From Vol­ume to Value

Text by Xu Ji­abin China’s man­u­fac­tur­ing in­dus­try not only con­trib­utes greatly to its high- speed and high- qual­ity eco­nomic de­vel­op­ment, but also plays an in­dis­pens­able role in the sta­bil­ity and growth of the world econ­omy.

China Pictorial (English) - - Contents - The au­thor is a mem­ber of the Na­tional Man­u­fac­tur­ing Strate­gic Ad­vi­sory Com­mit­tee and a pro­fes­sor of in­dus­trial eco­nom­ics at Ren­min Univer­sity of China.

The year 2018 marks the 40th an­niver­sary of China’s re­form and open­ing up. Driven by the pol­icy, both tra­di­tional and mod­ern man­u­fac­tur­ing in­dus­tries have ex­panded. China is the only coun­try with man­u­fac­tur­ing ca­pac­ity in all in­dus­trial cat­e­gories listed in the In­ter­na­tional Stan­dard In­dus­trial Clas­si­fi­ca­tion of All Eco­nomic Ac­tiv­i­ties ( ISIC) and has been the world’s largest man­u­fac­turer since 2010. Over the past 40 years, the added value of China’s man­u­fac­tur­ing in­dus­try has in­creased from 119.5 bil­lion yuan to 24.3 tril­lion yuan, ac­count­ing for nearly 30 per­cent of the na­tion’s econ­omy in 2017. The man­u­fac­tur­ing sec­tor has un­doubt­edly be­come the cen­tral driver of China’s eco­nomic de­vel­op­ment.

Trans­for­ma­tion and Up­grad­ing

Ever since the re­form and open­ing-up pol­icy was launched in the late 1970s, China’s man­u­fac­tur­ing in­dus­try has ac­com­plished tremen­dous achieve­ments as the coun­try has grad­u­ally trans­formed from a man­u­fac­turer of quan­tity to one of qual­ity. Not only does man­u­fac­tur­ing con­trib­ute greatly to the high-speed and high- qual­ity de­vel­op­ment of China’s econ­omy, but it also plays an in­dis­pens­able role in main­tain­ing the sta­bil­ity and growth of the world econ­omy. Es­pe­cially in re­cent years, even as ex­change rate dis­or­der causes chaos in the global fi­nan­cial mar­ket, prices of bulk com­modi­ties fall, over­all in­ter­na­tional trade shrinks and global de­mand drops, China con­tin­ues to main­tain a pos­i­tive prospect in man­u­fac­tur­ing, and its in­dus­trial out­put value has only in­creased every year. By 2014, China’s man­u­fac­tur­ing in­dus­try ac­counted for about 25 per­cent of the world’s

man­u­fac­tur­ing out­put, and more than a quar­ter of the world’s real econ­omy was cre­ated by China.

China’s man­u­fac­tur­ing achieve­ments were heav­ily in­flu­enced by its ac­tion plans which in­clude trans­for­ma­tion of the in­dus­trial de­vel­op­ment model, op­ti­miza­tion of sup­ply-side struc­tural re­form, im­prove­ment in in­no­va­tion- driven growth strate­gies and deep­ened mar­ket- ori­en­tated re­form, among oth­ers.

In terms of chang­ing the de­vel­op­ment model of man­u­fac­tur­ing, China has grad­u­ally trans­formed from ex­ten­sive to in­ten­sive de­vel­op­ment in the process of re­form and open­ing up, mov­ing to­wards re­duced ma­te­rial and en­ergy con­sump­tion per unit of GDP and greater pur­suance of green de­vel­op­ment.

In terms of op­ti­miz­ing sup­ply­side struc­tural re­form, in the early stage of its re­form and open­ing up, China read­justed the strat­egy of pri­or­i­tiz­ing de­vel­op­ment of heavy in­dus­try in fa­vor of com­pre­hen­sive de­vel­op­ment based on con­sumers’ de­mand. Since then, China’s man­u­fac­tur­ing sec­tor has been meet­ing de­mand to up­grade so­cial con­sump­tion, and the de­vel­op­ment of the man­u­fac­tur­ing in­dus­try has re­sponded ap­pro­pri­ately to res­i­dents’ needs for food, cloth­ing and travel. Con­sumers’ de­mand has guided ma­jor shifts in lead­ing in­dus­tries in the man­u­fac­tur­ing sec­tor, ef­fec­tively trans­form­ing the tra­di­tional man­u­fac­tur­ing sec­tor and cul­ti­vat­ing new emerg­ing in­dus­tries.

In terms of im­prov­ing in­no­va­tion- driven growth strate­gies, ever since the re­form and open­ing up be­gan, China has been in­creas­ing its R& D in­vest­ment and up­dat­ing its tech­nolo­gies for man­u­fac­tur­ing. As its man­u­fac­tur­ing in­dus­try climbs to­wards the mid­dle- and high- end, China is ac­com­plish­ing break­throughs in in­de­pen­dent in­no­va­tion in key ar­eas.

In terms of deep­en­ing mar­ket- ori­en­tated re­form in the man­u­fac­tur­ing in­dus­try, since the re­form and open­ing up be­gan, China has grad­u­ally given the mar­ket a de­ci­sive role in re­source al­lo­ca­tion, which has greatly strength­ened en­ter­prises’ abil­ity to re­spond and adapt to changes in mar­ket de­mand both at home and abroad. In the do­mes­tic mar­ket, pri­vate econ­omy has es­tab­lished a fair com­pet­i­tive po­si­tion across the aisle from the state- owned econ­omy. In the in­ter­na­tional mar­ket, de­vel­op­ment of the man­u­fac­tur­ing in­dus­try has ab­sorbed ad­vanced tech­nol­ogy and man­age­ment ex­pe­ri­ence and once-scarce re­sources, which have greatly boosted the growth of China’s man­u­fac­tur­ing sec­tor.

Fu­ture De­vel­op­ment

China is now em­brac­ing a rare his­toric op­por­tu­nity as it reaches for mid­dle- and high- end man­u­fac­tur­ing. The his­toric con­ver­gence of a new round of global tech­no­log­i­cal revo­lu­tion and in­dus­trial revo­lu­tion has pro­moted the in­te­gra­tion of next- gen­er­a­tion in­for­ma­tion tech­nol­ogy and ad­vanced man­u­fac­tur­ing tech­nol­ogy. Flex­i­ble man­u­fac­tur­ing, net­work man­u­fac­tur­ing and in­tel­li­gent man­u­fac­tur­ing have in­creas­ingly be­come the fu­ture ori­en­ta­tion of global man­u­fac­tur­ing de­vel­op­ment.

In this con­text, China con­sid­ers in­tel­li­gent man­u­fac­tur­ing the heart of its man­u­fac­tur­ing sec­tor. It strives to pro­mote deep in­te­gra­tion of the in­ter­net, big data and ar­ti­fi­cial in­tel­li­gence with man­u­fac­tur­ing and ac­cel­er­ate de­vel­op­ment to­wards ad­vanced man­u­fac­tur­ing. China is a man­u­fac­tur­ing power as well as an in­ter­net power. It boasts a ra­tio­nal in­dus­trial sys­tem and a solid man­u­fac­tur­ing base cater­ing to the huge do­mes­tic mar­ket, and it is spawn­ing emerg­ing tech­nol­ogy and in­dus­try, which has en­abled China to seize fa­vor­able op­por­tu­ni­ties of­fered by the on­go­ing tech­no­log­i­cal change and in­dus­trial revo­lu­tion.

China has al­ready em­braced some pos­i­tive out­comes in the de­vel­op­ment of in­tel­li­gent man­u­fac­tur­ing. The ba­sic sys­tem has been formed, and break­throughs have been achieved in key ar­eas. Pos­i­tive re­sults from pi­lot demon­stra­tion ar­eas are cre­at­ing a num­ber of new mod­els wor­thy of pro­mo­tion. Open­ness and co­op­er­a­tion have been fur­ther ad­vo­cated, and prac­ti­cal co­op­er­a­tion with other coun­tries has been car­ried out in a va­ri­ety of realms.

How­ever, along­side th­ese rare his­toric op­por­tu­ni­ties, China’s man­u­fac­tur­ing sec­tor has also en­coun­tered dif­fi­cul­ties. In­stead of an in­dus­tri­al­iza­tion process un­der tra­di­tional eco­nomic con­di­tions, the man­u­fac­tur­ing sys­tem up­grade in China is now hap­pen­ing amid the con­text of in­for­ma­tion eco­nomic con­di­tions. It is a “new type of in­dus­tri­al­iza­tion” led by the in­te­gra­tion of in­forma­ti­za­tion and in­dus­tri­al­iza­tion. China had pre­vi­ously be­gun to re­spond strate­gi­cally to the de­vel­op­ment trends of world in­dus­tri­al­iza­tion and adopted in­tel­li­gent man­u­fac­tur­ing as its main ap­proach. Through pro­mot­ing in­no­va­tion, in­tel­li­gence, a strong in­dus­trial foun­da­tion, green de­vel­op­ment and high- end equip­ment, the ten key ar­eas of China’s man­u­fac­tur­ing in­dus­try have found a path­way to trans­form the coun­try from a man­u­fac­turer of vol­ume to one of value.

March 23, 2018: Staff of CRRC Tang­shan Co., Ltd. on the pro­duc­tion line of Fux­ing bul­let trains. In March 2018, Fux­ing, China's first bul­let train de­signed for a top speed of 350 kilo­me­ters per hour, started a test run. Over the past 40 years of re­form and open­ing up, China has em­braced raced the spirit of crafts­man­ship to fa­cil­i­tate a mag­nif­i­cent trans­for­ma­tion from vol­ume to value. by Yang Shiyao/ Xin­hua

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