New manufacturing, new services, new business to promote the development of new quality productivity

On January 7, 2024, the 25th Peking University Guanghua New Year Forum was held at the 100th Anniversary Memorial Hall of Peking University. The theme of this forum is "Exploration of China's Growth Momentum". Researcher and former mayor of Chongqing, Huang Qifan, attended the forum and delivered a speech titled "Promoting the Development of New Quality Productivity around New Manufacturing, New Services, and New Business Forms".

Huang Qifan stated that his understanding of new quality productivity is roughly composed of three "new" elements: new manufacturing, new services, and new business formats. The aggregation of new manufacturing represented by strategic emerging industries and future industries, new services represented by high value-added productive service industries, and new formats represented by globalization and digitization is called new quality productivity. China has enormous potential in the three major sectors of manufacturing, service, and new formats. We need to cultivate new quality productivity, promote China's manufacturing industry to overcome its shortcomings, and make new quality productivity a new growth pole for China's future development.

The following is a transcript of my speech: I am delighted to be invited to participate in this year's New Year Forum. The theme of my speech this year is "Promoting the Development of New Quality Productivity Around New Manufacturing, New Services, and New Business Forms.". I would like to talk about my understanding of new quality productivity. I think there are roughly three "new" components of new productive forces:

The first new one is new manufacturing

I personally understand that "new manufacturing" involves five fields: new energy, new materials, new medicine, new manufacturing equipment, and new information technology. However, it can be called the concept of "new quality productivity", not ordinary technological progress or marginal improvements, but disruptive technological innovation. The so-called disruptive technological innovation requires at least one of the following five new standards to be met:

One is new scientific discoveries. This is a significant discovery of a new understanding of our world, from 0 to 1, from scratch. For example, research in quantum science and neuroscience may take a big step forward in human understanding of the world and ourselves.

The second is new manufacturing technology. That is to say, manufacturing technologies that are completely different from existing technological routes in terms of principles and paths, but can replace existing processes and technical solutions. For example, in future biological manufacturing, various proteins, food, materials, energy, etc. that humans need will be produced through bioreactors.

The third is new production tools. The transformation of tools has always held an important position in the history of human development, as the innovation of tools has brought about efficiency improvements and cost reductions. There are many examples of this, such as the emergence of EUV lithography machines making 7-nanometer and 5-nanometer chip manufacturing possible, the integrated die-casting technology in new energy vehicle manufacturing, which has significantly reduced the manufacturing cost of new cars, and so on.

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

The fifth is new products and applications. Every era has its own "four major items" and "five major items" that have entered thousands of households. In recent decades, it has been home appliances, mobile phones, cars, and so on. In the future, it may be home robots, head mounted VR/AR devices, flexible displays, 3D printing devices, and smart cars, among others.

Returning to the present, our development of new manufacturing needs to focus on developing strategic emerging industries and cultivating future industries. The 14th Five Year Plan proposes to focus on new generation information technology, biotechnology, new energy, new materials, high-end equipment, new energy vehicles, green environmental protection, as well as strategic emerging industries such as aerospace and marine equipment, accelerate the innovation and application of key core technologies, enhance factor guarantee capabilities Cultivate and strengthen new driving forces for industrial development. Organize and implement future industry incubation and acceleration plans in cutting-edge technologies and industrial transformation fields such as neuromorphic intelligence, quantum information, genetic technology, future networks, deep sea and aerospace development, hydrogen energy and energy storage, and plan to lay out a number of future industries.

Nowadays, we see rapid progress in these fields worldwide, and humanity is advancing technology at an unprecedented speed. A batch of disruptive products and technologies will change people's production and lifestyle, driving the possibility curve of production to achieve new expansion and leap. This is my first point, which is "new manufacturing".

The second new is the new service

Service becoming an important component of productivity is the result of deepening social division of labor. New productivity requires new services, which focus on the productive service industry embedded in the global industrial and supply chains and have a significant controlling impact on the global industrial chain.

Regarding the service industry, there are currently three characteristics in the world economic map:

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 terminal. For example, a mobile phone has over a thousand components, and the added value formed by these hardware components accounts for about 45% of the product value. The remaining 55% are design patents for operating systems, various application software, various chips, and so on, which are various services. These services are invisible and intangible, but they represent 55% of the value of this phone. Other high-end equipment and terminals, such as nuclear magnetic resonance, have similar characteristics.

The second characteristic is that the proportion of global trade in services is increasing. Thirty years ago, trade in services accounted for about 5% of global trade, but now it has reached 30%. Compared to trade in goods, the proportion of trade in goods is shrinking, and trade in services is expanding.

The third characteristic is that the proportion of productive services in the total GDP of countries around the world, especially developed countries, is increasing. We often say that the service industry in the United States accounts for 80% of the GDP of the United States, which seems to be "false". Is there a foam? It should be noted that 70% of 80% of the service industry in the United States is productive services, and this 70% x 80% is 56%. That is to say, about 13 trillion US dollars out of the 25 trillion US dollars in GDP is productive services, which is a high-tech service industry strongly related to manufacturing. The added value of the service industry in the 27 EU countries accounts for 78% of GDP, of which 50% is productive services, which means 39% of EU GDP is productive services. The productive services in the United States account for over 50% of GDP, while the European Union accounts for around 40%. The added value of productive services in other developed countries and G20 countries also generally ranges from 40% to 50% of GDP. By contrast, these three indicators of services are precisely the shortcomings of our country's current productivity. In 2022, the added value of manufacturing accounted for 27% of our GDP, while the added value of service industry was 52.8%. However, two-thirds of these 52.8% were in the life service industry, and less than one-third were in the productive service industry. This means that our productive service industry accounts for about 17% -18% of our GDP, which is quite different from Europe (40%) and the United States (50%).

In other words, to achieve Chinese path to modernization, we need to accelerate the development of producer services, and to achieve high-quality manufacturing in China, we must increase the added value of producer services with high added value related to strong manufacturing industry.

According to the Statistical Classification of Productive Services Industry (2019) by the National Bureau of Statistics, productive services industry includes research and development 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, productive leasing services, business services, human resource management and vocational education and training services, wholesale and trade economic agency services, There are ten categories of productive support services. These ten sectors are strongly related to the manufacturing industry. The various added values of manufacturing and service are represented by them. If they are not in place, the manufacturing products will not be high-end. At present, although the added value of China's manufacturing industry accounts for nearly 30% of the global total, the productive service industry strongly related to manufacturing is relatively lagging behind. The root cause of China's low position in the global industrial and supply chains lies in this aspect.

In addition, China's service trade also has the problem of structural imbalance with the world. According to data from the United Nations Conference on Trade and Development, global service trade accounted for approximately 30% of global trade in 2019, while China's service trade accounted for only 12% of total trade last year. Last year, China's service trade exports were 2.85 trillion yuan, with more than half of them being exports of lifestyle services. We have over RMB 300 billion worth of service trade imports, mostly from productive service industries. Unfortunately, most of the imported productive service industries are not imported by Chinese trading companies, but rather from foreign service trading companies that export productive service industries to China.

In this sense, cultivating new quality productivity is actually about making 50% of China's service industry productive services, and striving to reach 30% of the entire GDP sector productive services. If our service industry accounts for 60% of GDP, with 50% of the 60% being productive services, the productive services sector in the entire GDP sector can account for 30% of GDP. Although it still does not reach the proportion of Europe (40%) and the United States (50%), it has increased from less than 20% to 30%. This 10 percentage point increase is equivalent to 12 trillion yuan for the current GDP of over 120 trillion yuan. If service trade also increases, from the current 12% proportion to 30% of the total trade volume, the service value in our high-end manufacturing can reach about 50% of the overall added value of terminal manufacturing products, which is the direction of new quality productivity manufacturing. The productive service industry has gone up, and the manufacturing of new quality productive forces has also gone up. This is the second "new" that I want to talk about.

The third new is a new business format

The core of cultivating new business formats is to promote industrial transformation, which is a profound adjustment of industrial organization. I think there are two key thrust factors:

The first key driving force is globalization, and the formation of new formats should be linked to global trends, forming a new pattern of mutual promotion between domestic and international dual circulation. We must firmly promote institutional openness and promote the formation of a new development pattern. This is a new business format and a global trend. To cultivate new formats and models, we need to integrate domestic and foreign trade. In other words, our market system must be reformed from the aspects of rules, regulations, standards, management, etc., to form a business environment that integrates internal and external circulation, marketization, legalization, and internationalization.

For this reason, on December 1st last year, the Executive Meeting of the State Council studied and passed the "Several Measures to Accelerate the Development of Integrated Domestic and Foreign Trade", proposing to benchmark against the international advanced level, accelerate the adjustment and improvement of relevant domestic rules, regulations, management, standards, etc., promote the connection of domestic and foreign trade standards, inspection and certification, and supervision, and promote the same line and same standard for domestic and foreign trade products, These measures taken by the State Council are precisely the inherent goal of this reform.

The second key driving force is digitalization, which forms the industrial Internet. Now we are doing consumer Internet, which is basically just beginning. Industrial Internet is not only the Internet of domestic industries, but also the Internet of international and domestic industries. There are two kinds of industrial Internet. One is the integrated digital system of a corporate group and a large manufacturing enterprise from design, market, information, sales information to development, manufacturing and logistics. This is about the industrial Internet of enterprises, just like the SaaS in the 1990s and ERP after 2000, It is the industrial automation of an enterprise's manufacturing industry, and the entire automated industrial Internet system from marketing to sales and design.

But what the market is developing is another kind of industrial Internet, which is to rely on the Internet platform and various terminals, extend its reach to consumers around the world, and realize small batch customization, mass production, connection of the whole industrial chain, and global distribution according to consumer preferences. On this platform, hundreds of enterprises providing R&D and design, finance and insurance, logistics and transportation, and thousands of manufacturing enterprises are gathered, As well as tens of thousands of various raw material suppliers, these enterprises have been fully connected with digital systems. Relying on such an industrial Internet platform, these enterprises have formed a customer centered industrial cluster with close collaboration across the entire industrial chain, and truly achieved the goal of determining production based on sales, replacing the old with the new, and slowing down with the fast. There are a number of such industrial Internet in China. The city where such platforms are located will bring hundreds of billions or trillions of sales value, financial settlement, logistics and other services, and become a financial center, trade center and service center. Therefore, the "three centers" are the platforms that will control the world of the future industrial Internet.

In short, new manufacturing represented by strategic emerging industries and future industries, new services represented by high value-added productive service industries, and new formats represented by globalization and digitization form a cluster of new productive forces. Our country has enormous potential in the manufacturing, service, and new formats sectors, and the current weakness is the future huge growth pole, We hope to promote China's manufacturing industry to overcome its shortcomings and become a new growth pole for future development by cultivating new quality productivity.

The above content is sourced from the Peking University New Year Forum