China’s economic model will evolve

Significance

President Xi Jinping first used the concept on an inspection visit in Heilongjiang province in September 2023. The NPF concept recognises that China's existing growth model cannot continue, while some alternatives are politically unacceptable.

Impacts

• Total factor productivity will become an important benchmark in Chinese economic policy.
• Focus on NPF will further de-emphasise the development of the financial sector in favour of the real economy.
• The NPF policy signals a commitment to a highly constrained path, defined by excluding impossible or unpalatable policy options.