in a factory of china To the north, workers are busy testing an automated vehicle designed to move heavy objects around industrial locations, one of a new generation of robots Beijing Wants to shift the country’s manufacturing to the value chain. The Tianjin-based maker of robots has received tax breaks and a government-guaranteed loan to modernize China’s vast factory area and manufacture products that advance its technical expertise.
“The government is paying a lot of attention to the manufacturing sector and the real economy – we can feel it,” said Ren Xiong, general manager of Tianjin Langyu Robot Company, as he gave Reuters a guided tour of his plant. China is supporting R&D efforts by high-tech manufacturers such as Langyu, driven by an urgent desire to reduce reliance on imported technology and consolidate its dominance as a global factory power, even It also creates a rift in other parts of the economy.
Beijing’s pivot to move the world’s second-largest economy beyond the so-called “middle income trap” focuses on advanced manufacturing rather than the services sector, where countries lose productivity and stagnate in low-value economic output. . “Pressure is the driving force, and without pressure, it’s difficult for companies to grow,” Ren said.
He expects revenue to more than double this year to 100 million yuan ($15.52 million) by 2020, thanks to increased demand for high-tech products such as Langueu’s automated guided vehicles.
More broadly, the city of Tianjin plans to invest 2 trillion yuan ($311 billion) between 2021 and 2025, with 60 percent earmarked for strategic emerging industries, said Yin, head of the Tianjin Industry and Information Technology Bureau. Jihui told Reuters.
Yin said the investment, which includes corporate and government outlays, will help boost manufacturing to 25 percent of the economy in 2025, up from 21.8 percent in 2020. The share of strategic industries in Tianjin’s factory output will also increase to 40 percent, Yin said, from 26.1 percent last year.
“Achieving these goals will be very difficult and challenging, (as) we need to ensure stable economic growth while transitioning from old to new engines,” Yin said.
Achilles
China’s five-year plan in March promised to keep the manufacturing share of GDP “basically stable” in contrast to the 2016-2020 plan, which focused on services to create jobs. The coronavirus and the Sino-US trade war have reshaped the way policymakers look. Factories: are no longer just sordid remnants of the old economy but assets of strategic value. During the pandemic, China’s factories have been churning out everything from masks and ventilators to work-from-home electronics, pushing the economic recovery ahead of its record slowdown in early 2020. .
Additionally, the trade war with the United States and Washington’s technical sanctions exposed China’s lack of high-tech knowledge, hardening Beijing’s resolve to accelerate innovation.
“Increasing external pressure since the start of the trade war has made policymakers more determined to develop China’s medium and high-end manufacturing,” said Qu Hongbin, chief China economist at HSBC.
“The more external pressure, the more they stress on manufacturing. This will be turned into real policy support.” Tianjin-based Ringpu Biotech, which makes animal vaccines, has faced significant import delays on US equipment and materials used for R&D and quality control.
“We have taken some measures, including increasing our own R&D capacity and collaborating with other firms and universities,” said Fu Xubin, Ringpu’s vice president.
“We will try to promote our ability to find alternatives in areas where we face problems.”
‘sense of crisis
According to World Bank officials, the share of manufacturing in China’s GDP fell from 32.5 percent to 26.2 percent in 2006, while the services sector increased its contribution from 41.8 percent to 54.5 percent, shifting much more rapidly towards services. There is concern the change, which employs more people but is less productive than manufacturing, could undermine long-term growth, as was the case in some Latin American economies.
Government advisers said Beijing does not want manufacturing to fall below 25 percent of GDP, which is roughly in line with South Korea’s economic profile.
“Governments at the central and local levels are increasing support for advanced manufacturers, but achieving industrial upgradation will not be easy,” said a government adviser on condition of anonymity. From 2021 to 2025, China aims to boost R&D spending by more than 7 percent annually, focusing on “frontier” technologies such as artificial intelligence, quantum computing and semiconductors. The plan, which largely replaces the “Made in China 2025” initiative from 2015, targets nine emerging industries: new generation information technology, biotech, new energy, new materials, high-end equipment, new energy vehicles. , environmental protection, aerospace and marine equipment.
The central bank has given more credit to manufacturing, especially high-tech firms, at the expense of the asset sector, which faces new restrictions against speculative investment. Ren said robotics company Langue plans to spend about 20 million yuan on R&D this year, or 20 percent of expected 2021 revenue, helped by more tax breaks for R&D. Ringpu puts 8-12 percent of its revenue into R&D and will spend 1.3 billion yuan to upgrade automation and production between 2020 and 2023.
“For China, achieving technological self-reliance in certain areas is a matter of survival,” said Tu Xinquan, head of the China Institute for WTO Studies at the University of International Business and Economics.
“The feeling of distress is a great driving force.”
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