Chinese cities competing to build manufacturing clusters
April 20, 2021 Category Macro-economy, Weekly
A friendly competition is unfolding among major Chinese cities for building up advanced manufacturing clusters. This refers to a large number of companies and institutions in proximity that carry out mutual cooperation and exchanges. It is considered to be an advanced form of industrial division of labor and is part of China’s push to pursue high-quality development of manufacturing, experts said. China’s 14th Five Year Plan (2021-25) highlights efforts to cultivate advanced manufacturing clusters and to promote the development of key industries including integrated circuits, aerospace, marine engineering equipment, robots, advanced rail transit equipment, advanced power equipment, engineering machinery and medical equipment. Cheng Nan, Director of the Planning Institute at the China Center for Information Industry Development, a Beijing-based think tank, said that previously a large number of industrial parks relied on transportation and geographical convenience, abundant resources, policy dividends and other factors to bring about cost advantages, which have attracted enterprises to concentrate on specific areas. But such approaches are just an expansion of scale.
“The advanced manufacturing clusters, however, are based not just on physical proximity among industrial enterprises, but on deeper cooperation among companies to promote the development of local economies,” Cheng said. The Ministry of Industry and Information Technology (MIIT) recently published a list of advanced manufacturing clusters after fierce competition among cities across the nation. A total of 21 cities in nine provinces and municipalities made it onto the list, which is known as the “national manufacturing team”, with some cities hosting more than one site. Jiangsu and Guangdong, two provinces traditionally known for their manufacturing strength, have six industrial clusters each on the list, followed by Zhejiang province with three clusters.
Experts said the competition is designed to select leaders in different industries to build advanced manufacturing clusters and participate in global competition and cooperation on behalf of China to become “world champions” in their respective areas. Cheng said the competition considers both qualitative and quantitative factors and the list is a result of a comprehensive evaluation.
Cities across China have made major efforts for the competition. As early as 2019, Changsha, capital of Hunan province, established a special working group to promote the development of a construction machinery industry cluster in the city. The working group brought in leading construction machinery companies such as Sany Group, Zoomlion and China Railway Construction Heavy Industry and they worked together to achieve breakthroughs in 22 key technologies such as high-performance engines. Their total research and development (R&D) investment increased from CNY5.26 billion in 2018 to CNY8.25 billion in 2019. In the end, Changsha was on the “national manufacturing team” list, but no manufacturing clusters in the Beijing-Tianjin-Hebei region and northeast China made the list.
He Ying, Director of the Institute of Technology and Standards of the China Center for Information Industry Development, said more efforts are needed in North China to build an innovation-friendly environment. Beijing ranks third in its innovation capacity in China, but neighboring Tianjin and Hebei province are further behind, which kept the Beijing-Tianjin-Hebei region off the list, He said. The Planning Department at MIIT plans to further improve top-level design for the development of advanced manufacturing clusters, accelerate the strengthening of the industrial chains, optimize the layout of manufacturing innovation centers and cultivate a group of global competitively large enterprises and specialized small and medium-sized enterprises. Nanjing, capital of Jiangsu province, aims to increase the output value of its new smart power grid equipment cluster to more than CNY400 billion by 2025. Zhuzhou, a city known for its railway equipment manufacturing in Hunan province, proposed to build a world-class advanced rail equipment cluster with an annual output of more than CNY200 billion by 2025. A world-class intelligent equipment industrial cluster with an output value of more than CNY1 trillion by 2025 will be developed in the Guangzhou-Shenzhen-Foshan-Dongguan area. The Shenzhen municipal government also said it will support the construction of key projects for the Shenzhen-Guangzhou high-end medical device cluster.
Building clusters will help increase the proportion of the manufacturing industry in China’s GDP, which has gradually declined since 2015. Currently, manufacturing output only accounts for about 27% of China’s GDP, the China Daily reports.
- KURT VANDEPUTTE (UMICORE) APPOINTED CHAIRMAN OF THE BOARD OF THE FLANDERS-CHINA CHAMBER OF COMMERCE (FCCC)
- Webinar: “Knowing Your Chinese Partner” – May 26, 2021, 10 am – 12 am
- EMA starts rolling review of CoronaVac, WHO approves Sinopharm vaccine for emergency use
- The Global Times warns not to politicize the Comprehensive Agreement on Investment (CAI)
- Hainan to become biggest duty-free market in the world