Demand-Side Emerging Industry Policies Empowering New Quality Productive Forces: Pathways and Effects

【Authors】

GUO Xiaodan, LI Jiajun

【WorkUnit】

Dongbei University of Finance and Economics, 116025.

【Abstract】

At the State Council’s work conference on strengthening the domestic market held on May 15, 2025, it was emphasized that “building a robust domestic market is a strategic imperative for ensuring stable and sustainable economic growth”. Achieving this goal requires two key pathways: （1） continuously improving resource allocation efficiency by eliminating market segmentation and regional barriers, and （2） steadily advancing technological innovation to deepen the integration of technological and industrial innovation, thereby enabling consumption upgrading to drive industrial upgrading. Guided by this strategic vision, emerging industry policies should prioritize industrial resource allocation optimization and enterprise-level technological innovation to stimulate consumption growth and elevate new quality productive forces. This paper, based on the case study of China’s new energy vehicle industry, explores, from both theoretical and empirical perspectives, how demand-side emerging industry policies empower new quality productive forces.
Theoretical analysis identifies two primary pathways through which these policies enhance new quality productive forces. Drawing on the conceptual framework of the OP decomposition method, policies reduce the purchasing costs of high-quality products and accelerate demand-side structural adjustments. This fosters capacity substitution within emerging industries while improving the revenue prospects of high-tech, R&D-intensive firms. These dual pathways align with the strategic objectives of optimizing industrial resource allocation and technological innovation. Empirical validation further examines the effectiveness of these theoretical insights by isolating and quantifying the impacts of each pathway. Using China’s NEV subsidy policy as a natural experiment, this study employs structural estimation and counterfactual analysis on micro-level passenger vehicle sales data. The results demonstrate that NEV subsidies increased total product sales by 110.38% and 77.96% of this effect stemmed from direct policy interventions in resource allocation, leading to a 9.82% increase in market share for high-quality product manufacturers and a 10.06% rise in high-quality product penetration. These outcomes highlight cost-driven capacity substitution as a key mechanism. Meanwhile, policy incentives for technological innovation contributed 22.04% of the overall effects, explaining 59.92% of profit growth among high-tech firms. Jointly driven by these two pathways, improvements in new quality productive forces, characterized by optimized resource allocation and elevated innovation capabilities, have become attainable. 
This study contributes to existing literature in several dimensions. First, it provides a novel theoretical explanation for how demand-side emerging industry policies empower new quality productive forces at the micro level. By linking capacity substitution and market dynamics, it elucidates the micro-foundations of industrial support policies. Second, by evaluating policy impacts at product and enterprise levels, it reveals that resource allocation optimization occurs both across and within enterprises, while demand adjustments exhibit time-varying effects. These findings broaden the analytical boundaries of empirical research. Finally, based on a comparative analysis of two pathways, this study identifies potential directions for optimizing policy design, offering valuable insights for the rational configuration of future industrial policies.

JEL: L62, D43

【KeyWords】

Emerging Industry Policies, New Quality Productive Forces, Structural Estimation