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UPDATED: April 20, 2015 NO. 17 APRIL 23, 2015
Leaping into the First Echelon
China strives to rise globally through a massive manufacturing overhaul
By Deng Yaqing

INTELLIGENT DESIGN: Workers test the mechanical arm of a robot in the plant of Shenyang-based Siasun Robot & Automation Co. Ltd. on October 14, 2014 (PAN YULONG)

China's manufacturing sector is in dire need of a makeover. With its economy entering the "new normal" phase, the country has to eliminate its outdated production capacity and upgrade the industrial sector. On the other hand, though dubbed a "world factory" for decades, the country is still faced with challenges from some industrial giants owing to its lack of core manufacturing technologies, low-end and low value-added industrial goods, as well as mounting production costs.

In early March, in his Government Work Report for 2015 Premier Li Keqiang disclosed China's intentions to implement the Made in China 2025 strategy, which calls for greener, more intelligent manufacturing, with a focus on quality and becoming increasingly integrated with the Internet. The move aims to lift China from its current position as a manufacturing powerhouse to a manufacturing industry world superpower.

The Made in China 2025 drive can empower the manufacturing sector and help the nation maintain economic growth at a medium-to-high level, said the State Council in a statement released after an executive meeting of the country's cabinet held on March 25.

First formulated by China Engineering Academy (CEA) in 2013, the strategy will soon be formally published, and has laid out nine major tasks, 10 industrial sectors and five project categories that will be given development priority, setting the tone for the first step of China's manufacturing industrial transformation.

The CEA divides the transformation into three stages—nudging China into the ranks of global manufacturing superpowers by 2025, further lifting it to the middle level of the group by 2035, and pushing it into a frontrunner of the group by 2045.

Currently, the United States maintains a predominant position in the global manufacturing industry, followed by Germany and Japan; while China, Britain, France and South Korea run behind them. "China strives to enter the second tier of the global manufacturing industry within the next decade and ascend to the first tier within three decades," said Miao Wei, Minister of Industry and Information Technology.

"Keeping the internal and external economic development and the overall industrial transformation in mind, the strategy is designed not only to ensure the healthy development and upgrading of the traditional manufacturing industry but also to realize a leap in high-quality growth amidst the technological revolution," said Su Bo, Vice Minister of Industry and Information Technology.

Su argued that the Made in China 2025 initiative distinguishes itself in three respects. First, it has been infused with the concern of coping with the new round of technological revolution and industrial transformation. Although China's manufacturing sector has maintained a dominant position in realms such as electronic equipment and engineering machinery, and even taken the lead in fields such as high-speed railway transportation and communication equipment, it still lags far behind both the United States and Germany.

The strategy highlights innovation as a core competitive feature. "Emphasis should be laid on innovation, rather than expanding production capacity," said Su, noting that China has been the largest producer of more than 220 kinds of industrial product, with its output of some products making up 50 to 60 percent of global production capacity. Aside from that, it concentrates on making breakthroughs in key areas.

In some sense, Made in China 2025 has something in common with the Industry 4.0 strategy set forth in 2013 by the German Government. Both of the two advocate the deep integration of information and manufacturing technologies, and try to push forward the digitalization, networking and intelligentization of the manufacturing industry by way of mobile Internet, the Internet of Things, big data, cloud computing and robots, according to the Ministry of Industry and Information Technology.

VIRTUAL TECHNOLOGY: In Shijiazhuang of north China's Hebei Province, the owner of a 3D technology startup checks on the status of a 3D printer (WANG XIAO)

China's Industry 4.0

"Intelligent manufacturing is the fundamental path to shift China from a big manufacturer to a manufacturing industry superpower," said Miao, who believes that intelligent manufacturing will sway the new round of technological revolution and elevate the digital and intelligence level of each and every industry.

Xiong Qunli, President of China Electronics Technology Group Corp., held that the concept should be carried out throughout manufacturing activities and be reflected in companies' production lines, equipment and organization. "Computerization and networking are indispensable over the course," said Zhou Hongren, Deputy Director of the Advisory Committee for State Informatization.

"Robots are an important terminal and carrier of intelligent manufacturing. However, only when the robot is equipped with new technologies such as cloud computing, big data and the Internet of Things, can it have perception and give feedback, and live up to being named as the carrier of intelligent manufacturing," said Shi Jinhao, a senior expert from the corporation.

Miao argued that China should make further progress in the intelligence level of high-end sensors and major operating systems." Since some numerical control systems and industrial robots just work in accordance with confirmed procedures, workers are liable to be injured if they repair the systems and robots without turning off the power," he said.

The other day, the MIIT affirmed that a total of over 30 intelligent manufacturing pilot programs will be jump-started this year, and the program's scope will be further expanded in 2017.

Wang Jiayin, an analyst from the Equipment Industry Research Center of Beijing-based CCID Consulting Co. Ltd., held that the concept of intelligent manufacturing can't be put into practice without strong technological support and sufficient funds, and given the uneven development of China's manufacturing sector, pilot programs should be launched and expanded by steps to promote it.

Alongside the Made in China 2025 strategy, an Internet Plus plan was put forward to promote the deep integration of informatization and industrialization.

"It's not a rigid combination of manufacturing and the Internet; rather, it's a complete integration of the two, which means new information technology will be employed to improve the model of production, investment, management and business," said Gong Xiaofeng, Director of the Center for International Economic and Technological Cooperation under the MIIT.

"China is well positioned to propel the integration by taking advantage of its demographic dividend," said Gong.

Despite the weak foundation of China's manufacturing sector, the nation can catch up by dint of Internet applications and innovation as well as the huge and multi-layered Chinese market.

Zhou stressed that the industries that hope to board the ship of Internet Plus need to be first digitalized to set up a basic information system.

When a customer places an order for a customized Harley Davidson motorcycle and pays online, a German manufacturer is capable of dispatching a large package worth $100,000 to his or her residence within 24 hours. In stark contrast, a large number of Chinese companies still don't provide online customization services.

"It's a reflection that informatization has not yet be fully incorporated into the manufacturing industry. If the incorporation can be thoroughly carried out, the added value and competitiveness of Chinese-made products will gain a substantial boost," said Li Jun, President of Sugon Information Industry Co. Ltd. headquartered in Beijing.

Still a great gap

China's manufacturing sector confronts three major problems—weak innovation capacity, a lack of core and generic technologies, resource waste and environmental pollution, said Liu Baicheng, an academician of the CEA.

"Though China comes first in the output of over 220 kinds of industrial products, most of them are manufactured by foreign-funded enterprises and are rarely a result of independent innovation," said Gong.

In Gong's opinion, the large but not strong manufacturing industry undervalues the innovation strength and support capacity in terms of basic material, technique and technology foundation.

In 2012, the added value of China's manufacturing industry stood at $2.33 trillion—far exceeding the $1.85 trillion registered by the United States, which took second place—and accounting for 20.3 percent of the global total, according to statistics from the World Bank. Yet, its value-added rate was a mere 21.5 percent in 2011, much lower than 35 percent, the average level of developed countries.

"While the total volume is huge, the total value is low," said Zhu Gaofeng, an academician of the CEA, recognizing that most Chinese-made products are midrange and low-end, though many countries can't go without them. Currently, roughly 80 percent of high-end, numerically controlled machine tools and robots depend on imports.

Li Yizhong, President of the China Federation of Industrial Economics, noted that efforts should be made to establish an innovation system encompassing production, learning, research and application, to accelerate the commercialization of research outputs, and to elevate the innovation capacity in key links and sectors.

The Made in China 2025 strategy deems innovation the key to its competitive edge and believes it's the recipe to narrow China's gap with leading manufacturing countries, said Su.

Meanwhile, fundamental research, especially concerning key basic materials, techniques, parts and components, should be reinforced to pave the way for the elevation toward midrange and high-end manufacturing, said Liu.

As a new round of technological revolution and industrial transformation gathers momentum, China is under increasing pressure from technologically advantaged developed countries and vigorous emerging economies. That aside, it has come to realize and frown upon another critical problem—environmental pollution.

"As the largest manufacturing country in the world, China now needs to turn its eyes to resource conservation and environmental pollution," said Su, reiterating that priority should be given to quality and efficiency at the current stage. Given that the manufacturing sector contributes 73 percent to the nation's total energy consumption, huge potential remains within the field of green manufacturing.

Since manufacturing always serves as the backbone of a nation's industry, developed countries have scrambled to unveil national plans for the reinvigoration of their manufacturing industries, such as the Advanced Manufacturing Partnership program released by the U.S. Government in 2011 and Germany's Industry 4.0 launched in 2013.

"Made in China 2025 is not a replica. It is a China-customized strategy with unique characteristics," said Zhu.

Breakdown: Made in China 2025

Ten lead sectors

- Information technology

- High-end numerical-control machinery and automation

- Aerospace and aviation equipment

- Maritime engineering equipment and hi-tech vessel manufacturing

- Advanced rail equipment

- Energy-saving vehicles

- Electrical equipment

- New materials

- Biomedicine and high-performance medical apparatus

- Agricultural equipment

Five key categories of project

- Construction of innovation centers

- Intelligent transformation

- Industrial foundation improvement

- Green manufacturing

- High-end equipment innovation

Nine major tasks

- Improving the national innovation capability of the manufacturing industry

- Advancing the deep integration of informatization and industrialization

- Strengthening industrial foundations

- Ensuring quality and building up brands

- Promoting green manufacturing

- Making breakthroughs in key sectors

- Pushing forward the restructuring of the manufacturing industry

- Developing service-oriented manufacturing and producer services

- Propelling the internationalization of China's manufacturing industry

(Source: Ministry of Industry and Information Technology)

Copyedited by Kylee McIntyre

Comments to dengyaqing@bjreview.com

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