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China's manufacturing is polishing its brand to the world

(People's Daily Online)    17:54, February 27, 2015

There have been worries recently that China’s manufacturing is facing a wave of close-downs. But experts point out that survival of the fittest is a normal thing in market-oriented economy, and that China’s manufacturing can expect to become a pillar of the international economy.

Its predicament has forced manufacturing industry to update. In January, the Purchasing Managers Index (PM I) fell below the expansion/contraction threshold for the first time in 28 months and the value of imports and exports have decreased by 10.8% year on year. Such figures do indeed suggest that manufacturing is in trouble. But other figures should not be ignored.

Figures from Chinese Customs indicate that the export value of Chinese railway equipment rose 22.6% year on year in 2014, and the country is now exporting its railway technology to more than 30 countries and regions. Figures from China’s Ministry of Information and Technology Industry suggest that China’s manufacturing is updating: in 2014 China weeded out 81 million tons of outdated cement production. “China’s manufacturing is indeed confronting the strains of transformation, but the rhetoric of ‘wave of close-downs’ is exaggerated,” says Dong Dengxin, director of the Finance and Security Institute of Wuhan University of Science and Technology.

Experts point that manufacturing enjoys its own advantages, including the huge domestic market, a complete industry chain, favorable policies, and increasingly advanced competence in research and development. China invested 1.34 trillion in R&D in 2014 and R&D accounts for 2% of its GDP.

“There is excess capacity in the fields of steel, cement, glass and coal, but manufacturing has a complete industry chain. With more sophisticated innovation, the whole chain will become a driving force for manufacturing,” says Dong.

China has built up its brand strength in high-speed rail, nuclear power, and aerospace. Manufacturing has its own competiveness. The industry is facing two problems: many enterprises are burdened with excess capacity; many enterprises achieve little value-add. Such companies should eliminate excess capacity and raise the quality of and returns from their development. “Those with too much capacity should eliminate their outdated facilities and merge their capacity; the government should take measures to help small private firms to unleash their creative vitality,” according to Dong.

Experts predict that the current manufacturing gloom will not last, and that the industry will be restored to its position as a pillar of China’s Economy.

This article was edited and translated from 《制造业向世界擦亮“中国招牌”》, source: People's Daily Overseas Edition, Author:Wang Junling

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