China’s newly proposed economic policy, termed “new quality productive forces,” has garnered significant international acclaim. Many foreign media outlets and international scholars recognize it as a highly efficient productivity model that promises benefits not only for China, but also the greater global community.

To interpret the background, significance, and impact of new quality productive forces from both domestic and international levels, CSST recently interviewed Michael Dunford, emeritus professor at the University of Sussex in the United Kingdom.

A timely measure

“The Chinese government work report this year shows China’s determination to climb up the technological ladder. The global industrial revolution in information and technology has profound impacts on the economic development of many countries. This revolution involves the development of new industries and cutting-edge technologies: new energy, quantum computing, electric vehicles, artificial intelligence, drone technologies, satellite communications, aerospace, and life sciences. At this special moment, the official introduction of new quality productive forces is a timely measure,” Dunford said.

Dunford continued to note that as early as in the 14th Five-Year Plan (2021–2025), it was clear that China’s goal was supply-side restructuring to enable the country to play a leading role in the new industrial revolution by integrating industry, academia, and research in innovation, accelerating the transformation of scientific and technological achievements into real productive forces, and upgrading traditional sectors to high-end industries.

“In short, the aim of the Chinese government is a more profound supply-side structural reform of the Chinese economy. This transformation will not just shape the industrial sector but will also provide vital elements of changes in a new type of urbanization, and promote agricultural and rural modernization,” Dunford added.

Displaying theoretical courage

Dunford elaborated that the global economy has been losing momentum. Developing economies have been experiencing secular stagnation, and this loss of momentum reflects the crises of the Western economic growth regimes. A web of debt impedes progress in much of the Global South and emerging markets. The COVID-19 pandemic, which began in 2019, exacerbated these difficulties. In this context, China’s 5.2% GDP growth in 2023 was a positive achievement and is indeed in line with its longer-term goals, he said.

“China is the world’s largest trading nation and largest exporter, so the slowdown of the world economy and the decreases in imports by developed countries have had the greatest impact on China,” Dunford said. “To address this problem, China adopted the principle of dual circulation and is re-orienting its trade from Europe and North America towards the Global South.”

“It should never be forgotten that in these international circumstances and faced with economic slowdown, China chose sustainable, high-quality growth rather than fast quantitative growth that some countries chose. In this global situation, the new quality productive forces that Xi Jinping and the CPC leadership are pursuing display considerable determination, vision, and theoretical courage,” Dunford added.

He continued to say that the structural transformation of an economy is a very difficult task. It is a process that is always far from painless, even when the goal, as is China’s case, is to “establish the new before abolishing the old.” Importantly, this necessary structural transformation is a process during which China must not allow short-term difficulties or the self-interested criticism of Western countries to blow it off course.

Increasing technological self-reliance

As Dunford noted, the adoption of new quality productive forces is related to the fact that the United States imposes sanctions on China and seeks to limit its access to important intermediate and manufactured goods such as high-end semiconductors and photolithography equipment. Given this scenario, compounded by risks revealed by events such as the COVID-19 pandemic, the Ukraine crisis, the Israeli-Palestinian conflict, and frequent climate crises, China must increase technological self-reliance.

“In the semiconductor industry, for example, in January 2024, the revocation of licenses for Dutch ASML photolithography systems, at the request of the US government, used in the 7nm process and maybe in the years ahead in the 5nm process, put an obstacle in the way of China’s industrial progress. China does already have a very important presence in this sector. China’s monthly wafer production capacity has already reached 7.6 million pieces, and it accounts for 25.7% of global semiconductor capacity,” Dunford said.

These restrictions are designed to prevent access to leading-edge devices and their important applications. If China does not find solutions, these restrictions will give rise to a new technological divide, Dunford observed.

“China realizes that if China is able to take a lead in the current industrial revolution and the next industrial revolution, it will certainly increase its self-reliance and reduce its vulnerability, if other countries refuse to share knowledge, or impose sanctions of goods, services, or trade out of its own interest. In this respect, China’s finding a solution is important also for the rest of the Global South, as China will share its technologies in an equal, friendly way rather than impose restrictive measures employed by Western countries. This is also what traditional Chinese culture emphasizes,” Dunford said.

Bracing for new industrial revolution

Dunford also expressed his thoughts on the history of China’s modern industrial development. He explained that this development began after the founding of the People’s Republic of China in 1949, leading to a transformation of productive forces, initially confined to the processing and production of primary goods. Starting from the late 1970s, China progressively occupied an increasingly important role as an assembler, processor, and exporter of intermediate goods.

“China once specialized in traditional industries such as textiles, clothing, and machinery, and is known for these sectors. In the first part of the new millennium, China concentrated on upgrading low value-added and low-skilled manufacturing industries and gradually altered its subordinate role in the international division of labor,” he said. Over time, China moved up the value chain initially from importing components and assembling electronic goods, all the while establishing linkages and participating in the global industrial chains and supply chains. Chinese private enterprises did make significant original contributions to global technological breakthroughs (Huawei and its 5G technologies is an example).

At present, the world is on the verge of a fourth industrial revolution. Dunford believes that China’s focus on new quality productive forces indicates its preparation for a fresh round of technological competition. “China does not want to miss out on the new industrial revolution, just as it missed out on the earlier industrial revolution in the 18th century, and was assigned a low-productivity role in global supply chains, especially as it is so well placed to make a major contribution to it.”

“Socialism with Chinese characteristics has always shaped China’s adoption of existing productive forces. This, along with China’s chosen path of modernization path, makes the new era a radically new one for the great rejuvenation of the Chinese nation,” Dunford concluded.