The current policy focus in China has shifted toward fostering what is termed “new productive forces”.
From a manufacturing perspective, “new productive forces” encompass technological innovation, product upgrades, and sustainable technological advancements. Industries classified as such must demonstrate longevity, maintain their product positioning, continually upgrade technologies, innovate consistently, and control market dynamics through product updates and replacements.
Yet, in China, products associated with high technology and innovation are frequently indiscriminately labeled as “new productive forces”, which risks diluting the concept. Despite their technological advancements, industries such as photovoltaics and batteries face geopolitical risks and inherent technical limitations that hinder their sustainability as true drivers of new productive forces.
As it stands, China’s genuine new productive forces lie in sectors like electrical manufacturing and automobiles. The country stands out globally in electrical manufacturing, possessing robust capabilities across design and production. Many internationally recognized electrical brands have products manufactured in China through OEM arrangements. Crucially, China demonstrates sustainable technological upgrading in electrical equipment manufacturing, ensuring continuous innovation and market leadership despite the technologies being considered commonplace. This foundational technological capability sets these industries apart from those relying solely on high technology without the capacity for ongoing technological advancement and market control.
Chinese electrical manufacturing sector maintains strength amid economic fluctuations. Products such as air conditioners, washing machines, refrigerators, and LCD TVs continue to enjoy global popularity. In challenging markets like Japan, Chinese manufacturers dominate, particularly in refrigerators where they hold a significant share. This sector demonstrates robust competitiveness in mid-to-low price segments.
Similarly, the country’s automotive industry showcases new productive forces through technological advancements. Chinese vehicles now achieve thermal efficiencies up to 46%, rivaling counterparts from Japan and Korea. Innovations in batteries and intelligent components further bolster China’s automotive capabilities, posing challenges to established European and American automakers. This sector stands as a pivotal growth area, embodying the essence of new productive forces.
China heavily relies on automotive manufacturing and consumer electronics to drive economic growth, similar to how Japan and South Korea became global manufacturing leaders through these industries in the past, though of course, the situation of China is unique on its own in a deglobalized world today. The challenge amidst economic shrinkage concerns is whether these sectors alone can sustain robust economic growth and industrial prosperity. To navigate this challenge, prioritizing ongoing leadership in production and manufacturing is crucial.
All in all, industries like electrical appliances and automotive manufacturing provide sustained value through continuous technological advancements. Unlike strategically sensitive semiconductor chips, these sectors offer stability in trade dynamics. Strengthening these industries not only promotes the resurgence of manufacturing but also addresses deeper economic development challenges over time.
