Opinion

Combine investment in physical assets with investment in human capital

The recently held Central Economic Work Conference listed "combining investment in physical assets with investment in human capital" as one of the new insights and experiences for conducting economic work under new circumstances. This summary has enhanced and optimized investment philosophy and focus areas, with significant implications for boosting development momentum, expanding domestic demand, and promoting people's well-rounded development.

Currently, China's economic growth drivers are undergoing profound transformation. For many years, investment in physical assets, such as infrastructure, housing, and machinery, has played a crucial role in sustaining China's rapid economic growth. However, this growth model is facing weakening momentum, diminishing returns and no longer sustainable. Meanwhile, as global industrial competition shifts from "capital-intensive" to "talent-intensive," it has become essential for China to strengthen investment in human capital to advance innovation-driven, demand-led growth. Creating a "human capital dividend" can help China build long-term economic competitiveness and secure a strategic advantage amid a new round of scientific and technological revolution and industrial transformation. In this context, emphasizing "investment in human capital" reflects an investment philosophy that values both material and human factors.

Directing more resources toward areas such as education, employment, healthcare, and social security, as well as investing in enhancing human capabilities, maintaining health, supporting career development will unleash consumption potential, elevate human capital, and ultimately drive high-quality economic development and shape core competitiveness. Furthermore, increasing investment in education, healthcare, and elderly care is crucial to ensuring and improving people's livelihoods, achieving a high-quality life, and fostering well-rounded individual development.

Policy

1. The Hainan Free Trade Port (FTP) - the largest free trade port in the world in terms of area - began island-wide special customs operations on December 18, in a landmark move in China's high-standard opening-up.

2. The General Office of the National Development and Reform Commission and the Comprehensive Department of the National Energy Administration jointly issued the notice on establishing a national unified power market evaluation system on December 17. The focus will be on evaluating four aspects: the operational effectiveness of the power market, the role played by the market, the sustainable development of market entities, and the degree of market competition.

3. China's Ministry of Commerce and five other government departments have released an action plan on promoting high-quality development of service outsourcing industry. By 2030, a number of leading service outsourcing enterprises with international competitiveness should be cultivated, a group of service outsourcing clusters with strong innovation capabilities and distinct characteristics should be built.

Data

1. China’s consumer price index (CPI) went up by 0.7 percent year-on-year in November. The core CPI excluding the prices of food and energy went up by 1.2 percent year-on-year, according to the National Bureau of Statistics.

2. China's foreign trade has shown steady growth and strong vitality this year despite a challenging global environment. From January to November, the country's imports and exports of goods grew 3.6 percent year-on-year, the Ministry of Commerce said.

3. China has achieved another year of grain harvest in 2025. The output of grain for the year was 714.88 million metric tons, or 1,429.8 billion jin, an increase of 8.38 million metric tons, or 16.75 billion jin over that of last year.The figure represented a year-on-year increase of 1.2 percent, according to the National Bureau of Statistics.

4. China’s machinery industry has achieved substantial progress in industrial scale during the 14th Five-Year Plan period (2021-2025), according to data released by the China Machinery Industry Federation. The sector's added value has grown at an average annual rate of 7.1 percent since 2021, and the growth rate in the first three quarters of this year reached 8.7 percent, both exceeding the national average growth rate of the industry and manufacturing sector during the same periods.

5. During the 14th Five-Year Plan period, China has advanced high-standard farmland cultivation to make greater contributions to ensuring food security. The country has cumulatively allocated over RMB 700 billion in central funds to support the cultivating and upgrading of 460 million mu of high-standard farmland.

6. Cumulative electricity transmitted from Northwest China’s Xinjiang Uygur Autonomous Region had reached 1.0005 trillion kilowatt-hours by December 15, exceeding the mark of 1 trillion kilowatt-hours, according to the State Grid Xinjiang Electric Power Company. Of all electricity exported from the region, 296 billion kilowatt-hours has come from new energy sources, accounting for nearly one third of the total.

7. The number of digital consumers in China topped 958 million in the first half of 2025, accounting for 85.3 percent of the country’s total internet users, according to a report released by the China Internet Network Information Center. The figures highlighted the growing role of digital spending in China’s overall consumption.

8. According to the Asset Management Association of China, by the end of the third quarter of 2025, total assets under management of fund management companies and their subsidiaries, securities companies and their subsidiaries, futures companies and their asset management subsidiaries, and private fund management institutions reached RMB 80.03 trillion.

9. In the first 11 months of 2025, the national service industry production index increased by 5.6 percent year-on-year. The business activity indices for sectors such as railway transport, monetary and financial services, among others, all remained in the high expansion zone above 55.0 percent in November.

10. China has entered into the top 10 in the global innovation ranking released by the World intellectual Property Organization for the first time in 2025. China also has the most top 100 science and technology clusters globally for three consecutive years.

(Source: Economic Daily)