents—technology” and “technology—industry—finance.” 

The advantages of China’s large market capacity and long value chains from strategic emerging industries can be used in combination with local resource endowments, industrial foundations, research conditions, and potential advantages to achieve tailored development, improve the division of labor, and coordinate development. 

Second, in the face of unprecedented changes in the world today, we need to actively nurture and develop future industries, which will undoubtedly help China gain an early-bird advantage and take the initiative in industrial development. Therefore, it is essential to make forward-looking layouts for future industries. 

On one hand, emphasis should be placed on the leading and exemplary role of developing “future industries” in the construction of China’s modern industrial system. 

On the other hand, based on the reality that future industries are still nascent, and lack infrastructure for large-scale production and market-oriented operations, the market should play a leading role in resource allocation and industrial selection. A favorable market environment conducive to developing future industries should be created, focusing on areas such as launching frontier technology innovations, cross-innovation of hard technologies, and breakthroughs in disruptive technologies, to foster new dynamics for future industry development.

Third, notable features of new quality productive forces driving industrial development include integration of technology and industry, integrated systems, cross-industry collaboration, tightly combining scientific theories, technological principles, design schemes, process methods, operational skills, and production experience. These new productive forces present new characteristics while accelerating the integration of “science + technology + process + creativity + wisdom.”

Industrial security system

To achieve this productive convergence, it is necessary to deepen integration of the digital economy and the real economy, to advance the digital transformation of industries. With the acceleration of modern technologies such as the internet, big data, and artificial intelligence, the rapid application of digitization, networking, and intelligence leverage data as a “bond” that merges with traditional production factors such as labor and capital, thereby improving production efficiency.

It is thus crucial to focus on enhancing resource allocation capabilities and establishing a modern industrial support and guarantee system. 

First, factor allocation of new productive forces can improve efficiency by making the unified national market more accessible. New quality productive forces could be enhanced by efficient circulation, aggregation, and integration of productive factors through supply-demand linkage, production-sales adaptation, factory-market integration, and end-to-end connectivity; thereby playing a role in value creation in the modern economic system.

In this light, we need to follow the principles of market neutrality, efficiency, fairness, and full openness, to accelerate the construction and improvement of a unified national market and unify domestic market rules, standards, and systems. This unification will facilitate the smooth flow of commodity factor resources on a larger scale, and remove regional protectionism and market segmentation. In addition, policies in key areas such as science and technology, industry, finance, taxation, and talent should be coordinated to enhance protection of key core technologies, emerging industries, and intellectual property rights.

Second, development practices that accelerate the formation of new quality productive forces and promote the construction of new infrastructure are essential. To lay a solid material foundation for the development of new quality productive forces, we must increase investment in infrastructure, particularly new types of infrastructure that are “smart” and “digital.” That said, the construction of new infrastructure, particularly related to “new infrastructure” such as 5G, the Internet of Things, the industrial internet, satellite internet communication network infrastructure, and computing infrastructure should be emphasized, while optimizing the regional layout to further improve their usage rates.

Third, based on the realistic needs of developing new quality productive forces, we should improve both the economic governance system and the legal system. In the process of developing new quality productive forces, issues such as intellectual property protection, fair competition, and digital governance need to be addressed. Therefore, mechanisms for market-oriented distribution of labor, knowledge, technology, management, data, and capital should be improved to provide stable, long-term, systematic, and comprehensive political and institutional guarantees for the development of new quality productive forces. 

Finally, the establishment of a modern industrial system relies on the openness and integration of new quality productive forces. The development of new quality productive forces is tethered to a high-level outward openness. Therefore, it is necessary to strengthen international scientific and technological exchanges and cooperation to expand China’s industrial innovation development, thereby enhancing the resource allocation level and efficiency of China’s modern industrial system.

At the same time, industrial security, data security, and the security of key core technologies all need to be monitored to ensure a high-level opening up under an autonomous, controllable, secure, and competitive modern industrial system. 

Gan Chunhui is vice president of Shanghai Academy of Social Sciences (SASS); Liu Liang is deputy director of the Institute of Applied Economics at SASS.

Edited by YANG XUE