President Xi Jinping has called for a more concerted effort to transform scientific research into marketable products – one major bottleneck in the advancement of China’s technological capabilities – and singled out Jiangsu and Guangdong provinces to lead the charge for tech innovation and national growth. He made the remarks in a discussion with delegates during this year’s parliamentary meetings earlier this month, but his remarks were only made public by Xinhua last week. One delegate told Xi the main challenge China must contend with in its tech development is a low patent conversion rate, despite a high number of patents filed each year. The President replied the situation is improving, but the country must still strengthen bonds between research centers and enterprises and improve incentive mechanisms. China’s conversion rate for scientific and technological achievements in 2021 was a mere 6%, and its invention patent industrialization rate 36.7%, according to a report by Nanjing University’s Yangtze Industrial Economic Institute published last year. In comparison, corresponding figures from the United States were 50% and nearly 80% respectively.
Xi’s call is part of an overall drive for new growth engines called “new quality productive forces”. The President also warned not to waste investment or abandon traditional industries. “New quality productive forces”, first mentioned by Xi in September, have been put at the center of China's economic agenda. Xi named specific regions to take the lead in these efforts. “At Politburo meetings, I always encourage major provinces like Guangdong and Jiangsu to assume key roles. How can national modernization be achieved if they don’t carry out their responsibilities? They are important and irreplaceable,” he said. China has laid out an ambitious gross domestic product (GDP) growth target of around 5% in 2024, despite a slump in the property market, the high debts of local governments and weakened confidence among private and foreign investors.
The combined GDP of Guangdong and Jiangsu makes up more than 20% of the national total, and their shares of China’s exports and foreign investment are also among the highest of any region. Both provinces have set annual growth targets of 5%, mirroring the central government. “People should not just criticize or point fingers, but take real action and solve one issue at a time,” President Xi Jinping told a panel of NPC delegates. “As long as we’re convinced that we are moving forward, we must keep our mettle and carry on,” he was quoted by Xinhua as saying. “Facing a new scientific revolution and industrial transformation, we must promote innovation to nurture emerging industries and build future industries with foresight,” he added.
“More enterprises conduct R&D themselves and transform the outcomes into new products. Research institutions and enterprises are forming synergies. Incentives and supporting policies must be ramped up to hasten the process.” Specifically, Xi pushed for more incentives to promote the application of scientific research and pressed for “obstacles and bottlenecks” to be broken. “China’s industrial development is all about self-reliance and catching up from behind. We started from scratch and we now have an independent manufacturing sector,” Xi said, hailing the country’s progress in complex industries like electric vehicles (EVs), high-speed rail, shipbuilding and aircraft manufacturing. However, he also warned that local authorities should consider local conditions in this drive for development to prevent blind investment and bubbles. Solar panels, together with EVs and lithium batteries, have been touted as emerging growth and export engines, but complications like overcapacity and trade barriers present potential stumbling blocks.
Xi also said that traditional industries should not be given up in the name of hi-tech pursuits – a stance in line with last December’s tone-setting Central Economic Work Conference (CEWC), where leaders vowed to “establish the new before abolishing the old”. Traditional manufacturing still accounts for most industrial output, even with new sectors on the rise. Vocational training was another subject Xi broached, recommending skilled workers be trained to generate the necessary human capital to move China up industrial chains. The country is estimated to face a shortage of 30 million workers in 10 leading manufacturing sectors by 2025, the South China Morning Post reports.
