Five misreadings of "new quality productive forces" to correct: Liu Zhibiao
Dean of the Yangtze Industrial Development Economics Institute flags five pitfalls: inherently undefinable; unmeasurable efficiency; frontier-tech-only; economics-only; coastal-only (no leapfrogging).
China's top-level policy slogans often leave expansive room for interpretation. "New-quality productive forces" is one of them. That ambiguity has encouraged overly uniform initiatives at the local level, which is why, at July's Central Urban Work Conference, President Xi Jinping posed an unusually candid caution: "When we talk about launching projects, it's always the same few — artificial intelligence, computing power, new-energy vehicles. Must every province build its industry around these?"
Today's newsletter steps into that vacuum. Liu Zhibiao刘志彪, Chairman and Dean of the Yangtze Industrial Development Economics Institute at Nanjing University, and a professor of economics and doctoral supervisor, offers a clearer working framing of the concept and practical pointers for its use.
Dr. Liu flags five misreadings. First, that "new-quality" is inherently vague; he argues it is dynamic yet definable, anchored in a shift toward computing-led intelligent production. Second, that its "efficiency" can't be measured; he recommends a standardized, authority-set TFP yardstick. Third, that it's only about future tech; he emphasizes upgrading legacy industries and improving factor allocation via market and institutional innovation. Fourth, that it's purely an economic-department matter; education (human capital), culture (creative applications), and green transformation are central. Fifth, that only coastal frontrunners can do it; latecomer regions can, and should, pursue leapfrogging paths suited to local endowments.
In short, Liu suggests moving beyond a one-size-fits-all tech chase. He proposes a clearer working definition, a single measurement ruler, cross-sector coordination, and region-specific pathways, so as to help translate the broad slogan into more workable directions.
Dr. Liu's essay was published on Aug. 13 in Beijing Daily, the official newspaper of the Communist Party of China Beijing Municipal Committee, and is also available on the Yangtze IDEI website.
Below is the translation of his essay, and all the words in bold are added by me. The translation has not been reviewed by Mr. Liu.
刘志彪：发展新质生产力要纠正几种错误认识
Liu Zhibiao: Correcting Several Misreadings About Developing New-Quality Productive Forces
New-quality productive forces (NQPFs) refer to an advanced state of productivity in which innovation plays the leading role, breaking with traditional modes of economic growth and pathways of productive development. They feature high technology, high efficiency, and high quality, and align with the new development philosophy. Under the conditions of the Fourth Industrial Revolution, marked above all by intelligent technologies, NQPFs will continuously spawn new industries, new business models, and new growth drivers. They will help build a mechanism that sustains steady growth in China's economy and inject fresh vitality into the recovery and stable development of the world economy.
Accelerating the development of NQPFs is fundamental to advancing high-quality growth and realizing Chinese-style modernization; it is also the confidence behind championing a "bright outlook” for China's economy. We must not only grasp the connotation of these forces accurately and propose concrete, well-targeted measures to speed their development, but also reform how industrial policy has been implemented in the past, using policy transformation to forestall problems that could arise in this new round of development.
General Secretary Xi Jinping's words are thought-provoking: "When we talk about launching projects, it's always the same few, artificial intelligence, computing power, new-energy vehicles. Must every province build its industry around these?"
This sounds a clear alarm about the ways and means we use to cultivate new-quality productive forces in practice. Given China's mobilizational governance tradition, insufficient or flawed theoretical understanding often leads to brute-force action — doing things off-target or outright wrong — resulting in costly mistakes and waste. Preventing this is the first order of business. Concretely, several misconceptions call for correction:
First, some argue that "new-quality" cannot be pinned down in either connotation or scope. Because the term must be continually updated as technology advances and thus carries considerable uncertainty, they contend that installing a grand, target-setting concept without clear boundaries will confuse implementation, turning "new-quality productive forces" into a catch-all and inviting an all-of-the-above, everything-at-once logic.
Indeed, new-quality productive forces emerge after revolutionary technological breakthroughs and are represented by the advanced technologies and new industries of the time. The concept is historical, phased, and dynamic; its connotation and scope change as technology changes.
From the perspective of technological revolutions, the evolution of productive forces can be sketched as a progression through "five powers": human power — horsepower — electric power — network power — computing power. Each major technological shift corresponds to a distinct quality of productive forces, bringing new industries, creating new value, and opening new arenas, advantages, tracks, and growth drivers.
During the Second Industrial Revolution, for example, the new-quality productive forces were represented by electric power, with a corresponding industrial system and leading sectors such as petrochemicals, steelmaking, machinery, and shipbuilding. Under today's technological revolution, amid ever-deeper networking, informatization, digitization, and intelligence, new-quality productive forces are represented by intelligent technologies, especially computing power. The corresponding industrial system has undergone a fundamental transformation. The range of leading sectors is broad: beyond the artificial-intelligence industry itself, any industry that uses digital-intelligent technologies to create wealth may be defined as a new industry aligned with these productive forces. In short, the connotation and scope are ascertainable, not boundless.
Second, others contend that the "performance" of new-quality productive forces cannot be measured with precision. By definition they feature high technology, high efficiency, and high quality, with a marked rise in total factor productivity (TFP) as the core indicator. In practice, TFP captures the part of output growth not explained by measured inputs of labor and capital, the gains attributable to intangible drivers such as technological progress, institutional reform, and improvements in organization and management. Computationally, it is typically expressed as the residual: the growth rate of the economy minus the contributions of capital and labor.
Because estimation methods, especially how to measure capital and labor, remain contested and no standardized consensus has been codified, some jurisdictions may be tempted to game or misuse the metrics to prettify their numbers. This is, however, straightforward to remedy: statistics authorities can promulgate authoritative, standardized measurement protocols. If every region is assessed with one yardstick, these distortions should not arise.
Third, some reduce the discussion of new-quality productive forces to betting only on future technologies and future industries. On this point, central guidance is explicit: these forces are catalyzed by revolutionary technological breakthroughs, innovative allocation of production factors, and deep industrial upgrading.
Accordingly, breakthroughs in new technologies are only one major source. Raising factor-use efficiency through market innovation and institutional innovation; accelerating the transformation of traditional industries with intelligent technologies; and expanding emerging industries — all are integral to developing new-quality productive forces. Taken together, this maps out a new pathway for advancement that must be pursued in a manner tailored to local conditions.
Fourth, a further misconception is that developing NQPFs is the sole remit of economic departments. The economy is indeed the main arena, but high-quality development cuts across every facet of socioeconomic life; it is not just an economic-bureaucracy task, and this view needs correcting.
In education, the decisive input is human capital: "high technology, high efficiency, high quality" are the three defining features, and educational innovation is the core engine that powers them.
In culture, the cultural-and-creative sector is a key application scene; at the same time, NQPFs open new modalities for traditional culture — deploying virtual reality (VR) and augmented reality (AR) to breathe new life into cultural relics and intangible cultural heritage.
In green development, NQPFs are inherently green: on one side, develop new-energy industries and energy-saving/environmental-protection industries to forge efficient eco-industrial clusters; on the other, use new technologies to transform sectors long dependent on heavy resource and environmental consumption, accelerating a shift toward industrial structures with higher technological prowess, lower resource use, and less pollution.
Fifth, another misconception holds that developing NQPFs is a job for advanced regions, while "latecomer regions" can only wait their turn. To be sure, leaders along the southeast coast enjoy stronger industrial bases and first-mover advantages. Yet under the current technological revolution, latecomers can indeed achieve extraordinary, leapfrogging development.
History offers abundant examples of technology-driven catch-up: after the First Industrial Revolution centered on the steam engine, Britain overtook the Netherlands; in the Second Industrial Revolution, the United States surpassed Britain; in the Third, Japan rose rapidly on the back of the electronic-information revolution. In each case, the relative "latecomer" succeeded by "changing lanes to overtake."
Beyond clearing up misconceptions, two further points warrant attention:
First, it is significant that NQPFs' first public articulation came in September 2023, when General Secretary Xi Jinping proposed it during an inspection tour in Heilongjiang, tailored to the region's realities and strategic position. The choice is telling.
On one hand, more than 20 years into the Northeast Revitalization strategy, the region has yet to solve its problem of endogenous growth momentum. Population, especially high-skilled talent, continues to flow out; urbanization quality lags coastal leaders; industrial structures remain suboptimal; and downward pressure on growth is mounting. How "latecomer regions" represented by the Northeast can escape their predicament and revive their economies is a practical challenge that developing NQPFs must address.
On the other hand, the arrival of the Fourth Industrial Revolution, driven by computing power, offers resource- and heavy-industry-based areas a new chance to "change lanes and start fast."
In sum, NQPFs can supply new engines for revitalizing the Northeast and advancing development in central and western China.
Second, how can we forestall the risk of overcapacity when developing NQPFs? The concern stems chiefly from features of a government-led development model and from how industrial policy is executed. In broad terms, several pitfalls warrant vigilance: first, "new wine in old bottles" (repackaging old projects as new); second, a fresh wave of speculative bubbles; third, initiatives that violate the principle of tailoring to local conditions; and fourth, an excessive buildup of local-government debt.