China’s ‘new productive forces’ concept offers fresh hope and impetus for economic transformation
- President Xi Jinping has described new productive forces as ‘freed from traditional economic growth models’ and featuring ‘high technology’
- The concept shows that top Chinese leadership realises that ‘old’ productive forces can no longer move the country forward
China’s latest catchphrase to describe its development is “new productive forces”. The term, coined by President Xi Jinping during his nationwide tour last year, is set to be enshrined in party documents and government policy blueprints in the coming years, providing an answer to the country’s economic future.
“Productive forces”, which refer to the combination of human labour with technology and infrastructure, is a central idea in Marxist theory about societal progress. The notion that capitalism will ultimately fail and give way to socialism is backed by the argument that socialism is better at unleashing productive forces.
Chinese Communist leaders fully endorsed the theory and provided their own interpretations.
The most well-known reading is from former paramount leader Deng Xiaoping, who said socialism is essentially about “emancipating and developing productive forces”.
His successor, Jiang Zemin, went a step further with the “theory of three represents”. He argued that the Communist Party’s legitimacy comes from its ability to represent “the development trend of China’s advanced productive forces”. Therefore, the focus of socialism should be the economy, and the value of socialism should be shown in development, not through purging class enemies.
The emphasis on productive forces has provided a theoretical justification for China to introduce pro-market and pro-capitalist policies while removing ideological constraints on the country’s pursuit of wealth.
A capitalist in China who hires hundreds of workers to chase profit can be considered a good communist, as long as the business is contributing to economic growth.
The concept of “new productive forces” continues to emphasise development. During a study session of the central Politburo earlier this year, Xi said new productive forces mean “advanced productivity freed from traditional economic growth models”, feature “high technology, high efficiency and high quality”, and “align with the country’s new development philosophy”.
The concept has provided fresh hope and impetus for China to speed up its economic transformation.
It shows that China’s top leadership has realised that “old” productive forces can no longer move the country forward. The traditional model of relying on debt-fuelled investment to drive growth has reached its limits amid rising debt and falling investment returns.
China cannot go down the path of further entertaining “old” productive forces. This partly explains why Beijing has been extremely reluctant to conduct a new round of fiscal stimulus.
It also reflects China’s growing sense of urgency to recharge growth via the adoption of technology instead of relying on manpower and financial input.
China is trying to equip its economy with modern technologies like artificial intelligence, and the country’s newly gained prowess in electric vehicles has clearly given Beijing fresh confidence that it can move up the value chain to forge new growth momentum.
China is putting hopes on new productive forces as the answer to sustaining growth momentum amid an ailing property market, a rapidly greying population and geopolitical headwinds.
In the coming years, the lofty concept could be translated into specific policies. China may identify industries, projects and businesses as bearers of “new productive forces” and provide them with state support.
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To be sure, new productive forces will not come easily for China. The country has been trying for decades to embrace a technology-driven growth model, but the results have been mixed.
China has achieved a lot in building up its advantage and even dominance in certain sectors, but that has also come with the high price of repeated investments and waste. If the country is to rely on local governments and state enterprises to deliver new productive forces, officials will likely rush to present local projects as being relevant.
Discussions of productive forces in orthodox Marxism often involve “production relationship” or “economic superstructure”. In this regard, the odds are in China’s favour if the country continues to reform and open up new paths.
