China's cabinet, the State Council, on Tuesday unveiled a 10-year plan to upgrade the country's manufacturing sector by encouraging innovation, optimizing industrial structures and boosting efficiency.
The plan, dubbed "Made in China 2025," was endorsed by Premier Li Keqiang and is the country's first action plan focusing on promoting manufacturing.
It comes at a time when China is facing increasing pressure from a slowing economy and factories are struggling with overcapacity.
The plan will be followed by two other plans to transform China into a leading manufacturing power by the year 2049, which marks the 100th anniversary of the founding of the People's Republic of China.
Chinese manufacturers are expected to enhance innovation in the next 10 years, spend more on research and development, acquire more patents, develop more advanced and sophisticated equipment such as spaceships, shipping vessels and airplanes, and prioritize product quality and sustainable manufacturing, according to the "Made in China 2025" plan.
"Chinese manufacturing must transform itself. And it is not going to be easy. The performance of Chinese manufacturing will determine how successful China's economic transformation is and whether China can avoid the middle-income trap," Zhao Xiao, a professor at the University of Sciences and Technology Beijing, told the Global Times on Tuesday.
Rising labor costs and land prices, appreciation of the yuan, growing competition from emerging markets in low-end manufacturing, and the failure to improve the industrial value chain are the challenges faced by Chinese manufacturers.
China cannot copy the model of smaller countries, with some focused on a dominant service industry. Instead, China must have a well-represented manufacturing industry reflecting a significant portion of its GDP, Zhao said.
The plan will be market-oriented, though guided by the government, according to the State Council.
Miao Wei, minister of industry and information technology, said the plan means that "by 2025 ... China will basically realize industrialization nearly equal to the manufacturing abilities of Germany and Japan at their early stages of industrialization."
The new guideline for "Made in China 2025" aims at improving China's productivity in the future, He Jun, analyst from the Chinese Academy of Social Sciences, who helped discuss the guideline, told the Global Times on Tuesday.
"We used to focus more on product innovation, but now we must turn our attention to upgrading China's manufacturing systems," He said.
"The focus from now on will be on quality rather than quantity, with the national plan stressing informatization, core technologies in core sectors, the Internet, and lower energy consumption per unit of GDP," Tian Yun, an economist at the China Society of Macroeconomics, told the Global Times on Tuesday.
The plan, which hopes to upgrade the country from the world's No. 1 manufacturer in terms of quantity to a manufacturing industry superpower in terms of quality, was first introduced by Premier Li in his government work report at the annual sessions of the National People's Congress in March, according to the State Council's website.
Chinese manufacturing accounts for about 20 percent of the world's total. China is the world's top producer of over 220 out of 500 industrial product categories. And 56 Chinese firms were listed in the Fortune Top 500 in 2014, according to a report by the Xinhua News Agency on Tuesday.
Chinese manufacturers are expected to increase their output by applying cutting-edge manufacturing technologies such as artificial intelligence and automation, according to the plan.
Still, analysts said "Made in China 2025" is different from "Industry 4.0," a concept that was first featured in a German government high-tech strategy in 2013.
Germany has a strong position in manufacturing and has already embedded IT technology in some industries. It is expanding the use of intelligent monitoring and autonomous decision-making processes in factories. China has yet to acquire these features, said He.
"The State sector takes up too many resources, such as financing resources, and thus reduces the ability of China's industrial sector to innovate," Zhao further noted.
To absorb advanced overseas technologies and adapt them into China's proprietary technologies requires technological talent, but most of the Chinese academic elite is still employed by the State-funded research institutions, Tian noted.
9 tasks of ‘Made in China 2025’ plan
Improving innovation in manufactur¬ing sector
Integrating technology and industry
Strengthening the industrial base
Fostering Chinese brands
Enforcing green manufacturing
Promoting breakthroughs in 10 key sectors
Advancing restructuring of the manu¬facturing sector
Promoting service-oriented manu¬facturing and manufacturing-related service industries
Internationalizing manufacturing
Xinhua