Former Chinese Government Minister: Country Is 30 Years Away From Top-Tier Manufacturing

A former high-ranking Chinese government minister has said that China is at least 30 years away from becoming a “great power” in the manufacturing sector.

What Happened: China has been the world’s dominant figure in manufacturing since 2010, according to United Nations data, with $4.8 trillion in industrial added value last year and a nearly 30% global share that is approximately equal to the combined share of the U.S., Germany and Japan.

China’s State Council Development Research Center issued a report in January that defined the nation as being in the third tier in a four-tier ranking system based on key criteria including innovation, quality and effectiveness, environmental factors and global competitiveness, according to a South China Morning Post report.

In comparison, the U.S., Germany and Switzerland were in the top tier, while Japan, South Korea, Singapore and France were in the second.

In a speech before the Chinese People's Political Consultative Conference, the government’s leading advisory body, former Minister of Industry and Information Technology Miao Wei warned that while China reigns in terms of industrial supply chains and accounts for more than one-third of global manufacturing output, its industries’ dependence on U.S. high-tech products including semiconductors remains a strategic obstacle that needs to be overcome.

"Basic capabilities are still weak, core technologies are in the hands of others, and the risk of 'being hit in the throat' and having 'a slipped bike chain' has significantly increased," said Miao, who stepped down from his ministry post last year after a decade in office.

"The ratio of manufacturing output to GDP has been declining too early and too quickly, which not only weighs on economic growth and affects employment, but also brings security loopholes to our industries and diminishes our economy's ability to withstand risks, and its global competitiveness."

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What Happens Next: Miao said a lack of progress on market-oriented financial reforms including tax relief and a deficit of high-tech talent in manufacturing is keeping the sector from reaching its fullest potential.

"China's manufacturing industry has made great achievements in recent years, but the situation of being 'big but not strong' and 'comprehensive but not good' has not been fundamentally changed," he said.

"We must maintain our strategic resolve, stay clear-headed and deeply understand the gaps and deficiencies."

Miao, who is now vice chairman of the CPPCC’s economic committee, also acknowledged that China’s services sector has overtaken manufacturing as the nation’s main economic force, with 54.5% of its economic output last year coming from the services sector versus 37.8% from manufacturing.

“We should emphasize the strategic role and contribution of manufacturing and stabilize its share of the economy,” Miao said. “We should protect our most comprehensive manufacturing system and upgrade our self-reliance in industry and supply chains.”

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Miao Wei. Photo courtesy G20 Argentina/Creative Commons.