New-type industrialization advancing towards modernization

 

In 2013, the added value of China’s service industry accounted for 46.1 percent of the GDP, exceeding that of secondary industry for the first time to become the biggest industry. It reached up to 48.2 percent in 2014. Employment in tertiary industry accounted for 38.5 percent of the whole in 2013, also exceeding that of secondary industry (30.1 percent). However, this doesn’t mean China has bidden farewell to the industrial economy and entered an era of service orientation.

 For many years to come, China’s economy will stay in the middle and final stages of industrialization, dominated by the industrial economy. China will still be a large developing country. As it did in the past, industry, especially manufacturing, will continue to play a dominant role in China’s economic and social development as well as its promotion of international competitiveness.
 

To start with, China has not fulfilled the historical task of industrial development. Today, modernization is what each country pursues, and industrialization is the basic precondition of realizing this goal. It is well known that China began the process of industrialization with a weak industrial base.

The numerous economic, social and environmental problems that emerged in the process urgently need to be resolved. The resolution of these problems cannot be mainly dependent on the service industry. It must also depend on the further development and promotion of manufacturing.
 

Furthermore, a powerful manufacturing industry lays the industrial foundation for the implementation of an innovation-driven strategy. The implementation of innovation-driven strategy will be the inevitable requirement and basic condition for China’s economic and social development as well as its industrial transformation and upgrading during the 13th Five-Year Plan (2016-2020) and for many years after that.
 

The highly developed system of the manufacturing industry is the fundamental basis and source of a country’s technological innovation. For a long time, China’s capacity for technological innovation, especially independent innovation, has been severely insufficient. One reason for that which must not be neglected is the low level of the manufacturing industry development. The implementation of China’s innovation-driven strategy must be based on the high development of the manufacturing industry and constant promotion of competitiveness. 
 

It must also be noted that the overall competitiveness of the industrial system can only be promoted by facilitating the coordinated development of the manufacturing and service industries. The economic and industrial system of a country is complicated. The transfer from the industrial economy to the service economy is the evolutionary process of this system becoming upgraded and optimized.

The manufacturing industry should not be separated from service industry. There are symbiotic connections between the manufacturing and service industries in the industrial system as well as among different subsets of the two big sectors, making the industrial system a constantly evolving network.
 

The reindustrialization of Western countries, such as the US, does not mean that the service economy is devolving into an industrial economy. Instead, it entails the development of an advanced manufacturing economy that complements the highly developed service sector based on the existing service economy in a bid to improve the innovation capacity and level of productivity of the country’s industrial system.
 

China should enhance the overall competitiveness of the industrial system or industrial network in accordance with the requirements of collaboration in the industrial system. A special emphasis needs to be placed on facilitating the synergetic development of manufacturing and its related service industries.

Finally, in reflecting upon and responding to the international financial crisis of 2008, developed countries have shown that manufacturing is still very important for the service economy. For example, Britain has issued a number of strategic reports about boosting the development of manufacturing since 2008.
 

The concept of “Industry 4.0” put forth by Germany in 2011 was intended to aid the transition from manufacturing to a knowledge-based economy and long-term economic growth through a fourth industrial revolution dominated by intelligent manufacturing. The further development of the manufacturing industry has become the strategic choice for occupying the high ground in the next round of international industrial competition. 
 

Robust and competitive industrial manufacturing system is needed for responding to the challenge from strategy of reindustrialization in developed countries and arduous tasks such as stabilizing growth, promoting employment and pushing forward new-type urbanization. China should therefore transform the manufacturing industry through down-to-earth efforts rather than developing the economy dominated by the service industry. The sustainable and healthy development of the service industry can be achieved only through the transformation and upgrading of the manufacturing industry. China must accelerate the deep integration of industrialization and informatization amid profound  global industrial reform to explore an unprecedented path of new-type industrialization.

 

Du Chuanzhong and Pang Ruizhi are from the Institute of Economic and Social Development at Nankai University.