China’s leadership looking to unleash ‘new quality productive forces’, top economic adviser predicts
- Justin Lin Yifu says the third plenum, a key Communist Party policy meeting next month, will lead to substantial reforms
A senior economic policy adviser to the Chinese leadership has predicted that a key policy meeting will generate substantial reform measures, including steps to unleash “new quality productive forces”.
Justin Lin Yifu, dean of Peking University’s Institute of New Structural Economics and a former chief economist at the World Bank, made the comments in answer to a question during a seminar at the University of Hong Kong on Wednesday.
In his response, he first quoted the Communist Party’s own words when announcing the third plenum – which is expected to outline the country’s economic policy over the next five years – saying “every plenary session [of the party’s Central Committee] needs to bring in some new ideas and further promote development in China … There will be further deepening of the original market reforms”.
“The Chinese market for [finished] products has already been almost totally liberalised,” Lin said. “The [next] reforms will hit many markets of factors of production. And also, new quality productive forces will also be a highlight in this new plenum.”
Factors of production are the resources needed to create goods and services, and are usually defined as including land, labour, entrepreneurship and capital.
Lin did not elaborate on the specific measures China would take.
In the run-up to the meeting of the party’s elite, many analysts have said they have low hopes for sweeping market reforms and opening-up measures.
However, there could be structural improvements in certain areas to boost growth. Several economists expect Beijing to begin a new round of rural land reforms and dig deeper into its massive data resources to develop emerging industries, especially artificial intelligence.
In recent years China has been exploring measures that would allow farmers to sell their village land to allow more rural residents to move to the cities.
In an commentary published in the party theoretical journal Qiushi last week, Han Wenxiu, deputy director of the General Office of the Central Financial and Economic Affairs Commission, emphasised the need to accelerate the migration of the agricultural population, deepen reforms of the household registration system and move to ensure that those with urban residence rights were fully provided with public services.
China has also named its vast data resources a “growth factor” this year, as the development of artificial intelligence requires enormous amounts of data to train the models, giving countries owning large amounts of data a crucial advantage.
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Driven by the rapid development of 5G, AI technologies and the wider availability of smart devices, China generated 32.85 zettabytes – a unit equivalent to a billion terabytes – of data last year, according to the National Data Resources Survey Report.
It predicted China’s data production would increase by more than 25 per cent in 2024, driven by the large-scale application of new technologies, such as satellite communications, self-driving cars and generative AI.
Lin said China’s priority now was to formulate and implement policies for sustainable growth in the longer term.
“I think the most important thing that can boost confidence in China is long-term growth. You cannot try to boost the confidence of the people by introducing some temporary policies,” Lin said.
In his talk – “China’s rejuvenation: achievements, challenges and prospects” – Lin, who is well-known for his optimistic views about China’s long-term growth potential, said he remained confident that China’s GDP per capita could reach half that of the United States by 2049, the centenary of the founding of the People’s Republic, despite current challenges.
He said China should be able to achieve annual economic growth of 5-6 per cent until 2035 and 3-4 per cent up to 2050 because the economy still had “latecomer advantages”.
China’s GDP grew by 5.3 per cent in the first quarter of this year, according to official figures.
The International Monetary Fund forecast in May that China’s growth would decelerate to 3.3 per cent by 2029 due to an aging population and slower productivity growth.
While China could still upgrade traditional industries, it was on the same starting line as developed countries in terms of emerging industries, Lin said.
Given the country’s vast human capital, a large unified domestic market, and industrial supporting policies, its potential for technological innovation would be greater than other high-income countries, he said.
