China's manufacturing sector strives to remain competitive amid headwinds

BEIJING, March 10 (Xinhua) -- Amid challenges posed by global geopolitics and competition, China's manufacturing sector counters headwinds with a robust supply chain framework and policies fostering industrial advancement.

Over the past year, the impact of geopolitics on the global supply chain has become increasingly evident. The re-shoring of manufacturing to developed countries and rapid economic development in countries and regions like Mexico and Southeast Asia have intensified competition among nations to attract manufacturing production lines to their own territories.

It's undeniable that the production of some labor-intensive goods has shifted from China to other countries. However, because China has been deeply integrated into the global value chain, many companies that have left China end up returning, or they still need to import a significant amount of intermediate products from China.

"One must not view the shift in parts of the industrial chain as indicative of an overall trend," said Song Xiquan, chairman of Yantai Tayho Advanced Materials Co., Ltd. "China's industries are currently undergoing transformation and upgrading, reshaping their competitiveness."

Song took the country's textile industry as an example. Although certain processing enterprises have left, the industry's overall added value is increasing. In 2023, China's high-performance fiber production capacity accounted for over a third of the world's total, with a 14.4 percent year-on-year increase in export volume.

Tesla's Shanghai gigafactory has achieved a component localization rate of over 95 percent, which Song Gang, the manufacturing vice president of Tesla Inc., has hailed as a "win-win" situation for both Tesla and its Chinese suppliers.

China now possesses all the industrial categories in the United Nations industrial classification and has nurtured 12,000 "little giant" firms, over 90 percent of which are suppliers to well-known large enterprises both at home and globally. "Little giant" firms represent the novel elites of small and medium-sized enterprises that specialize in a niche market, boast cutting-edge technologies and show great potential.

Official statistics showed that China tops the world in terms of output of more than 40 percent of 500 major industrial products. China's personal computers, smartphones and solar panels contribute over half of the global production.

In 2023, China's total value-added industrial production approached 40 trillion yuan (about 5.57 trillion U.S. dollars), accounting for 31.7 percent of its GDP. The scale of its manufacturing industry has ranked first in the world for 14 consecutive years, according to the Ministry of Industry and Information Technology (MIIT).

The Business Confidence Survey 2023/24 published by the German Chambers of Commerce Abroad Greater China indicated that over half of the surveyed companies planned to increase investment in China in the next two years, citing reasons such as a well-established supply chain and enhanced innovation.

This year's government work report, which was unveiled this week at the national legislative session for deliberation, shows that Chinese policymakers are committed to preserving the competitive advantage of the country's robust industrial chain system and climbing toward mid-to-high-end development. The report highlighted the importance of modernizing the industrial system and developing new quality productive forces at a faster pace.

China will fully leverage the strengths of the new system for mobilizing resources nationwide to raise the capacity for innovation across the board, said the report.

The report signaled a series of measures including "planning basic research systematically" and "supporting enterprises with distinctive strengths in heading up major R&D projects," to move faster to boost self-reliance and strength in science and technology.

A senior official from MIIT said that efforts would be accelerated to supply cutting-edge and commonly used technologies, nurture leading enterprises, and enhance the industrial ecosystem. For future industries, the focus will be on laying the groundwork in key areas such as artificial intelligence for general use, humanoid robots, and brain-computer interfaces.