This year marks the final stretch of China’s 14th Five-Year Plan, with a strong emphasis on developing new quality productive forces. Introduced in 2023, this concept represents a shift towards advanced productivity, moving away from traditional economic growth models. Key areas include artificial intelligence, big data, and new materials, showcasing high-tech, high efficiency, and high quality.
Rising R&D Fuels Innovation
Last year, China solidified its position as a global innovation leader, climbing to 11th place on the Global Innovation Index—one of the fastest rises among major economies in the past decade. This achievement is backed by sustained investments in research and development (R&D), with expenditure reaching 2.68% of GDP in 2024, up 0.1 percentage points from the previous year. Basic research funding surged by 10.5%, now making up 6.91% of total R&D spending, according to the National Bureau of Statistics (NBS).
China’s total R&D spending surpassed 3.6 trillion yuan (approximately $500 billion) last year, marking an 8.3% increase compared to the previous year. NBS statistician Zhang Qilong highlighted that favorable policies, a diversified investment environment, and increased business involvement have significantly contributed to this growth.
With an R&D intensity of 2.68%, China ranks 12th among major countries, outperforming the European Union’s average of 2.11% and nearing the Organisation for Economic Co-operation and Development’s figure of 2.73%.
New and Old Industries Embrace Tech
China’s industrial landscape is transforming rapidly as emerging sectors expand. Kang Yi, commissioner of the NBS, reported that the value-added output in high-tech manufacturing above designated size grew by 8.9% year on year in 2024. Notably, the aerospace equipment and electronic communication device manufacturing sectors posted double-digit growth, while smart consumer equipment manufacturing surged by 10.9%, driven by a 25.1% increase in intelligent car-mounted devices and a staggering 53.5% rise in unmanned aerial vehicles.
\"New market demands are accelerating the supply of high-quality products, reshaping China's industrial pillars,\" Kang emphasized.
Legacy industries also saw robust modernization efforts in 2024, with technical transformation investments in manufacturing rising by 8%, outpacing overall investment growth. Meanwhile, the digital economy continued its rapid ascent. The value-added output in digital product manufacturing exceeded industrial averages, and the information transmission, software, and IT services sector expanded by 10.9%.
Innovations in digital consumption further spurred online retail sales of physical goods, which climbed by 6.5%. Infrastructure for next-generation connectivity advanced steadily, with China deploying 4.19 million 5G base stations by November 2024. Additionally, the country launched its first 400G all-optical interprovincial backbone network under the \"East Data West Computing\" project, establishing ultra-high-speed computing channels.
