BEIJING, May 14, 2024 /PRNewswire/ -- A report from
People's Daily: China's production
capacity is deeply rooted in the country's vast market.
China is a developing country
with a population of over 1.4 billion. The fundamental purpose of
its production is to meet the ever-growing expectation of the
people for a better life.
Since the reform and opening up, China has transitioned from a planned economy
to a socialist market economy, which has boosted production in
different sectors and enhanced its supply capabilities.
As China's economy continues to
grow steadily and with the incremental upgrading of Chinese
industries, the potential of China's domestic demand has been consistently
expanding and unleashed, which will enhance production capacity in
a cycle of mutual reinforcement.
China boasts a large and
steadily expanding middle-income group, with per capita GDP
surpassing $12,000, creating a huge
consumer market.
In 2023, China's total retail
sales of consumer goods exceeded 47 trillion
yuan ($6.5 trillion), with
final consumption expenditure contributing 82.5 percent to economic
growth. Consumption has become the main engine driving economic
growth and the primary driver of China's expansion of production capacity.
Over the past few years, China
has been the world's largest consumer of automobiles, home
appliances, clothing, and jewelries, among others. This wouldn't
have been possible without massive domestic production capacity, as
relying solely on imports wouldn't have been enough.
Technological innovation and enhanced production efficiency are
the driving forces of China's
production capacity.
Innovation serves as the engine of productivity. China adopts the innovation-driven development
strategy and keeps expanding investment in scientific and
technological innovation. It ranks second in the world in terms of
total R&D investment. A total of 679 Chinese companies were
listed among the world's top 2,500 R&D investors last year.
Technological innovation has enhanced China's production efficiency and forged more
comparative advantages. In recent years, China's traditional top three products, or the
"old three" -- mobile phones, computers and home appliances, and
three major tech-intensive green products, or the "new three" --
new energy vehicles (NEVs), lithium-ion batteries and photovoltaic
products, have gained widespread popularity in the global market.
This success is attributed to the continuous technological
innovation and efficiency improvements in the extensive and
specialized industries in China,
along with the unwavering commitment to excellence by Chinese
entrepreneurs.
It is particularly important to see that China is the only country in the world that
possesses all the industrial categories in the United Nations
industrial classification. By harnessing the well-established
industrial ecosystem and leveraging market dynamics, China can quickly transform technological
innovation achievements into high-quality production capacity.
A Bloomberg article said that the global energy transition is
largely attributed to China's
provision of low-cost and clean products.
China is embracing the new
round of sci-tech revolution and industrial transformation
worldwide and has no intention of criticizing or suppressing other
countries that are leading in areas such as artificial
intelligence, commercial aerospace, and low-orbit satellites.
Instead, China is genuinely
committed to learning from others with an aim to promote scientific
and technological development through mutual learning and
exchanges.
Similarly, developed countries should embrace China's technological advancements in areas
like new energy with fairness and openness, keeping in mind the
benefits of all humanity.
A large portion of China's
production capacity is attributed to multinationals.
Foreign-invested enterprises have played a significant role in
the growth of China's
manufacturing. As China becomes
more integrated into the global economy, many foreign enterprises
have chosen China as their primary
production base, producing goods for sale on a global scale. Among
them are many American companies.
For instance, the remarkable success of Apple as the second most
profitable and highest-valued company in the world can be largely
credited to the dedicated Chinese workers and efficient Chinese
enterprises along its supply chain. Apple has announced to expand
its R&D labs in China to
better support its production line.
Tesla produced over 1.84 million new energy vehicles last year,
with half of them being manufactured in its Shanghai Gigafactory.
Tesla's exports from China account
for nearly 30 percent of Chinese exports of the NEVs.
Multinationals often follow a typical approach: making decisions
at headquarters, manufacturing products in China, distributing them in global markets
including China, and repatriating
the profits generated to their home countries. Such business model
can lead to win-win outcomes for all stakeholders.
By launching more important projects in China in the coming future, particularly in
industries such as chemistry and the NEVs, multinationals are set
to see more improvements in their competitiveness and production
capacity.
The growth of China's
production capacity is credited to the combined efforts of an
efficient market and a proactive government.
Throughout the history of industrial development in developed
countries, successful industrial upgrading relied on both market
dynamics and government strategies to guide and support
industries.
For instance, the rapid economic growth of countries like
Japan, Germany, and South
Korea after World War II was largely a result of government
assistance for key industries. Industrial policies have been a
longstanding practice in the United
States, with the CHIPS and Science Act alone providing over
$52 billion in subsidies.
Since the reform and opening up, China has drawn lessons from developed
countries and used strong domestic demand to drive economic growth.
By directing the allocation of resources through industrial
planning, China has been actively
developing a modern industrial system.
Since the accession to the World Trade Organization,
China has consistently complied
with the subsidy-related rules and developed its production
capacity within a market economy environment.
China's industrial policies
never violate market principles. China does not seek to exclude competition
with other countries or unreasonably favor its own industries.
Instead, China aims to
continuously improve marketization levels and adopt tailored
industrial policies that suit local conditions. This approach
allows for orderly competition among industries, ultimately
achieving an equilibrium between supply and demand.
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