Country’s manufacturing industry needs a boost and quality check

The Chinese Academy of Engineering’s report on the state of the manufacturing industry says China is far from becoming an advanced manufacturing hub.

The report points out that the United States, Germany and Japan are the most developed countries in this field, and the gap with China remains wide.

The report says China is indispensable to the world’s manufacturing supply chains not because of its technological strengths, but the scale of its manufacturing sector. The productivity and per capita output of China’s manufacturing industry lag far behind those of the developed countries.

Although the government is committed to promoting innovationdriven development, the shrinking profit margin and mounting operation costs have prompted many Chinese manufacturing enterprises to reduce investment in research and development.

As a result, the competition that should have been driving innovation has been downgraded to a price war. The Chinese manufacturing industry’s share in the country’s gross domestic product has fallen from 31.5 percent in 2012 to 27.1 percent in 2019.

In contrast, the US manufacturing industry has been expanding in scale and improving in productivity for three consecutive years. A similar trend is observed in many other developed countries, including Japan, as they now pay more attention to bringing investment, technology and production capacity back home to create jobs, boost growth and ensure national security.

As many enterprises are relocating their production units to Southeast Asian countries where the cost of labor is lower, China will find it more difficult to maintain its scale advantage. No wonder, the market share of Chinese bearings, instrument and machine tools and some other basic industrial components has markedly fallen in recent years.

Unlike the internet, financial and real estate industries, the manufacturing industry banks on more long-term investment, particularly in fundamental research, protection of intellectual property rights and fair market competition.

The central authorities have vowed to make a 10-year action plan on strengthening fundamental research for developing the country’s manufacturing industry, the backbone of an economy’s competitiveness. State support is key to prompting the country’s manufacturing industry to focus more on quality than quantity.