While China's manufacturing sector still seems to be stuck in a rut, factory activity in the US has been stabilizing. More worryingly, a recent study has revealed that an increasing amount of foreign investment, including from Chinese companies, has been drawn to the US manufacturing sector.

It seems that while the US is on an upward trend in global manufacturing, China's status as the world's factory is being challenged. This calls for efforts to be made by China in upgrading its vast factory sector, which will continue to play a significant role in the world's second-largest economy. 

There are various reasons for the growing interest among foreign investors, mostly from Asia and Europe, in shifting their production facilities to the US, according to an article posted Friday on forbes.com, citing findings of a study by the Global Supply Chain Benchmark Consortium.

In addition to proximity to the US market, research and development capabilities, technological innovation, relatively low costs of production and high productivity in the US are contributing to the growing attractiveness of the US manufacturing sector, the report said.

In comparison, rising labor costs in China over recent years have eroded the competitiveness of the country's manufacturing sector.

It is possible that China might be under rising pressure to maintain the survival of many of its manufacturing facilities in years to come if the country fails to climb up the value chain of the global manufacturing sector.

Furthermore, those with investments in China's factory sector are under pressure, partly because of India's bourgeoning manufacturing industry, which is further reducing the survival chances of a multitude of Chinese manufacturers that are still trying to compete on price.

In a rapidly changing world with the US rising as a manufacturing destination for non-US firms, it is of growing importance for China to develop a clearer strategy for its manufacturing upgrade, which can lay stepping stones for the Chinese economy's transition toward a "new normal" of higher quality, albeit slower growth.

China's manufacturing sector is facing a critical time of transition. China needs to develop new capabilities and business models to help the manufacturing sector pick up steam in the next few years, and these could include integration of the Internet into traditional manufacturing to enable a digitally viable factory sector.

With a growing middle class that will drive fundamental shifts in consumption, Chinese manufacturing firms will have opportunities to develop a new growth model that relies on technological progress, integration of resources and new management models, rather than cost and scale advantages.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn