New development paradigm leads manufacturing transition
LNG-powered supply vessels delivered, August 1 Photo: CFP
The world is undergoing profound changes unseen in a century, and China has accelerated the fostering of the new development paradigm with domestic circulation as the mainstay and domestic and international circulation reinforcing each other. It brings new opportunities for the transformation of the manufacturing industry, which in turn has become the foundation for fostering the new development paradigm.
Reshaping industrial chains
Within the new development paradigm, China’s manufacturing industry needs to take the opportunity to build a unified national market, accelerate the reshaping of local industrial chains, and evolve from being embedded in the global value chains (GVCs) dominated by developed countries to building independent and controllable industrial chains.
On the one hand, the advantages of China as a super-large-scale market and the potential of domestic demands can be fully employed to provide driving forces for smoothing internal circulations in the manufacturing industry. Guided by domestic demand expansion, downstream e-commerce platforms and retail enterprises, with scale effects and brand effects, are cultivated, and these form a manufacturing industrial chain for domestic demand by linking with a large number of local upstream manufacturing enterprises. Based on personalized consumer demands and domestic preferences, manufacturing enterprises and downstream platform enterprises are gradually transforming into “product + service + solution” manufacturing service providers.
On the other hand, world-class advanced manufacturing clusters should be fostered, to achieve a higher level of openness while promoting China’s manufacturing industry to move towards the middle and high end of the GVCs. In the process of building a unified national market, barriers to the flow of factors will actively be broken down. This will give full play to local market effects and gather excellent manufacturing enterprises and talent globally with the advantages of a super large-scale market and complete industrial chains. By further deploying innovation chains around existing industrial clusters, we can focus on cultivating “invisible champions” in advanced manufacturing industries, and forge independent and controllable advanced manufacturing clusters.
Developing key technologies
With the continuous rise of labor costs, “factor-driven” and “investment-driven” development models are unsustainable, and China’s manufacturing industry needs to continue climbing to the higher value-added end in the value chain. Only with breakthroughs in the key core technologies and by strengthening the guarantee and insurance capacity of key areas, links, and products, can we enhance the modernization of the industrial and supply chains and inject sustainable momentum into dual circulation.
First, the supporting role of national strategic sci-tech forces should be strengthened. The advantages of the new national system should be fully employed, with a focus on promoting key core technological breakthroughs in manufacturing.
Second, it is crucial to deploy the innovation chains around industrial chains and accelerate technology industrialization. Enterprises should be encouraged to integrate innovation resources and develop key technologies with market potential, as this will accelerate the process of moving new technologies from R&D to industrialization stages through the deep vertical cooperation of all entities along the innovation chain. By relying on the advanced manufacturing industrial investment fund, innovating investment and financing mechanisms in the manufacturing sector, and optimizing the investment structure for the manufacturing industry, we can give sufficient financial support to the industrialization of key technologies.
Third, the “creative destruction” potential brought by the digital economy should be employed. China’s manufacturing industry should take the initiative to embrace digital changes, build a common technological platform with leading local Internet of Things enterprises as the core, and promote standardization in the digital economy in collaboration with national laboratories and upstream “invisible champions.” In addition, we should focus on cultivating key digital technology research and consulting service enterprises in the productive service industry to accelerate the digital transformation of the manufacturing industry.
Optimizing industrial layout
When building the new development paradigm, we need to take advantage of the situation, coordinately promote industrial structure upgrades and optimize the regional industrial layout, and keep the proportion of manufacturing industries stable.
First, the manufacturing service industry’s scale in the eastern region should be strengthened. Central cities in the eastern region make it their primary goal to improve manufacturing development’s quality; they should promote the traditional manufacturing industry’s transformation to service-oriented manufacturing. Meanwhile, the manufacturing service industry’s scale is growing, and the layout of the manufacturing service industry has formed for the whole industry chain. The central cities in the Yangtze River Delta (YRD), Pearl River Delta, and Beijing-Tianjin-Hebei city clusters should be taken as the carriers, and all-dimensional productive services should be provided for manufacturing enterprises in those clusters. Meanwhile, those enterprises should be actively connected to manufacturing clusters in other regions and even overseas so as to enhance the expansion capacity of manufacturing service industries.
Second, the manufacturing agglomeration level in the central-western and north-eastern regions should be improved. From the main starting points of cross-regional construction of industrial parks, we can promote upstream and downstream connection and cooperation in the industrial chains among regions, and guide the orderly transfer of production and manufacturing links in the industrial chain of advanced manufacturing industries to central and western and northeastern regions.
Finally, we should rely on the Belt and Road Initiative (BRI) to optimize the layout of foreign investment in manufacturing. Taking international production capacity cooperation as an opportunity, we should fully exploit the resource endowment and market potential of BRI countries and regions, use foreign investment to smooth the manufacturing industry’s circulation and promote the steady growth of the manufacturing industry. Drawing on the construction experience of mature parks in the eastern region, we will take industrial parks as the drivers of change to accelerate foreign investment and enhance the international influence of China’s high-quality products, services, and even standards.
Promoting green transformation
China has already crossed the inflection point of the environmental Kuznets curve, and the subsequent industrialization process must be based on causing no damage to the environment, which requires accelerating the green transformation of the manufacturing industry to achieve sustainable economic development. A resource-saving and environmentally friendly green manufacturing system should be shaped. With energy consumption and emissions per unit of GDP as important indicators, we must develop and strictly implement environmental protection standards for manufacturing industries in areas with overloaded resource and environmental carrying capacity, support traditional manufacturing enterprises to build green and intelligent factories, and accelerate the green transformation of key industries. The green manufacturing industry should be vigorously developed. The scale of strategic emerging industries will be expanded, and world-class green industry clusters will be cultivated in regions with relevant industrial bases.
Duan Wei is from the Business School of Nanjing University.
Edited by ZHAO YUAN