Despite being the world’s most competent industrial supply chain, China is at least 30 years away from becoming a manufacturing nation of “great power”, said a former industry minister today.
Over the last few years, China had become the world’s top manufacturing nation, claiming over a third of the world output, motivated by domestic demand to produce everything from software chips, vehicles to industrial machinery. But China’s industries’ heavy dependence on U.S. products such as semiconductors is what contributed to a strategic weakness.
Ex-minister of Industry and Information Technology said, “Basic capabilities are still weak, core technologies are in the hands of others, and the risk of ‘being hit in the throat’ and having ‘a slipped bike chain’ has significantly increased.”
In 2020, China’s manufacturing accounted for slightly over a quarter of gross domestic product, the lowest since the year 2012. “The ratio of manufacturing output to GDP has been declining too early and too quickly, which not only weighs on economic growth and affects employment, but also brings security loopholes to our industries and diminishes our economy’s ability to withstand risks, and its global competitiveness,” said Miao, now a member of the Chinese People’s Political Consultative Conference (CPPCC), the top advisory body to the government.
According to President Xi Jinping, innovation in the manufacturing industry needs to strengthen, and firms need to tackle “bottleneck” technologies to become fully innovative. “China’s manufacturing industry has made great achievements in recent years, but the situation of being ‘big but not strong’ and ‘comprehensive but not good’ has not been fundamentally changed.” Said Miao in a speech to CPPCC delegates.
There are many problems which are stopping the high-quality development of Chinese manufacturing, but the most important one is insufficient market-oriented reforms, Miao said. While the tax burden on companies remains heavy, and financial support on the manufacturing sector needs strengthening urgently, a shortage of innovative and high-tech talent has also significantly constrained development of the sector, Miao added.