Executive summary:
This policy brief critically examines the concept of “New Quality Productive Forces According to Local Conditions” (NPF) which aims to optimise resource allocation and foster technological advancement, thereby positioning China as a global leader in innovation. This approach seeks to address inefficiencies resulting from the neglect of local advantages and to channel innovation resources into strategic growth clusters.
The NPF approach is based on China’s longstanding division into three economic macro-regions, assigning coastal provinces the task of spearheading technological innovations, while central and western regions play supportive roles. Yet, in a novel move, the NPF introduces new mechanisms of “differentiated development paths” and “classified guidance” to enhance the redistribution of national resources toward high-quality development. Existing innovation hubs will acquire more resources and support, but in less developed inland areas, new manufacturing hubs can be expected to emerge.
A case study of Chengdu illustrates how the city has leveraged its local characteristics and advantages to align with the NPF approach. Chengdu’s plans emphasise agriculture, science, and technology, with a particular focus on cutting-edge fields such as artificial intelligence and microchips. These efforts are underpinned by substantial infrastructure projects and a competitive environment for future industries.
Overall, the NPF strategy’s emphasis on local conditions appears as a more resource-efficient and pragmatic alternative to previous plans. However, challenges persist, including regional inequalities and persistent bottlenecks in policy implementation. The ultimate success of this strategy will depend on its detailed execution in the forthcoming 15th Five-Year Plan.
Policy recommendations:
To effectively respond to China’s increasingly targeted and regionally differentiated approach to science, technology, and innovation (STI) development, the European Union should consider the following strategic actions:
- Deepen understanding of China’s evolving regional development strategy, which emphasizes a more selective and uneven distribution of STI resources, to better anticipate shifts in innovation dynamics.
- Increase public and private investment in science and technology across the EU to remain competitive in light of China’s substantial support for emerging innovation hubs.
- Facilitate access for European enterprises to inland Chinese regions by identifying and promoting opportunities in newly emerging innovation and manufacturing centers to leverage local comparative advantages.
- Expand analytical capabilities to assess the effectiveness of STI policy implementation at the local level in China, with a focus on identifying efficiency gains and the phasing out of outdated or inefficient practices.
- Ensure that European firms, research institutions, and policymakers are well-informed about the priorities and regional implications of China’s upcoming 15th Five-Year Plan (2026–2030), enabling them to proactively navigate diverse opportunities and challenges in cross-border science–business collaboration.
Stay tuned with us by reading more: ReConnect China Policy Brief 24-Local conditions