Manufacturing industry

Updated: 2018-06-28

Data

The manufacturing industry is and will remain the mainstay of the Chinese economy. In 2017, it contributed 24.2 trillion yuan ($3.75 trillion) to China's GDP of 82.7 trillion yuan. It is the largest sector of the Chinese economy and the lifeblood industry that sustains the country’s development. It accounts for 29.34 percent of China's economy. According to the Ministry of Industry and Information Technology, China's manufacturing industry had 4,986 newly-established foreign-invested enterprises in 2017, a year-on-year increase of 24.3 percent.

The Statistical Communiqué of the People's Republic of China on the 2017 National Economic and Social Development indicates that in the industries above designated size in 2017, the added value of the agricultural and food processing industries increased by 6.8 percent from the previous year, the textile industry increased by 4.0 percent, the chemical raw materials and chemical products manufacturing industry increased by 3.8 percent, the non-metallic mineral products industry increased by 3.7 percent, the ferrous metal smelting and rolling processing industry increased by 0.3 percent, the general equipment manufacturing increased by 10.5 percent, the special equipment manufacturing increased by 11.8 percent, the automotive manufacturing increased by 12.2 percent, the electrical machinery and equipment manufacturing increased by 10.6 percent, and the computers, communications and other electronic equipment manufacturing increased by 13.8 percent.

Potential

First, the Chinese market is vast. China's domestic market will be the world's largest, which will make it possible for manufacturing companies that produce standardized products to expand the single product production scale many times over and reduce individual costs to the lowest level.

Second, China has a deep and knowledgeable labor force. There are nearly 8 million university graduates in China annually. The number exceeds 10 million if graduates with master's and doctoral degrees are counted, and the number is still climbing. This provides a large number of R&D personnel who can work at relatively lower costs (compared with major international competitors). Moreover, China has a tradition of pursuing excellence, which provides a hotbed for manufacturing companies to break through technical barriers and reserve technologies.

Third, the world's largest high-speed rail network and mobile Internet are greatly improving China's all-round efficiency and opening up the industrial frontier. China’s high-speed rail mileage has reached 20,000 kilometers, and the mobile Internet now covers more than 700 million people. They are respectively the largest networks in the world. The two networks not only help China tap and release potential needs, but also improve efficiency in all aspects including production and supply side development, significantly enhancing China's competitiveness.

Fourth, the long-term growth of the manufacturing industry in China has formed advantageous industrial chain clusters. Based on the vast domestic market and manufacturing costs, complete industrial chains for many industries can be realized in China, and even within a region or a city. Such industrial clusters provide superior advantages in procurement, logistics and R&D response.

Policy

In 2016, China further eased access to general manufacturing, implemented the “Made in China 2025” policy, sped up the optimization of the structure and quality of foreign investment, and vigorously absorbed foreign investment in advanced manufacturing. The high-end trend in manufacturing is evident. According to statistics from the Ministry of Commerce, 798 new foreign-invested companies in advanced manufacturing were established in China in 2016, a year-on-year increase of 0.38 percent.

Restrictions on foreign investment in the manufacturing industry, as set out in the Catalogue of Industries for Guiding Foreign Investment (2017 Revision), have been continuously reduced in recent years. Twenty-two out of the 31 major areas, 167 out of the 179 categories and 585 out of the 609 subcategories are completely open to foreign investment, accounting for 71 percent, 93.3 percent, and 96.1 percent respectively.