Path Selection for the Upgrading of the "World's Factory"

                               The growth rate of industrial added value in the past three years.

Path Selection for the Upgrading of China's Manufacturing Industry

1.Outlook for 2025

Looking ahead to 2025, the domestic demand of China's manufacturing industry is expected to improve, yet there remains great uncertainty regarding external demand, and the export momentum may wane.

(1) Domestic Demand:

Policy support continues to send out positive signals. For instance, the implementation of the "trade-in" policy has driven up the year-on-year growth rate of total retail sales of social consumer goods in September and October, demonstrating the remarkable pulling effect of targeted consumption subsidy policies on short-term consumption. Additionally, measures such as reducing the interest rates of existing mortgage loans and stabilizing the real estate market aim to improve residents' balance sheets in the long term and further enhance their consumption capabilities.

(2) External Demand:

With Donald Trump's re-election as the President of the United States, the uncertainty of the international trade environment has intensified, which may have an impact on China's exports. Meanwhile, some countries' adoption of trade remedy measures against Chinese goods will also weaken the export driving force. Against the backdrop of a possible decline in external demand, policy support becomes crucial for boosting domestic demand and stabilizing economic growth.

1.From “Expansion” Driven to “Upgrading” Driven

Under the dual pressures of the internal and external environments, China's manufacturing industry stands at a critical crossroads in the transition from "high growth" to "high quality" development. In the future, both value-added and fixed asset investment will gradually shift from being driven by "expansion" to being driven by "upgrading". Multi-dimensional transformation can be carried out from the following four aspects:

(1) Green Manufacturing and Sustainable Development

China has already established a global leading position in the field of green manufacturing. However, further investment is needed in the future to increase the added value of products and market bargaining power:

- Photovoltaic Industry: Through technological innovation and industrial upgrading, improve the conversion efficiency of photovoltaic modules and reduce costs to consolidate the industry's advantages.

- Electric Vehicle Industry: Strengthen the research and development of battery technologies, improve the charging infrastructure network, and enhance endurance and usage convenience.

(2) Industrial Structure Adjustment and Integration

Optimizing the industrial structure is the core of improving resource utilization efficiency and profitability:

- Technological Innovation: Promote enterprises to improve product quality and added value and accelerate the development of high-end manufacturing.

- Merger and Reorganization: Through market-oriented means, optimize the capacity layout of overcapacity industries (such as Steel), reduce cutthroat competition, and achieve economies of scale.

(3) Domestic Demand Driven and Service Industry Enhancement

Domestic demand is an important pillar for stabilizing economic growth and needs to be strengthened through the following measures:

- Social Security Reform: Improve the social security system, increase residents' incomes, and enhance consumption confidence.

- Service Industry Collaboration: Promote the liberalization and innovation of the service industry, and develop in coordination with the manufacturing industry to strengthen the domestic demand driving force.

(4) Internationalization and Diversified Export Strategies

In the complex and volatile external environment, China's manufacturing industry needs to deepen its global layout:

- Expansion into Emerging Markets: Through the Belt and Road Initiative, deepen economic and trade cooperation and explore markets in developing countries.

- Participation in Trade Rules: Actively promote the formulation and reform of global trade rules, safeguard its own interests, and drive trade liberalization.

- Diversification of Export Markets: Reduce dependence on a single market, diversify export strategies to disperse risks, and enhance global influence.