Fostering New Productive Forces to Empower Drivers of New Growth

HIGH-quality development isChina’s primary task in buildinga modern socialist countryin all respects. For thispurpose， at its third plenary session inJuly this year， the 20th Central Committeeof the Communist Party of China（CPC） declared its resolve to “improvethe institutions and mechanisms forfostering new quality productive forcesin line with local conditions… Relevant"rules and policies will be improved toaccelerate the formation of relationsof production that are more compatiblewith new quality productiveforces， and to channel various types ofadvanced production factors towardthe development of new quality productiveforces. These steps will helprealize a significant increase in totalfactor productivity.”

This decision reflects the CPCleadership’s acute understanding ofthe mechanisms and systems underpinning"the development of Chinesesocialism. High-quality developmentcannot be achieved without deepenedreforms， which will remove institutionalobstacles to the development of newquality productive forces， create newgrowth drivers， and harness strengths.

Productive forces in this contextrefer to the ability of human beings totransform nature to their benefit in theproduction process. They consist ofthree key elements： labor， subjects oflabor， and means of labor， which form"an organic system based on interactionswithin and between them. Of thethree elements， laborers are the mainbody of productive forces. The meansof labor are an important benchmarkof the development of productiveforces， and subjects of labor are whatlabor is applied to. Productive forcesadvance in tandem with the progressof science and technology. When newtechnologies emerge， workers' abilitiesimprove， means of labor get upgraded，and subjects of labor undergo changes，all of which lead to revolution in theoptimization and integration of thethree. As a result， productive forcesare raised to a higher level. Productiveforces provide the material foundationfor human society and are the key factorand decisive force that drives humanhistory forward.

Relations of production are economicrelations formed in the productionprocess. They determine the wayin which the means of production arepossessed， used， and distributed， andhence have an important bearing onthe development of productive forces.Productive forces determine relationsof production， and vice versa.The development of productive forcesdemands changes in relations of productionthat will make the latter betteradapt to the former. Without timelyadjustments in relations of production，the development of productive forceswill consequently be held back. Therefore，relations of production must bemodified and transformed as requiredby changes in productive forces tofacilitate their growth. This is why reformis needed.

The fundamental task of Chinesesocialism is to tap and develop productiveforces. The reason why China'seconomic development can keep makinghistoric strides is that the CPC"has continuously deepened its understandingof the laws underpinning thedevelopment of productive forces， andon this basis guided them to reach newheights. As China strives to furtherdeepen reform comprehensively， itaims to rectify the relations of productionthat are not keeping pace with theexpansion of productive forces， furtherharness and develop productive forces，and promote all-round economic andsocial progress， thereby achieving highqualitydevelopment.

Fostering new quality productiveforces is the requirement and focus ofChina’s pursuit of high-quality development.New quality productive forcesare characterized by a substantialincrease in total factor productivity，innovation， and quality. They are in essenceadvanced productive forces.

Through scientific and technologicalinnovation and breakthroughs，new quality productive forces canpromote the transformation and upgradingof economic structure andimprove production efficiency. After"being translated into industrial innovation，they can turbocharge the riseof emerging industries and the transformationof traditional industries，enhancing economic competitivenessand sustainable development. Newquality productive forces facilitategreen development， which is conduciveto coordinated development ofthe economy and the environment.In short， in fostering new qualityproductive forces， China aims tooptimize resource allocation， stimulatethe creativity of market entities，advance high-quality development，and consequently achieve steady economicgrowth and all-round socialprogress.

To foster new productivity， whatis needed first is to strive for innovationsand breakthroughs in science andtechnology. Innovations are the key toimproving productivity， and revolutionarytechnological breakthroughs are animportant means of creating new qualityproductive forces. The developmentof such productive forces in science"and technology and broad applicationof new technologies， procedures， andmaterials can significantly improveproductivity， promote the transformationof an economic growth model， andallow China to achieve high-quality development.

Second， sci-tech innovation mustbe efficiently translated into industrialexecution. The application of researchoutput to real productivity will lead toboth the rise of emerging industriesand the deep transformation and upgradingof traditional industries. Scitechinnovation is the source of newquality productive forces， but it hasto be translated into real productivitythrough industrial innovation. Inother words， on the basis of sci-techinnovation， a country can improve andupgrade its industrial structure， buildup emerging industries， transform traditionalindustries， improve productionefficiency， and finally foster newer andmore advanced productive forces.

Third， accelerating green developmentis also important. New qualityproductive forces are green productiveforces. In accelerating green development，the aim is to strike a balancebetween economic development，resource utilization， and the environment.Under the philosophy of greendevelopment， China encourages theapplication of green technologiesand the development of green industries，strives for more efficient use ofresources and better environmentalprotection， and pursues sustainableeconomic development.

At its third plenary session， the 20thCPC Central Committee stressed theneed to accelerate the formation ofrelations of production that are morecompatible with new quality productiveforces， and declared to furtherdeepen reform comprehensively. The"fundamental purpose of such reformis to calibrate the relations of productionincompatible with new qualityproductive forces， thereby unleashingthe full potential of these productiveforces. Institutional design and policyarrangements should be refined tocontinuously stimulate the creativityof market entities， build up growthmomentum， and promote deep integrationof sci-tech innovation and industrialinnovation. This will improveproductivity and boost high-qualitydevelopment.

In this regard， the focus lies on three main issues.

First， the provision of better institutionalarrangements to mobilizeadvanced production factors. Concentratingadvanced production factors onnew quality productive forces is importantfor improving total factor productivity.By comprehensively advancingreform of the systems and mechanismsconcerning educational， scientific， andtechnological personnel， the training，management， and flow of these professionalswill be improved， cultivatinga highly competent and innovativeworkforce for the development of newquality productive forces. There shouldalso be continuous streamlining ofgovernment administration， delegationof power， improved governmentservices， and reduced costs to createa better business environment andstimulate the creativity of enterprises.In particular， protection of intellectualproperty rights should be further enhancedto ensure fair competition.

Second， creating an enabling innovationenvironment for the formationof new quality productive forces.Through policy guidance and by leveragingmarket mechanisms， theconcentration and circulation of innovationresources will be promoted to"prompt the formation of a robust innovationecosystem. In particular， it isnecessary to strengthen collaborationbetween the government， enterprises，research institutes， and the privatesector to create a good environmentfor innovation， ensure synergy for innovation，and jointly promote the developmentof new quality productiveforces.

Third， providing strong financialsupport for the development of thereal economy. The financial marketplays an important role in supportingthe development of new qualityproductive forces. To that end， angelinvestments， venture capital， andprivate equity investment should beencouraged and regulated. In addition，government investment fundsshould play a better role， and patientcapital be encouraged so as to providelong-term， stable financial supportfor innovative enterprises and emergingindustries. Reform of the financialsystem should be deepened. Financialinnovation should be carried outin a steady manner， along with theoptimization of financial resourceallocation， and the improvement of financialservices for the real economy.It should be ensured that governmentinvestment funds effectively play theirimportant role in steering capital towardnew quality productive forces.Special funds can be established tosupport scientific and technologicalinnovation， industrial upgrading， andgreen development， guiding privatecapital to flow to new quality productiveforces.