New productive forces should suit local conditions

New quality productive forces comprise two main elements. The first is science and technology, which constitute the primary productive forces, and facilitate the multiplier effect in high-tech innovations, leading to a new level, new realm and new quality of productivity with qualitative changes. This applies mainly to new and high-tech industries.

The other element is step-by-step upgrading driven by the multiplier effect, which results from the optimization of the supply-side factors such as technology, institutions, data, labor, capital and natural resources that together constitute total factor productivity. This applies to all industries.

China needs to view new quality productive forces from the global perspective, because its "artificial intelligence-plus" sector lags behind those of developed economies. Fortunately, the central government has taken measures to catch up with global cutting-edge development through the complete rectification of leading platform enterprises.

The rectification aims to promote the healthy development of leading internet companies, so they can lead the country's high-tech enterprises and industrial clusters to write a new chapter in new high-tech development.

At the same time, we need to explain why the recent increase in unicorn companies is shrinking in China. To begin with, the support for original and major innovations in the digital field, and for developing a high-standard and legalized business environment has been inadequate in recent years. Given this fact, local governments should have employed performance evaluation mechanisms to produce better results, but they failed to do so due to a lack of experience and regulation.

Besides, there is a lack of high-quality talents in cutting-edge industries. Although the central and local governments have invested huge amounts in recent years to improve the infrastructure and other facilities of schools and universities, they have failed to cultivate enough leading talents.

Hence, it is necessary to solve these problems by integrating innovation in institutions, management, syllabuses and the high-tech sector. In this regard, the Third Plenary Session of the 20th Communist Party of China Central Committee scheduled for next month may release new guidelines on major reform measures, which may help local governments to find new ways to bolster the digital economy and enhance talent cultivation.

For the time being, local governments should tailor new quality productive forces to local conditions, meaning they should take measures to promote innovation in accordance with the reality of the situation and find high-quality solutions for supply-side structural problems.

Against this backdrop, some local governments should adopt a cautious approach while implementing the central government's policies. For instance, new and old infrastructure projects can be developed well together by integrating digital technology in the real economy. At the same time, local governments need to develop their own unique and innovative projects.

The central government began issuing ultra-long-term national bonds from May. Compared with ordinary government bonds, including short- and medium-term bonds, the ultra-long-term bonds can ease the debt repayment burden of local governments to a certain extent. As a matter of fact, the ultra-long-term national bonds can help solve some major problems of local governments as the bonds are not suitable to be used to directly support the development of some cutting-edge technologies, a problem which should be handled by enterprises themselves.

Yet the local governments can take advantage of land planning to improve public facilities and infrastructure, whose costs can be covered by the ultra-long-term bond funds, and thus boost domestic demand and inject new vitality into the economy. The bonds can also be used to optimize the industrial structure and increase employment in the medium and long term.

Many local governments invest in business incubators, entrepreneurship parks and "artificial intelligence-plus" projects. However, since local governments cannot be the major entities in handling such high-risk cutting-edge technologies, non-government investment and venture capital need to play a bigger role in the development of high-tech.

There is no singular path to developing new quality productive forces; local governments should explore tailored approaches based on their unique conditions.

The author is the former director of the China Academy of New Supply Side Economics. The views don't necessarily reflect those of China Daily.

If you have a specific expertise, or would like to share your thought about our stories, then send us your writings at opinion@chinadaily.com.cn, and comment@chinadaily.com.cn.