Whether Or Not China Has Become a 'World Factory'?

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Last updated at: (Beijing Time) Tuesday, August 06, 2002

Whether Or Not China Has Become a 'World Factory'?

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Be it is that the media of Japan intend to inspire a sense of national self-improvement in its people, or that the US media further play up the "theory of China threat" as raised by some Americans, in short, recently, some foreign media have all along been preaching that China has become a "world factory".

It seems that this kind of "preaching" is not wind coming from hollow cave-being not a groundless rumor, perhaps reliable data are enough to make us "feel complacent":

"China-made" products have penetrated into every corner of the world, in 2001 alone, the volume of China's export commodities reached US$266 billion, of which 90 percent belonged to industrial manufactured products. At the same time, 80 percent of the world top 500 transnational enterprises have entered China, 390,000 foreign-funded enterprises have been operating in China, China has leapt to second place in the world in the absorption of foreign direct investment.

"China has become the world's fourth largest manufacturing industrial center", said Chen Xingdong, chief representative of French Peregrine in China, at the "Forum on the Development of the World Manufacturing Industry and the Outlook of China's Economy" concluded on July 28, currently there is a fashionable word abroad-"go to China", "share the fruit of China's development".

However, Jing Shuping, vice-chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) and chairman of the All-China Federation of Industry and Commerce, indicated in response to the preaching of foreign media, "I think their preaching is a bit too exaggerated". What he said was not imagination, but was supported by most convincing data.

During and after the 60s of the 19th century, Britain was the "world factory", with the proportion of its manufacturing industrial output value reaching 20 percent of the world total, while that of China at present is only 5 percent of the world total; at that time, Britain produced 53 percent of the world's iron and 50 percent of coal, while in 2000, China's export of ordinary steel and iron was worth US$4 billion, while at the same time it had to import US$9.7 billion worth of fine-quality and special steel and iron, with trade deficit reaching US$5.7 billion; in 2001, in the placing of the world top 500 enterprises, 11 were Chinese enterprises without a single one being manufacturing enterprises.

What made one feel more uneasy even when eating and sleeping was that China's manufacturing enterprises were not only few in quantity but poor in quality. In the production chain of global manufacturing industries, Chinese enterprises are swaying on the middle and low sides. Chinese enterprises mostly adopt the OEM manufacturing method, around 74 percent of the export value of 200 top Chinese foreign trade enterprises are registered through the method of processing trade.

Therefore, at the recent forum, scholars, based on their forward-looking judgment and entrepreneurs, based on their sensitivity, came to a sober-minded conclusion: Currently, China is still not a "world factory".

Vice-Chairman Chen Jinhua of the CPPCC National Committee said at the forum, in the history of world economy, countries called the "world factory" coming in order, were Britain, the United States and Japan, "in my opinion, judged by comprehensive national strength, the quality and competitive capability of the manufacturing industry, particularly the possession of automatic core technologies, China, compared with advanced industrial countries, still has a long way to go."

Of course, we are longing to become a "world factory", this is not only because China's modernization cannot be achieved without a strong manufacturing industry, what is more, this industry provides a best opportunity for solving the transfer of China's surplus rural labor force. According to Gao Shangquan, president of the China Economic Restructuring Research Institute, the indirect significance of China's becoming a world factory outdoes its direct significance, what he refers to precisely is China's march from a traditional agricultural country of several thousand years old to an industrialized country.

Then, will China become a "world factory"?

At present, China has possessed the favorable conditions for making a "world factory". Concentrating our energy to give play to China's comparative advantages will make it possible for the country to become a "world factory" in the next 10-20 years.

China's biggest comparative advantages are its mammoth contingent of labor power and cheap labor cost. The Paris Company of France predicts that in the coming two decades, China will be able to maintain a strong contingent of labor force, the large quantity of newly added labor power is enough to control the labor cost at a low level. Although the proportion of Chin's university students is relatively low, people with a secondary school education made up 48.7 percent of the total population in 2000, along with the steady increase in education expenditure, the education level of the younger generation will further rise.

In addition, China's high economic growth has created a favorable investment environment. Recently, large numbers of foreign business people have set up research and development centers in China, China is expected to become a "world laboratory", at the same time, foreign enterprises have intensified their procurement efforts in China, setting up parts and components production and purchase networks. Sources say that the General Electric, Hewlett-Packard, Dell, Kodak and other transnational corporations have recently declared their intention to establish purchasing centers in China.

Experts with the Shenzhen Comprehensive Development Research Institute said that the concept of "world factory" is quite different from what it was before, it is no longer something for which a country fights a lone battle, but rather many countries come together to make a "world factory".

Moreover, the main characteristics of a "world factory" in the information age are different from that in the epoch of industrialization: It is caused by the revolution of information technology, it is related to the extension and expansion of a world factory in the epoch of industrialization. But, unlike the "world factory" in the epoch of industrialization, the "world factory" in the information age does not mean the comprehensive rise of a country's overall manufacturing capacity, but rather it serves more as a "workshop of a world factory". In the epoch of informationization, a "world factory" is not based entirely on the cultivation of the domestic market, but rather it takes global networking production and networking purchase as its features, it is a manufacturing base for processing according to requests.

At the same time, the "world factory" in the epoch of informationization and science and technology innovation center appear to be separate from each other and form a tendency of new integration and establish a networking research and development center, and the establishment of a system for the transnational corporations' global research and development center has quickened the process of this separation.

Basing themselves on the new understanding of the epoch of informationization, experts believe that in the process of its march toward a "world factory", China has the conditions to become a "dual world factory"-the "duality" characteristic has manifested itself: On the one hand, China gives prominent expression to itself in the aspect of the traditional manufacturing industry; on the other hand, it has experienced rapid development in the manufacturing of information technology and other high-tech products.

The fact that China has a huge consumer market must not be neglected.

It is the view of experts that regions most hopeful to become the "world factory" are currently the Pearl Rive and the Yangtze River deltas with a concentration of industries; whereas the core force is non-governmental and foreign investments.

However, in regard to the question of whether or not China is a "world factory" and whether or not it can become a "world factory", the conclusion, after all, cannot be drawn through study, discussion or analysis. Just as Wang Zhongming, director of the Information Center of the State Economic and Trade Commission, one of the host units of the recent forum, said in his summary, a "world factory" is the will of our times and the strength of social logic on the development of a kind of history. Whether you want it or not, history invariably and stubbornly express its will, if the world factory is to come, nobody can block it.

Wang Zhongming said creation of a world factory is a historical process as well as a complicated system engineering. Many experts agree that presently China is still not a "world factory", we need to do many preparations, which involve problems related to property rights, ownership, technological progress, management, and the improvement of laborers' qualities. This system project has many tentacles, has extensive connections and involves various aspects, this is also destined that to turn the world factory into a reality in China cannot be accomplished at one stroke.

By People's Daily Online

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