Manufacturing to get a major boost

China is rolling out new efforts to nurture a number of manufacturers that specialize in niche sectors and specific industries.

Such policy efforts will help enhance and stabilize the country's manufacturing and supply chain, contributing to both the Chinese and world economies in the post COVID-19 era, experts and industrial insiders said.

Earlier this month, six ministries — including commerce, industry and information technology, and science and technology — jointly issued a guideline on scaling up efforts in building the country's manufacturing sector.

China will strive to cultivate 10,000 small giant companies with high growth potential, advanced technologies and a strong market competitive edge before 2025, according to the guideline.

Large groups will also be guided to become globally competitive leaders. Such a "gradient pattern" in manufacturing is also expected to be formed by 2025.

Favorable policies, including incentives for technological innovation and some offering businesses financial assistance, will be put in place.

Experts and industrial insiders hailed the policy effort as "timely". China's economic transition is moving into a critical stage while the evolving COVID-19 epidemic has added to the significant need for a strong, high-end manufacturing sector to help a country's economy stay afloat during these difficult times.

Jiang Feitao, an associate researcher at the Institute of Industrial Economics at the Chinese Academy of Social Sciences, said he believes developing high-end manufacturing with strong, self-innovation capacity is now a "must" for the growth of the sector.

China is still in the process of its economic transition from relatively low-end manufacturing to high-tech-driven manufacturing, he said, while the rampaging pandemic has, in the past year, severely disrupted global supply chains and heavily impeded international logistics.

"Self-innovation capacity in high-end manufacturing will be critical for the nation's recovery in the post COVID-19 era," he said.

Jiang said that since last year, China has been taking the lead in recovering from the pandemic, and many multinational businesses are racing to move their manufacturing bases from other Asian countries to China.

Domestic manufacturing companies are thus taking more orders. These businesses have served as a key driving force for global supply chains.

"Yet, most of them still cluster in low-end manufacturing, and they will eventually move out of China when the pandemic tapers off. A sense of urgency is needed for our manufacturing businesses to improve," Jiang said.

Investment in manufacturing rose 19.2 percent year-on-year in the first half of this year, figures from the National Bureau of Statistics show.

Wang Yiming, vice-chairman of the China Center for International Economic Exchanges, told a forum in June that China is now equipped with a certain global competitiveness in areas of nuclear power, high-speed rail, construction machinery and other tertiary products.

Yet, technological upgrades of key components of these sectors are occurring more rapidly. Enhancing the innovation capability of key technologies in these areas is thus crucial for China's industry chains.

The new guideline noted that research breakthroughs and applications of basic components and software, raw materials and integrated circuits will be enhanced.

The government noted in a statement accompanying the guideline's release that compared with developed countries, China's self-innovation capacity of manufacturing businesses still needs improvement. Synergized growth of large, medium and small-sized enterprises will be scaled up, and efforts to develop management talent will be made.

It was made clear in the guideline that technology resources at the State level will be further opened to businesses. More platforms will be created to trigger cooperation between giant manufacturers and smaller ones.

China is now the world's largest manufacturer, with industrial value-added reaching 31.3 trillion yuan ($4.83 trillion) last year. It is also the world's only economy to have all industrial categories listed by the UN, according to the Ministry of Commerce.

Financial support for manufacturers will be increased. The new guideline urged local and regional governments to better leverage the guiding role of government-backed funds. Private funding will be encouraged to create a fund to nurture high-quality manufacturing businesses.

Jiang said he noted that the clogged financing channel for manufacturers is hampering their growth, as their operating costs are high. This is acutely felt by private and smaller manufacturing businesses.

To mitigate this problem, a State-financing cooperation platform has been implemented, the new guideline said. It urges financial institutions to provide targeted, well-calibrated and effective financial support to manufacturers.

Existing financing channels will be better utilized, particularly in supporting the high-quality growth of specialized medium and small-sized manufacturing companies.

Song Xiangqing, deputy dean of the School of Government at Beijing Normal University, suggested financial institutions can develop multipronged financing channels to help manufacturers.

Cooperation between industry and finance in recent years has been an effective way to help financial institutions better serve the real economy, he said, and this can be further leveraged to boost the growth of the manufacturing sector.