Manufacturing posts stable growth, exodus impact limited: ministry

By Chu Daye Source:Global Times Published: 2019/7/23 20:18:40

A man works on the production line of Guangzhou Seagull Kitchen and Bath Products, a manufacturer of high-end and customized bathroom facilities, in Guangzhou, capital of south China's Guangdong Province, June 18, 2019. (Photo: Xinhua)

The scale of manufacturing relocation outside of China is limited and its impact is under control, Vice Minister of Industry and Information Technology Xin Guobin told a press conference on Tuesday, the third official statement on the matter in less than two weeks.

Xin said that some exodus of manufacturing to destinations including Vietnam is natural, but China remains the market darling for global investment.

Xin said that China has maintained its global top 3 ranking in attracting foreign direct investment (FDI) since 2008 and has been the No.1 destination among all developing countries for 25 consecutive years.

In 2018, when global FDI dropped 40 percent year-on-year, FDI into the Chinese manufacturing sector still grew by 23 percent from 2017, said Xin. In the advanced manufacturing sector, the growth rate was 13.4 percent during the first half of 2019. 

Xin provided a breakdown of findings from a survey by the ministry. In South China's manufacturing powerhouse Guangdong Province, 588 foreign manufacturing companies shifted production capacity outside China to countries such as Vietnam, Malaysia and Thailand in 2018. These companies accounted for a mere 1.44 percent of the headcount of manufacturing companies that are investing in Guangdong. 

Inflows are happening at the same time as the exodus, with 1,918 companies setting up plants in Guangdong. Companies including such big names as German chemical producer BASF, US oil major ExxonMobil and Foxconn from the island of Taiwan situated advanced manufacturing plants in the province.

In the first six months of 2019, the value added of major domestic industrial companies grew 6 percent, reaching the upper range of this year's target, according to data released by the ministry on Tuesday.

Xin said that the generally stable performance of Chinese industrial companies in the first half has paved the way for the completion of the full-year target, which is set at 5.5 to 6 percent.

However, Xin said that a slowing global economy and rising headwinds of trade bullying have caused uncertainty to rise and China is also affected by the worsening international environment.

China's exports to the US in US dollar terms dropped by 8.1 percent year-on-year during the first half, and Chinese integrated circuit and software companies were among those receiving a sizable impact. The Chinese government responded by slashing taxes for these companies and is working on tariff exclusions to exempt certain products from China's retaliatory tariffs on US imports.  


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