Huang Qifan's New Year's Speech: New Quality Productivity is the New Growth Pole (Full Text)

Source: Sina Finance-Ruijian Economy

Huang Qifan: New quality productivity is a new growth pole for China's development in the future, which can promote China's manufacturing industry to overcome shortcomings

On January 7, 2024, the 25th Peking University Guanghua New Year Forum was held at the Centennial Lecture Hall of Peking University, with the theme of "Exploration of Growth Momentum in China". Huang Qifan, researcher and former mayor of Chongqing, attended the forum and delivered a speech entitled "Promoting the Development of New Quality Productivity Around New Manufacturing, New Services and New Business Formats".

Huang Qifan said that the new quality productivity he understands is roughly composed of three "new" things: new manufacturing, new services, and new business formats. The aggregate formed by new manufacturing represented by strategic emerging industries and future industries, new services represented by high value-added producer services, and new business forms represented by globalization and digitalization is the new quality productivity. The mainland has great potential in the manufacturing sector, the service sector and the new business sector, and it is necessary to promote China's manufacturing industry to overcome its shortcomings by cultivating new quality productivity, so that new quality productivity can become a new growth pole for China's development in the future.

The following is a transcript of the speech:

I am very pleased to be invited to participate in this year's New Year's Forum, and the theme of this year's speech is "Promoting the Development of New Quality Productivity Around New Manufacturing, New Services and New Business Formats". I would like to say a little bit about my understanding of the new qualitative productivity.

In my opinion, there are roughly three "new" components of new quality productivity:

I personally understand that "new manufacturing" involves five fields: new energy, new materials, new medicine, new manufacturing equipment and new information technology, but to be called the concept of "new quality productivity", it is not those ordinary scientific and technological progress, not marginal improvements, but subversive scientific and technological innovation. For the so-called disruptive technological innovation, I believe that at least one of the following five new standards must be met:

One is new scientific discoveries. This is a "0 to 1", from nothing to something, a major discovery with a new understanding of our world. For example, the research of quantum science and brain science may take a big step forward in human cognition of the world and self.

The second is new manufacturing technology. That is, it is completely different from the existing technical route in terms of principle and path, but can replace the original process and technical solution, such as the future biomanufacturing, through the bioreactor to produce various proteins, foods, materials, energy, etc.

The third is a new production tool. Tool revolution has always been in an important position in the history of human development, because the innovation of tools has brought efficiency improvement and cost reduction, such as the emergence of EUV lithography machine to make 7 nanometers, 5 nanometer chip manufacturing possible, new energy vehicle manufacturing in the integrated die-casting molding technology, so that the manufacturing cost of new cars has been greatly reduced, etc.

Fourth, new factors of production. In the past, manufacturing relied on factors such as labor, capital, and energy, and in the future of manufacturing, in addition to these traditional elements, there will also be a new element of data. The intervention of new factors has brought about new changes in the production function, and the economies of scale, scope, and Xi effects will produce new cross-combinations and fusion fissions.

Fifth, new products and uses. In recent decades, home appliances, mobile phones, cars, etc., and the future may be home robots, head-mounted VR/AR devices, flexible displays, 3D printing equipment and smart cars, etc.

The "14th Five-Year Plan" proposes to focus on a new generation of information technology, biotechnology, new energy, new materials, high-end equipment, new energy vehicles, green environmental protection, aerospace, marine equipment and other strategic emerging industries, accelerate the innovation and application of key core technologies, enhance the ability to support factors, and cultivate and expand new momentum for industrial development. Organize and implement future industry incubation and acceleration plans in the fields of cutting-edge technologies and industrial transformations such as brain-like intelligence, quantum information, gene technology, future networks, deep-sea aerospace development, hydrogen energy and energy storage, and plan to lay out a number of future industries.

Nowadays, we see that the world is making rapid progress in these fields, and human beings are advancing scientific and technological progress at an unprecedented speed, and a number of disruptive products and technologies will change people's production and lifestyle, and promote the production possibility curve to achieve new expansion and leap. This is the first point I talked about, which is "new manufacturing".

Service has become an important component of productive forces, which is the result of the deepening of the social division of labor. The new productive forces need new services, and the focus of this service is on the producer service industry that is embedded in the global industrial chain and supply chain and has a significant controlling impact on the global industrial chain.

With regard to services, there are now three features in the world economic landscape:

The first characteristic is that in various high-end equipment, the value of the service industry often accounts for 50%-60% of the added value of this equipment or this terminal. For example, a mobile phone has more than 1,000 parts, and the added value of these hardware accounts for about 45% of the product value, and the remaining 55% is the design patent of the operating system, various application software, various chips, etc., which is a variety of services. These services are invisible and intangible, but they represent 55% of the value of this phone. Others, such as nuclear magnetic resonance, or a variety of high-end equipment and terminals, have similar characteristics.

The second feature is that the world's trade in services accounts for an increasing proportion of global trade. Thirty years ago, trade in services accounted for about 5% of the total global trade, and now it has reached 30%, compared with trade in goods, the proportion of trade in goods is shrinking, and trade in services is expanding.

The third characteristic is that all countries in the world, especially developed countries, have an increasing proportion of producer services in their total GDP. We often say that the service industry in the United States accounts for 80 percent of the GDP of the United States, and it seems that there is a bubble × 80 percent of the service industry in the United States, and 80 percent of the 70 percent 80 percent is 56 percent, that is, almost $13 trillion of the $25 trillion GDP of the United States is the producer service industry, which is a high-tech service industry that is strongly related to the manufacturing industry. The added value of the service industry in the 27 EU countries accounts for 78% of GDP, and 50% of the 78% is producer services, that is, 39% of the EU's GDP is producer services. Producer services account for more than 50% of GDP in the United States, about 40% in the European Union, and the added value of producer services in other developed countries and G20 countries accounts for roughly 40%-50% of GDP.

In contrast, these three service indicators are precisely the shortcomings of our country's current productivity, of our GDP in 2022, the added value of manufacturing accounts for 27%, and the added value of the service industry is 52.8%, but 2/3 of these 52.8% are life services, and less than 1/3 of the producer services industry, that is to say, our producer services account for about 17%-18% of GDP, which is a relatively large gap compared with Europe (40%) and the United States (50%).

In other words, to achieve Chinese-style modernization, we must accelerate the development of producer services, and to achieve high-quality Chinese manufacturing, we must increase the added value of high-value-added producer services that are strongly related to manufacturing.

According to the Statistical Classification of Producer Services (2019) of the National Bureau of Statistics, producer services include R&D, design and other technical services provided for production activities, cargo transportation, general aviation production, warehousing and postal express services, information services, financial services, energy conservation and environmental protection services, producer leasing services, business services, human resource management and vocational education and training services, wholesale and trade economic agency services, and productive support services, a total of ten categories. These ten sectors are strongly related to the manufacturing industry, and the various added value of the manufacturing industry and the added value of the service are represented by it, and if it is not in place, the manufacturing products will not be high-end. At present, although the added value of the mainland's manufacturing industry accounts for nearly 30% of the world's total, the producer service industry that is strongly related to the manufacturing industry is relatively lagging behind.

According to data from the United Nations Conference on Trade and Development (UNCTAD), global trade in services accounted for about 30% of total global trade in 2019, while China's trade in services accounted for only 12% of total trade last year. Last year, the mainland's exports of services were 2.85 trillion yuan, and more than half of them were exports of life services. We have more than 3 trillion yuan of service trade imports, and basically all of them are producer services, but unfortunately most of the imported producer services are not the producer services imported by Chinese trading companies, but the output of producer services made by foreign service trading companies to China.

In this sense, the cultivation of new quality productivity is actually to make 50% of China's service industry producer services, and strive to reach 30% of the entire GDP sector. If our services sector accounts for 60% of GDP, and 50% of the 60% is producer services, the producer services sector can account for 30% of GDP in the entire GDP sector. Although it is still less than the proportion of Europe (40%) and the United States (50%), it has increased from less than 20% to 30%, which is an increase of 10 percentage points, which is 12 trillion yuan for the current GDP of more than 120 trillion yuan. If the trade in services also increases, from the current 12% to 30% of the total trade, so that the service value in our high-end manufacturing can reach about 50% of the overall added value of the terminal manufacturing products, which is the direction of the new quality productivity manufacturing industry. The producer service industry has gone up, and the manufacturing of new productive forces has also gone up. This is the second "new" I want to talk about.

The core of cultivating new business forms is to promote industrial transformation and a profound adjustment of industrial organization. I think there are two key thrusts:

The first key thrust is globalization, the formation of new business forms should be linked with the global trend, forming a new pattern of domestic and international dual circulation promoting each other, we must unswervingly promote institutional opening-up, and promote the formation of a new development pattern. This is a new format, is the trend of the world, we want to cultivate new formats, new models, the need for the integration of domestic and foreign trade, in other words, our market system must be reformed from the rules, regulations, standards, management and other aspects, the formation of internal and external circulation integration, marketization, rule of law, international business environment.

To this end, on December 1 last year, the executive meeting of the State Council studied and adopted the "Several Measures to Accelerate the Integrated Development of Domestic and Foreign Trade", which proposed to benchmark the international advanced level, accelerate the adjustment and improvement of relevant domestic rules, regulations, management, standards, etc., promote the convergence of domestic and foreign trade standards, inspection and certification, and supervision, and promote the same line and standard of domestic and foreign trade products.

The second key thrust is digitalization, the formation of the industrial Internet, and now we are doing the consumer Internet is booming, and the industrial Internet has basically just begun. The industrial Internet is not only the Internet of the domestic industry, but also includes the international and domestic industrial Internet, there are two kinds of the industrial Internet, one is an enterprise group, a large manufacturing enterprise from the design, market, information, sales information to the development, manufacturing, logistics of the integrated digital system, this is talking about the industrial Internet of an enterprise, just like the SaaS we talked about in the 90s, ERP after 2000, it is the industrial automation of an enterprise manufacturing industry, from the market to sales, Design the entire automated industrial Internet system.

However, the market is developing another kind of industrial Internet, which relies on the Internet platform and various terminals to extend its tentacles to consumers all over the world, and realize small-batch customization, large-scale production, the whole industry chain and global distribution according to consumer preferences. Logistics and transportation enterprises, thousands of manufacturing enterprises, as well as tens of thousands of various raw material suppliers, these enterprises with a digital system for a comprehensive penetration, relying on such an industrial Internet platform, these enterprises have formed a customer-centric industrial cluster of close cooperation of the whole industry chain, and truly realized the production by sales, the old with the new, and the slow with the fast. Now there are a number of such industrial Internet in China, and which city such a platform is placed in, which city will bring hundreds of billions or trillions of sales value, and at the same time bring hundreds of billions or trillions of financial settlements, as well as logistics and other services, and become a financial center, a trade center, and a service center. Therefore, the platform that controls the future industrial Internet is the "three centers".

In short, the new manufacturing represented by strategic emerging industries and future industries, the new services represented by high value-added producer services, and the new forms of business represented by globalization and digitalization, the aggregate formed is the new quality of productivity, our country has great potential in the manufacturing sector, the service sector, and the new business sector, and the current short board is the huge growth pole in the future, and we hope to promote China's manufacturing industry to overcome the shortcomings and become a new growth pole for future development by cultivating new quality productivity.