Industry reform seen as key to strong growth

While the world wonders where China's reform is heading as its economy slows, local experts believe the upgrading and restructuring of the manufacturing industry will play a key role for the country to achieve its economic goals.

Xu Hongcai, director of the Economic Research Department at the China Center for International Economic Exchanges, said on Friday at the China Insights Forum that China's economic development is resilient, with the manufacturing industry a significant driving force.

The forum, themed Implications of China's Economic Restructuring: From "Made in China" to "Made by China", was organized by China Daily and co-hosted in Shenzhen by hardware innovation platform IngDan.

He said China's manufacturing industry is the No 1 in the world in many aspects, such as overall size, import and export volume and number of companies, with the most significant being that "our manufacturing is complete, and this is quite unique".

He said China is the only country in the world that has all industrial divisions according to evaluation by the United Nations.

To upgrade the nation's manufacturing is a key task this year according to the 2016 Report on the Work of the Government at the two sessions - the National People's Congress and Chinese People's Political Consultative Conference.

Xu believes restructuring of the industry is the core to the success of the country's overall economic transition. He said the restructuring means China's manufacturing companies should aim for the medium and high levels of the world's value chain.

He admitted, however, that the industry also faces many challenges during the process. One of the challenges is to deal with workers who are laid off, he said, as a result of cutting overcapacity, destocking, deleveraging and reducing costs, which he described collectively as "subtraction".

The action of "subtraction" alone is of high risk, so we also need to "add" at the same time, he said, by finding new industries and business opportunities.

The Report on the Work of the Government also states that the government will provide 100 billion yuan to train laid-off workers for new positions and create above 50 million new urban jobs.

Innovation is the key to driving the upgrade, Xu said.

This is in line with the principle proposed in the "Made-in-China 2025" strategy initiated by Premier Li Keqiang to transform China into a smart and innovative world manufacturing power by 2025.

Xu said businesses should play the dominant role in this innovative transition, while the government assists them to improve their scientific strength by establishing public innovation platforms.

Zhang Jing'an, a former member of the Leading Party Group at the Ministry of Science and Technology, said, "We should give companies more power so they can fearlessly innovate at world level."

In the past, reforms were driven by administrative means, resulting in companies not being fully empowered, Zhang said, but the relationship between the market and the government will become the key to our reform in the future."

grace@chinadailyhk.com