In-Depth Analysis of the Government Work Report | Accelerating the Cultivation and Expansion of New Drivers of Growth — What Are the Focus Areas?

Premier Li Qiang of the State Council mentioned in the government work report on March 5th that this year’s government tasks include accelerating the cultivation and expansion of new drivers of growth. The focus remains on developing the real economy, adapting development strategies to local conditions, fostering new quality productivity, and building a modern industrial system.

The expansion of new drivers of growth involves four aspects: optimizing and upgrading traditional industries, cultivating emerging and future industries, expanding and improving the quality of the service sector, and creating new forms of intelligent economy.

Zhong Huiyong, Associate Research Fellow and PhD Supervisor at Antai College of Economics and Management, Shanghai Jiao Tong University, and Deputy Researcher at the China Development Research Institute, told The Paper that the government work report integrates traditional industry upgrading, emerging and future industry cultivation, service sector expansion, and the creation of intelligent economic forms as the main thread of “accelerating the cultivation and expansion of new drivers of growth.” This reflects a comprehensive approach that emphasizes both transforming existing stock and nurturing new growth points.

Zhong Shihu, Deputy Director and Associate Professor at the Modern Industry Development Research Center of Shanghai National Accounting Institute, pointed out that early development requires policy guidance, but ultimately must withstand market testing. Therefore, policy focus should shift from selective support to ecosystem building by releasing application scenarios and improving institutional environments, thereby leveraging the decisive role of the market in industry survival of the fittest.

Zhong Shihu stated that the government work report’s proposal to “build a number of national advanced manufacturing clusters” is based on the logic of agglomeration effects and economies of scale. “Innovative agglomeration growth is an objective law. China’s city patent distribution is more concentrated than what the Zipf’s law suggests, and this trend is becoming increasingly pronounced. In other words, innovation tends to cluster more in large cities than population does.”

Wu Yiping, a Distinguished Researcher at the China Modernization Research Institute of Shanghai University of Finance and Economics, told The Paper that China’s strategic focus has shifted toward strategic emerging industries and future industries, such as artificial intelligence, new energy vehicles, biotechnology, and aerospace. These sectors have achieved breakthrough innovations in recent years, thanks to the continuous发挥 of high-quality industrial cluster effects.

Wu Yiping pointed out that future industries have entirely different internal development logic. The traditional “blood transfusion” fiscal support model of the industrial economy era cannot meet the deep needs of high-growth enterprises. “Therefore, it is urgent to break through traditional path dependence and build a dynamic policy support system covering the entire enterprise lifecycle, which has become a key core of future industrial innovation policy reform. Regions need to establish a ‘clear function, distinct levels, and efficient coordination’ fund system, with central, provincial, and municipal funds clearly defining investment roles. By using ‘direct investment + co-investment’ approaches to precisely support hard technology projects, forming a pattern of differentiated development and complementary advantages, and exploring loss absorption mechanisms during fund liquidation, we can motivate government investment funds to act as patient capital.”

Zhong Huiyong also said, “‘Government investment funds should lead by being patient capital’ and ‘establish mechanisms for future industry investment growth and risk sharing,’ which to some extent responds to the long-standing conflict between short-term assessments and long-term investments.”

Regarding the development of new quality productivity based on local conditions, Zhong Shihu emphasized that the government work report reiterates this point, which aligns closely with the regional division of labor based on comparative advantages. “Division and cooperation are objective laws. Developing emerging and future industries must adhere to a unified national strategy, guiding regions to leverage their comparative advantages, focusing on specialization, differentiation, and特色化, doing what they are good at and avoiding blind development beyond local endowments. Not all cities are suitable for developing emerging and future industries; different-sized cities have different functions.”

Zhong Huiyong added that regions need clearer lists of “what to do and what not to do” to avoid herd behavior and redundant construction.

(Article source: The Paper)