New quality productive forces and their formation and development from a political economy perspective

The new quality productive forces represent a category within political economy, put forward by President Xi Jinping through the creative development of Marxist political economy. This concept is not merely a new term adopted to depict emerging new technologies, tools, sectors, industries and other novel phenomena. Instead, it is a terminological revolution grounded in the Marxist theory of productive forces, considering the historical development of productive forces and the latest practical experiences.

The concept of productive forces came to the attention of political economists during an era of rapid growth in social wealth. Historically, to explore the sources of wealth, political economists such as Quesnay, Smith, Ricardo and List approached the issue of productive forces from diverse perspectives. For example, Quesnay proposed the productive power of land, while Say put forward the productive power of capital. However, their understanding of productive forces was superficial. Although at the beginning of The Wealth of Nations, Smith identified the division of labor as the most crucial factor in enhancing the productiveness of labor and analyzed the role of capital accumulation, he regarded the division of labor as a universal law of production. He did not explicitly state that such productiveness was, in fact, the result of socialized production under capitalism – specifically, the social productive force of labor under the dominance of capital. List posited that the power of creating wealth outweighs wealth itself, thereby regarding productive forces as a capacity superior to exchange value and capitalist relations of production. These theories, however, failed to link the development of productive forces under capitalism to its contemporary relations of production, instead treating productive forces as transhistorical concepts.

Marxist political economy critically inherited and developed classical political economy, with the theory of productive forces as an essential component. The concept of productive forces, having undergone the refinement by dialectical materialism and historical materialism, forms a dialectical unity with production relations. The contradictory movement between the two constitutes the fundamental driving force behind the progress of human history. As a scientific category of political economy, productive forces are not an “alien” force external to human society but a historical-social category. Marx attached significant importance to the study of productive forces. In his speech at the grave of Marx Engels (2009, p. 602) noted, “Science was, for Marx, a historically dynamic, revolutionary force. However great the joy with which he welcomed a discovery in some theoretical science whose practical application, perhaps, was as yet quite impossible to envisage, he experienced quite another kind of joy when the discovery involved immediate revolutionary changes in industry and in historical development in general.

Based on the orientation of socialism with Chinese characteristics, answering the question of “what kind of productive forces to develop” and “how to further develop and liberate them” remains central to achieving the goal of high-quality development in the new development stage. Accelerating the development of new quality productive forces represents China's latest response to this epochal question. After establishing the socialist system, China must undergo two transformative transitions to evolve from an impoverished agrarian society into a modern socialist power. The first transition entailed industrializing a predominantly agricultural economy. In his later years, Marx put forward a well-known proposition concerning backward Russia at that time: Russia could bypass the “Caudine Forks” of capitalism and either acquire all the positive achievements created by the capitalist system or apply all such positive achievements to the Russian communes. Whether through appropriation or application, among the positive achievements created by the capitalist system, the foremost is the advanced productive forces. This suggests that for socialist countries with backwards productive forces to achieve leapfrog development, the first step must be to “follow in the footsteps” and actively “catch up and surpass,” while making full use of their own “late-mover advantage.”

China has completed this first leap, evolving from a backward agrarian country into a manufacturing powerhouse with the world's most comprehensive industrial system. It now ranks first globally in both manufacturing output and value-added. In the new stage of development, to build a modern socialist country in all respects, China must accomplish the second leap. Relying solely on the “catch-up strategy” is insufficient to surpass the capitalist system and fully demonstrate the superiority of socialism. This is because competition and even confrontation between China and long-standing “leading” developed capitalist countries will intensify, and “chokepoint technologies” – bottlenecks that cannot be exchanged for, bought or obtained – must be solved through independent R&D efforts. Furthermore, the new round of global technological revolution presents unprecedented opportunities for China to shift from a “follower” to a “parallel runner” and further to a “leader.” By leveraging the institutional advantages of socialism with Chinese characteristics, advancing innovative development, continuously optimizing and upgrading existing industries and actively cultivating emerging and future industries, developing new quality productive forces as a key point and pillar for high-quality development has become the inevitable choice for realizing the second leap.

Since Xi proposed the concept of new quality productive forces, the theoretical community has engaged in vigorous discussions on numerous specific theoretical and policy implementation issues. Drawing on the theory of productive forces in political economy, this paper offers preliminary reflections and explorations on the formation and development of new quality productive forces and related issues.

The definition of productive forces prevailing in Chinese theoretical circles has long been “humanity's capacity to utilize and transform nature for the production of material goods, which mainly comprises three elements: laborers, means of labor, and objects of labor” (Compilation Group of Introduction to Marxist Political Economy, 2021, p. 7). However, this definition warrants further discussion, as it fails to distinguish between productive forces and productiveness (i.e. the productiveness of labor) and between productive forces and the factors of production and their capabilities.

Marx put forward many concepts related to productive forces, such as the productiveness of labor, social productive forces and natural forces. Some of these concepts and formulations emphasize the productive capacity possessed by factors of production, while others emphasize the role that factors of production play in production. To provide an accurate definition of productive forces, should it refer to the capabilities of factors of production or the realized outcomes of these capabilities? Returning to the principles of historical materialism itself, the answer to this question is not difficult. Productive capacity and productive forces are not the same. Oil possessed the capacity for combustion before it was discovered and utilized by humans, but this capacity was not applied to material production. Only when people employed it as a means of production and a factor of production in the material production process could this capacity be brought into play to meet human needs. Marx (2009a, p. 44) indicated, “Whatever the social form of production, laborers and means of production always remain factors of it. But in a state of separation from each other, either of these factors can be such only potentially. For production to go on at all, they must unite. The specific manner in which this union is accomplished distinguishes the different economic epochs of the structure of society from one another.” It follows that productive forces refer to material productive forces and social productive forces, which are the outcomes of various capabilities discovered and utilized by humanity and the material productive power realized by people under specific relations of production. Productive forces are the result of the combined action of factors of production, which should not be conflated with the capabilities possessed by the factors of production nor be equated with the productiveness of labor. As Marx (2009b, p. 53) indicated, “This productiveness is determined by various circumstances, amongst others, by the average amount of skill of the workmen, the state of science, and the degree of its practical application, the social organization of production, the extent and capabilities of the means of production, and by physical conditions.”

Productive forces must be realized through people's “purposeful labor,” manifesting as “the process in which both man and Nature participate, and in which man of his own accord starts, regulates, and controls the material reactions between himself and Nature” (Marx, 2009c, pp. 207–208). The history of human civilization, scientific advancement and social development reveals that societal progress is fundamentally a trajectory of discovering, harnessing and utilizing natural energy sources – transitioning from traditional biomass energy (human/animal labor) to hydropower and wind power, then to fossil fuels like coal and petroleum and ultimately to nuclear energy and contemporary renewables.

Economic historians also emphasize that one of the necessary prerequisites for understanding economic transformations is comprehending “the revolutionary changes that led to the ‘conquest’ of the physical environment” (North, 2013, p. 86). However, understanding productive forces solely from the perspective of the relationship between humans and nature is one-sided and erroneous, because the fundamental purpose of individuals developing productive forces is to serve their needs. To better achieve this purpose, people form societies and specific relations of production, integrating the various material factors of production they master to function collectively and produce goods needed by society. Therefore, discussions of the development of productive forces cannot be separated from society, as well as the modes of production and relations of production that evolve with history. The category of productive forces in political economy reflects not only the natural material attributes of social production but also embodies the socio-historical properties of production. Marx (1995, pp. 408–410) elucidated, “[…] men are not free to choose their productive forces—which are the basis of all their history—for every productive force is an acquired force, the product of former activity. The productive forces are therefore the result of practical human energy. However, this energy is conditioned by the circumstances in which men find themselves, by the productive forces already won, by the social form which exists before they do, which they do not create, which is the product of the former generation. Because of this simple fact that every succeeding generation finds itself in possession of the productive forces won by the previous generation, which serve it as the raw material for new production, an interconnection arises in human history—there is a history of humanity which has become all the more a history of humanity since the productive forces of man and therefore his social relations have been extended …. In acquiring new productive forces, men change their mode of production; and in changing their mode of production, in changing the way of earning their living, they change all their social relations.”

The developmental laws of productive forces are not solely governed by natural laws – constrained by accessible scientific knowledge, technological capabilities and natural resources – their advancement fundamentally hinges on human agency in selecting specific production modes to achieve synergistic integration among constituent elements. Marx and Engels (2009, pp. 532–533) observed, “It follows from this that a certain mode of production—or industrial stage—is always combined with a certain mode of cooperation—or social stage—and this mode of cooperation is itself a productive force. Further, the multitude of productive forces accessible to men determines the nature of society; hence, the history of humanity must always be studied and treated in relation to the history of industry and exchange.” This asserts that productive forces must be examined in combination with the mode of joint activity, i.e. a specific mode of production. The development of productive forces has historical stages, and the sum total of productive forces determines the most basic modes of production and life in society.

The development of productive forces entails both quantitative changes and qualitative transformations. Quantitative changes are mainly caused by changes in the quantity, variety and scope of three factors, i.e., laborers, means of labor and objects of labor. For instance, the increase in the number of laborers and the improvement of their skills, the continuous advancement and enrichment of means of labor and the expansion in the variety and scope of objects of labor – these changes directly manifest as economic growth of a certain scale and speed. Moreover, quantitative changes in these factors will alter the proportions between them, leading to changes in the composition of capital and the productivity of labor. What is particularly noteworthy is that, due to the inevitable generational replacement of laborers (in terms of their physical existence) and the fact that means of labor and objects of labor can be materialized in products and continuously accumulated, the development of productive forces inevitably has an inherent tendency: the quantity of means of labor and objects of labor grows far more and faster than that of laborers, “roundabout production” keeps increasing and the productiveness of labor (labor productivity) continues to rise.

The qualitative transformation of productive forces essentially lies in the fact that changes in the factors of production and their combinations can bring about fundamental changes in the mode of production (mode of labor) and drive the formation of new production relations and ways of life. Means of labor or tools are often regarded as the measuring devices and indicators of these changes. Marx's famous statements, “It is not the articles made, but how they are made, and by what instruments, that enables us to distinguish different economic epochs. Instruments of labor not only supply a standard of the degree of development to which human labor has attained, but they are also indicators of the social conditions under which that labor is carried on.” (Marx, 2009c, p. 210) and “The hand-mill gives you society with the feudal Lord; the steam-mill gives you society with industrial capitalism.” (Marx, 2009d, p. 602), are both made in this sense. Of course, political economy does not examine tools or the means of labor only from the perspective of natural science and engineering technology; instead, it focuses on the impact of technological changes on the mode of production and production relations. Marx's analysis of cooperation, manufacturing, machinery and large-scale industry in Das Kapital sets a paradigm for this. The capitalist application of machinery not only fundamentally transformed the capitalist mode of labor but also turned workers' “formal subordination” to capital into “real subordination.”

Schumpeter also regarded changes in methods of production as one of the fundamental characteristics of capitalism. He conceptualized production as the combination of various factors, arguing that “from a technical and economic perspective, production means combining things and forces within our reach” and that so-called innovation is the realization of “five new types of combinations” (Schumpeter, 2011). Thereafter, some studies in development economics, innovation economics and economic history have continued this line of thinking, using the expansion of factor scope and changes in combinations to delineate the stages of the industrial era. For example, evolutionary development economist Reinert characterizes different techno-economic paradigms through infrastructure, cheap resources and major industries. Freeman and Louçã (2007) and Pérez (2007), among others, depict the six waves of technological revolutions since the Industrial Revolution through key inputs, leading industries and leading modes of production organization. In recent years, Chinese scholars have also increasingly emphasized that the “energy–information–material” combination determines the growth potential of each technological transformation (Yang, 2020). Alternatively, drawing on Marx's “prime mover–transmission mechanism–working machine” principle proposed in his study of machinery and large-scale industry, some regard the trinity production paradigm of “energy–transportation communication–materials” as an intermediate category for understanding the development of productive forces (Liu, 2023). Others treat the means and content of “connection” as key variables that determine industrial differentiation and stages of industrial development (Hu and Yang, 2022).

Compared with quantitative changes, another significant consequence arising from the qualitative transformations of productive forces is the further development of the division of labor, creating new departments, new products and new skills that did not exist in the past. Marx and Engels (2009, p. 520) proposed, “Each new productive force, insofar as it is not merely a quantitative extension of productive forces already known (for instance, the bringing into cultivation of fresh land), causes a further development of the division of labor.” “With the development of the productive forces, the sphere of production expands, creating investment opportunities which did not exist at all previously. Production becomes not only cheaper but also more diversified in the course of its development” (Marx, 2008, p. 611). When analyzing the impact of machine production, Marx (2009e) observed that its expansion not only stimulates interrelated industrial sectors – “as the use of machinery extends in a given industry, the immediate effect is to increase production in the other industries that furnish the first with means of production” (p. 510) – but also catalyzed unprecedented social transformations. He documented, “The factory system carries the social division of labour immeasurably further than does manufacture” and “social production increases in diversity” (p. 512). Crucially, Marx identified the emergence of a new type of worker, namely, the machine-maker (p. 510). This offers crucial insights for detecting whether productive forces have undergone qualitative transformation.

The development of productive forces necessitates both long-term accumulation and, at certain stages, qualitative transformations and leaps. The criteria for identifying and assessing such qualitative changes diverge between political economy and science and technology. While natural sciences and engineering assess qualitative leaps by whether new discoveries or technologies overturn existing theoretical interpretations or transform fundamental operational principles, the socioeconomic impact of such innovations follows a distinct temporal logic. From the advent of new inventions, technologies or tools to their integration into social production and daily life – and the consequent reshaping of production modes and lifestyles – the full manifestation of their transformative effects necessitates a prolonged, often indeterminate, process of maturation. Therefore, determining whether productive forces have undergone a qualitative leap poses a significantly greater challenge within political economy than assessments based on scientific and technological standards. Political economy must extend beyond technological appraisals to scrutinize the profound societal implications arising from transformations in productive forces. The metaphorical juxtaposition of “the hand-mill” and “the steam-mill” epitomizes Marx's lifelong and seminal research into the histories of technology and economy. Yet, even Marx could not have foreseen the subsequent technological developments and tool inventions that emerged after his lifetime nor predicted what tools future societies would employ or even if mills as such would remain relevant.

Traditional economic concepts prove inadequate as criteria for judging qualitative transformations in productive forces. Take economic growth rates for example: Western mainstream growth theories remain predominantly focused on quantitative expansion rather than qualitative change. As Rostow (2016, p. 685) criticized, the history of mainstream economics since the Marginal Revolution has essentially involved devising devices to sustain an approach that circumvents technological issues, noting that neoclassical economics “merely assumes rather than explains technological phenomena.” Economic growth rates can stem from either quantitative shifts in productive forces (e.g. increased factor inputs) or their qualitative leaps, yet mere rate fluctuations fail to differentiate these origins. Likewise, the productiveness of labor – distinct from productive forces per se – denotes specifically what Marx (2009f, p. 366) defined as “an alteration in the labor-process which shortens the labor-time socially necessary for commodity production and endows a given quantity of labor with the power of producing a greater quantity of use-value.” The increase in labor productivity (productiveness) may stem from either quantitative shifts in productive forces – manifested through altered proportional relations among factors due to changes in input volumes – or qualitative transformations thereof, characterized by systemic changes in factor combinations and production function forms. Consequently, merely observing changes in labor productivity fails to differentiate between quantitative and qualitative shifts in productive forces.

Furthermore, Marx's specific explanations for capitalist business cycles – such as fixed-capital renewal or rising depreciation rates – are sometimes misinterpreted as indicators of qualitative transformations in productive forces. However, Marx employed these factors merely to elucidate economic fluctuations, not as markers of fundamental shifts in productive forces. Such changes represent only quantitative variations and cyclical oscillations in productive forces, generating no “additional surplus” for society (Mayevsky, 1993) [¹]. Crucially, these dynamics manifest not only in advanced economies but also in late-developing nations. During their industrial catch-up phases, massive fixed-capital investments merely fulfill Gerschenkron's substitutability conditions. While such investments materialize productive forces, they constitute neither qualitative leaps nor new quality productive forces.

A qualitative transformation of productive forces manifests through its capacity to fundamentally reconfigure existing labor processes, forge novel syntheses among factors of production – specifically restructuring the relationship between producers and means of production – and thereby catalyze shifts in production relations between laborers and owners of productive assets. When Marx wrote Das Kapital, machinery and large-scale industry epitomized the new quality productive forces that laid the foundation for the capitalist mode of production. As technological capacities advanced and quantitative changes in productive forces accumulated, corresponding transformations in production modes and adjustments in economic structures have progressively emerged within capitalist societies. To theorize this evolution, contemporary Western economic schools retaining Marxist traditions, such as the French Regulation School and the American Social Structure of Accumulation (SSA) School, have distilled Marx's social reproduction theories – the reproduction of material conditions and the reproduction of production relations – into two meso-level concepts: industrial production paradigms and institutional forms. Industrial production paradigms outline how the developmental stage and nature of productive forces determine specific production organizational forms, encompassing Fordist standardization and mass production, as well as flexible specialization and decentralized manufacturing in the information era. Institutional forms, conversely, comprise the triadic frameworks governing labor-capital relations, capital-capital relations and capital-state relations. The dialectical interplay between these dimensions constitutes the distinctive accumulation regimes and developmental models forged by capitalism in adapting to contemporary productive forces.

The foundational tenets of Marxist productive forces theory and political economy profoundly influenced Joseph Schumpeter – who regarded his own work as exploring merely “a fraction” of Marx's intellectual domain – and his successors. Contemporary Neo-Schumpeterian schools, extending Schumpeter's axiom that “creative destruction” constitutes an ontological feature of capitalism (Schumpeter, 1999, p. 147), contend that economic growth transcends the mere expansion of economic aggregates emphasized by mainstream theory. Crucially, it embodies qualitative transformations, such as the emergence of novel entities and structural recompositions. To observe and identify these shifts, the Neo-Schumpeterian School pursues two research trajectories: one examining waves of technological revolutions (exemplified by Dosi, Freeman and Pérez) and another analyzing structural change processes (pioneered by Nelson and Winter, later advanced by Metcalfe and Saviotti). Taking technological revolutions since the Industrial Revolution as an example, research by Freeman, Louçã and Pérez demonstrates marked variations across industrial development stages in leading sectors, key input factors, types of infrastructure and the modes of production organization, as shown in Table 1 (Freeman and Louçã, 2007).

The metabolic shift between old and new productive forces – manifested through the transition from quantitative accumulation to qualitative leaps in productive forces – unfolds via the emergence, diffusion and ultimate dominance of new key technologies, leading sectors, infrastructure paradigms and corresponding modes of production organization. This dynamic shapes the life cycle of technological constellations associated with revolutionary waves, progressing through four phases: irruption, deployment, synergy and maturity. Freeman's analysis of post-WWII economic development in Europe and the United States revealed that sectors exhibiting peak growth rates consistently correlated with those experiencing maximal innovation intensity – exemplified by synthetic materials, electronics and plastics industries (Freeman and Louçã, 2007). Rostow's examination of pivotal industrial sectors since the British Industrial Revolution demonstrated that growth trajectories of leading sectors initially surge above aggregate industrial production indices, only to decline below them over time (Rostow, 2016). These insights establish a diagnostic framework for identifying qualitative transformations in productive forces, centering on the comparative dynamics between the growth rate of leading sectors and overall industrial indices. When new leading sectors outpace both traditional sectors and the aggregate industrial index, it may signal the onset of productive forces' qualitative transformation. Convergence between new sector growth rates and the industrial index marks the consummation of this transformation.

A complementary research trajectory (Conlisk, 1989; Silverberg and Verspagen, 1994; Metcalfe, 2001) proceeds from micro-level agent behavior, emphasizing how technological innovations shape individual enterprises and further influence the broader economic system. Saviotti and Pyka (2003) advance this framework by introducing intrasectoral and intersectoral competition – adapting concepts from evolutionary biology – to analyze structural shifts and qualitative transformations driven by new sector emergence. They posit that quantitative economic development manifests through rising production efficiency, while the increase of new sectors defines qualitative transformation. Crucially, their model centers on a product's “service characteristics space” – defined by consumer utility perceptions or end-use functionalities – as the lens to differentiate sectors, thereby assessing qualitative leap potential and gauging creative destruction intensity. Within complexity emergence theory, interactions among heterogeneous agents underpin novelty generation. Thus, sectoral diversity and intra-sector complexity serve as primary indicators of qualitative transformation. Such transformation entails not only the emergence of new sectors. Furthermore, the proximity in service characteristics between new and traditional sectors reveals the degree of creative destruction: Intrasectoral competition arises when distinct technologies produce use values with similar “service characteristics” (e.g., steam vs. internal combustion locomotives), while intersectoral competition occurs when entirely new use values are created.

Regardless of the research trajectory adopted – whether examining growth rates of leading sectors relative to other sectors or aggregate industrial indices, or analyzing the “service characteristics” and their proximity between new and traditional sectors – each approach fundamentally addresses the emergence of new sectors and their relational dynamics with existing ones. According to Freeman, the genesis and evolution of new sectors are propelled by novel technological systems comprising new technologies: “Major fluctuations may arise when particularly significant innovations with extended time horizons emerge – innovations that are interdependent due to technological or compatibility factors, or when prevailing economic conditions favor their co-development” (Freeman et al., 1982). They further classified sectors exhibiting such interdependencies – those whose interactions drive ‘major fluctuations’ – into three categories, namely, motive sectors producing core production factors or critical inputs; carrier sectors intensively utilizing these core factors and induced sectors developing synergistically around motive and carrier branches (Freeman and Pérez, 1992) ^[2]. The productive forces capable of bridging old and new sectors while embodying Freeman's ‘particularly significant innovations with extended time horizons’ are exclusively general-purpose technologies (GPTs), i.e. technologies exhibiting pervasiveness, technological dynamism and innovational complementarities (Bresnahan and Trajtenberg, 1992). Historical exemplars include steam power, electricity and internal combustion engines. Beyond spawning new sectors due to their design, manufacturing and refinement, GPTs must possess substantial improvement potential via innovational complementarities. This enables their pervasive diffusion across traditional sectors, catalyzing profound ripple effects and socioeconomic spillovers.

From the perspective of Marxist political economy, new GPTs and leading sectors can serve as general indicators for identifying qualitative transformations in productive forces. Certain tools and means of labor qualify as “gauges of productive forces development and barometers of social relations” precisely because they embody these characteristics as quintessential GPTs. When researchers delineate and identify technological revolutions and qualitative leaps in productive forces based on criteria such as the “prime mover–transmission mechanism–working machine” principle, the “energy-information-materials” nexus or means and content of “connection,” the underlying logic centers on the emergence, application and diffusion of GPTs. To interrogate the drivers enabling the widespread adoption and rapid diffusion of new GPTs since the Industrial Revolution, the answer lies in the capacity of new technologies to furnish conditions for superprofits – both in new sectors and traditional sectors adopting these technologies. While new quality productive forces attract capital into emerging sectors, they simultaneously compel the “worst production conditions” in existing sectors to exit the market. Theoretically, this process persists until new technologies achieve full diffusion and capital flows between old and new sectors reach equilibrium, culminating in a new social average rate of profit.

The emergence and evolution of new quality productive forces drive structural transformations in socioeconomic development. Schumpeter conceptualized this process as “creative destruction,” positing that economic development does not proceed at a uniform pace but evolves through discontinuous leaps (Schumpeter, 2011, p. 255). Some misinterpret this as implying technological rupture, framing the transition between old and new technologies and industries as a zero-sum struggle – a view contradicted by the facts.

The path from quantitative accumulation to partial qualitative shifts and ultimately comprehensive transformation indicates that new quality productive forces – definitive of each historical epoch – never materialize instantaneously. Ideas conceived by brilliant minds, laboratory experiments, engineers' blueprints or factory prototypes remain distant from actualizing qualitative leaps in social productive forces. While the “creative destruction” brought by new quality productive forces emphasizes competitive displacement between emerging and established technologies/sectors, it equally entails complementary convergence – a duality rooted in the core attributes of GPTs. Transforming novel GPTs into new quality productive forces necessitates an evolutionary process of pervasive diffusion and continuous improvement. For instance, computing technology, invented in the 1950s, became a GPT only in the 1990s when integrated into productive systems; artificial intelligence, not yet a GPT circa 2000, is now recognized as a transformative GPT reshaping production and lifestyles; even electricity – the paramount GPT of the Industrial Revolution – continues to evolve in techniques and application scope.

The continuous diffusion and improvement of new GPTs create critical buffering zones and adaptive windows for resolving conflicts between emerging and traditional sectors. Within traditional sectors, intensified intrasectoral competition compels productivity enhancements, reduction of socially necessary labor time and phase-out of obsolete productive forces, which facilitates capital reallocation toward new sectors. When synergistic linkages emerge within a new technological ecosystem – particularly with sufficient external capital infusion – nascent sectors experience accelerated expansion and ultimately catalyze qualitative leaps in productive forces with diffused novel technologies. The confluence of the expansion and deepening of labor division, extension of roundabout production chains and financial mechanisms accelerating capital mobility forms a self-reinforcing mechanism for productive forces development, exhibiting accelerating growth tendencies. Under this mechanism, the transition from quantitative accumulation through partial to comprehensive qualitative transformation is governed by multiple factors, including the scale of synergistically aligned sectors with new GPTs and technical ecosystems and the volume and velocity of capital inflow.

During the early Industrial Revolution (1760–1840), classical scholars described productive forces changes as “revolutionary” or “leap-like” precisely because they observed the First and Second Industrial Revolutions – an era when breakthrough GPTs were scarce and largely in their “seeding phase” (Helpman and Trajtenberg, 1994). Consequently, the scale, sectoral linkages and long-term expansion effects of these technologies remained underdeveloped. For example, steam engines contributed minimally to labor productivity growth before 1830; only after a century of iterative refinement – from Newcomen's atmospheric engine (1712) to Watt's separate condenser (1776) and to the Corliss steam engine (1849) – did its contribution to productivity finally reach its peak, establishing steam power as the prime mover for transport and industry. Similarly, ENIAC (1945) inaugurated digital computing, but the transformative personal computer era required 26 years of miniaturization breakthroughs (e.g. Intel 4004 microprocessor, 1971). As labor specialization intensifies and industrial systems grow increasingly complex, the number of GPTs increases. New technological systems develop more intricate architectures and technological diffusion, along with the formation and coordination of new sectors, usually takes a longer time.

Technological history reveals that the formation and evolution of new quality productive forces constitute a process encompassing both Schumpeterian creative destruction and creative transformation. Crucially, these forces not only generate novel sectors replacing traditional industries but also drive technological permeation and adaptive integration into legacy sectors, catalyzing their upgrading. Under competitive pressures and superprofit incentives within sectors, the emergence of new GPTs and leading sectors accelerates the adaptive recalibration of traditional modes of labor and production sectors, reducing costs and enhancing efficiency through new quality productive forces. The synergistic co-evolution of emergent and traditional sectors elevates aggregate labor productivity and total factor productivity (TFP). Considering the temporal dimension of capital withdrawal from traditional sectors under the “worst production conditions” and the time required for capital reallocation, one cannot rigidly apply Kuznets' framework – which posits that nascent industries' growth requires compensating for the contraction of older industries to sustain aggregate output growth – during creative transformation.

Creative destruction and creative transformation coexist and synergistically unfold during the formation of new quality productive forces, converging toward systemic unity through aligned objectives – a process that does not invariably sustain higher economic growth rates but may exhibit fluctuations congruent with the S-curve trajectory of technological life cycles. The initial phase of qualitative transformation in productive forces typically manifests as an overlap phase, where the upper segment of the incumbent technological system's S-curve growth converges with the rising segment of an emerging technological system's S-curve. During this interval – characterized by limited diffusion breadth of nascent technologies, immature technological readiness, substantial learning and organizational costs and saturated markets in legacy sectors – structural adjustment manifests as economic deceleration or stagnation. Once localized qualitative leaps accelerate toward systemic transformation, both the input and output of new sectors and the productivity of traditional sectors increase, driving robust economic growth. Of course, the amplitude of fluctuations and duration of this upward process are influenced by factors such as technological characteristics – for instance, whether a large number of old sectors that correspond to new sectors and can be penetrated and transformed by new technologies.

This complexity and uncertainty are empirically manifested throughout economic history. Each technological revolution wave since the Industrial Revolution has demonstrated marked variations in the duration of expansion/contraction phases, fluctuation amplitudes and growth rates of labor productivity and TFP, indicating that during the coexistence of creative destruction and creative transformation, quantitative metrics – such as labor productivity or GDP growth – are insufficient to attest to qualitative shifts in productive forces. A more reliable indicator lies in whether the growth rates and profit margins of new and traditional sectors exhibit a trend of converging toward the mean, transitioning from divergence. Crucially, the development of new quality productive forces allows for achieving “structured phase-out” through “creative transformation” amidst ongoing “creative destruction.”

From the civilizational perspective of technological history, modern industrial civilization has evolved along dual trajectories: information systems and energy regimes. The information trajectory progressed from telegraphy and telephony through wireless communications, computing and the Internet, culminating in the era of ubiquitous intelligent connectivity; concurrently, the energy trajectory transitioned from hydropower and fossil fuels to nuclear power, now advancing toward green energy systems. The new quality productive forces in the 21st century epitomize the parallel development and systemic integration of the two trajectories – “information and energy” – redirecting economic growth toward a green-intelligent paradigm (Brynjolfsson and McAfee, 2014). As novel use-value categories and production methodologies expand, they will catalyze the emergence of unprecedented industrial sectors.

In the era of green, intelligent economic growth, the scope of GPTs expands substantially. Industry 4.0, for instance, integrates big data analytics, cloud computing, additive manufacturing (3D printing), cybersecurity protocols, autonomous robotics, the Internet of Things (IoT) and extended reality (XR) technologies encompassing both virtual and augmented reality (VR/AR). Concurrently, green energy systems incorporate smart grids, advanced energy storage solutions and carbon capture, utilization and storage (CCUS) technologies. Evidence from innovation trajectories in these domains indicates that China is in the incipient phase of developing new quality productive forces, where emerging technologies and sectors are entering an accelerated development period. This necessitates not only technological maturation and cross-sectoral synergies but also sustained infusions of social capital and expanding market demand.

Achieving “creative transformation” is pivotal while innovating and developing new technologies and sectors. Only through the advancement of novel technologies and sectors coupled with green and intelligent transitions in traditional industries can modern productive forces achieve comprehensive qualitative leaps from localized breakthroughs to systemic transformation. This transition inevitably incurs costs of Schumpeterian creative destruction: destructive attrition from intrasectoral competition in legacy industries and excessive rivalry during the embryonic phase of emerging technology sectors. Conventional discourse predominantly emphasizes the former while underestimating the latter's competitive intensity – a persistent pattern since the First Industrial Revolution. For example, the number of manufacturers in the US automotive industry peaked at over 150 between 1910 and 1920, declined to around 90 from 1920 to 1930 and consolidated to 30 from 1930 to 1940 (Engerman and Gallman, 2008). In the 1990s, the dot-com bubble's burst coincided with the early stages of e-commerce and platform enterprises. From their emergence and development to maturity, these new technologies and new sectors were accompanied throughout by rising industrial concentration and the exit of backward enterprises. Both intersectoral and intrasectoral competitions constitute an inherent mechanism of market economies and a necessary cost for cultivating new quality productive forces.

What is particularly encouraging is the high compatibility among China's natural endowments, economic structure and the development imperatives of “green and intelligent” new quality productive forces. Scarcity of fossil energy, the east-west geographical divide in energy distribution (known as the “Hu Huanyong Line” or “Heihe-Tengchong Line”), high population density, large market scale and well-developed infrastructure – these objective conditions collectively determine the extensive potential of clean energy, ultra-long-distance transmission, centralized and distributed energy systems and information infrastructure in China. Transforming these advantageous conditions into scenarios akin to the UK's historical use of steam power to resolve water accumulation in coal mining or the US's adoption of motorization and suburbanization to adapt to the mobility of people and goods in vast, sparsely populated regions requires not only scientific and technological innovation and talent cultivation but also deepened reforms to create supportive institutional and policy environments for new quality productive forces.

This paper is a partial outcome of the Major Project of the National Social Science Fund of China (No. 23ZDA043), titled “A Political Economy Study on Promoting the Deep Integration of Digital Economy and Real Economy”.