More work needed for China’s rise in industrial world

By Jia Kang Source:Global Times Published: 2018/4/3 21:33:39

Illustration: Xia Qing/GT


Since reform and opening-up began in 1978, China's industrialization has accelerated and taken off, growing at an extraordinary pace. Some observers believe the country has reached the middle-to-late phase of industrialization. But I would argue, more cautiously, that the nation remains in the middle phase of industrialization.

The coastal regions show all the signs of being in the middle-to-late phase of industrialization, seeing a convergence of upgrading and informatization and achieving world-class results in some pivotal areas. But most places in central and western China are still at the middle or even early-to-middle stage of industrialization.

Additionally, there are weak spots in coastal regions. For instance, wheels and axles - the key components of high-speed trains - are still largely reliant on imports. China's domestic passenger aircraft C919, which is moving into the airworthiness certification phase, also depends on overseas sources for some key components such as engines. Rivets used in the aircraft are also imported, because domestic workmanship hasn't yet reached this stage.

It's cases like these that tell me China is still in the middle phase of industrialization. This is also seen in the "Made in China 2025" initiative and its derivative strategy aimed at remaking the nation's manufacturing sector. Obviously, the country's continued development requires the use of information technology to transition from "Made in China" to "Smart Manufactured in China" and "Innovated in China." This is a mission of upgrading that must be addressed, as many indicators show that the technological innovation capacities of China's manufacturing sector have yet to reach even the second rank globally.

The central government has outlined the second half of China's industrialization journey. According to the strategic plan of "Made in China 2025," the manufacturing sector at large will be upgraded to see the country cross the threshold of a manufacturing power by 2025. On that basis, China will be prepared for another 10 years of effort to take its industrialization to another level, rising to be among mid-level global manufacturing powers by 2035.

This fits well with the country's goal of basically realizing socialist modernization by 2035, when China is set to be in the middle-to-late phase of industrialization overall. Developed industries in the country's developed regions will be expected to take the lead globally and be on par with those in developed industrialized countries such as the US and European countries.

From 2035 until the middle of this century, China will face another 15 years of arduous efforts to become a great modern socialist country by 2050. By then, the country will steadily climb to be among the top ranks in terms of industrialization.

It's a tough task, though. There are some questions worth pondering as to whether China can shift successfully from playing catch-up to being among the leaders. One question is how the heavy chemical industry is supposed to be dealt with. Some scholars have proposed to skip the development of the heavy chemical industry, but I don't think that's possible.

With China still in the middle stage of industrialization, the central and western parts will need heavy chemical production capacities. By 2035, however, a large portion of the heavy chemical capacities are expected to be transferred overseas. Cutting-edge production as a percentage of all production capacity will be raised accordingly. This will require an integrated management system on the supply side as well as supply-side research efforts to achieve an advanced, durable industrial structure, as well as an implementation mechanism that's fully aligned to the global markets.

Over the course of its development, the US has apparently attached great importance to its global leadership and it's obvious that amid international cooperation and competition, the nation has employed various means to curb China's advance in industrialization. Leading powers never easily cede their position, and the US certainly is making every attempt to maintain the huge benefits associated with its position as the world's top power. But there are precedents for a rising power to overtake a ruling power: for example, the UK supplanted the Netherlands before being unseated by the US.

During China's peaceful rise, it is possible that the popularity of the sharing economy and the policy of nuclear deterrence will prompt all sides to give up old-fashioned zero-sum thinking. China can exploit its latecomer advantages and ultimately make itself into a modernized economic power.

The author is the chief economist of the China Academy of New Supply-side Economics and a research fellow with the Chinese Academy of Fiscal Sciences.


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