China’s manufacturing sector is facing challenges amidst global geopolitics and competition. However, the sector is countering these headwinds with a robust supply chain framework and policies that foster industrial advancement.
Over the past year, the impact of geopolitics on the global supply chain has become increasingly evident. The re-shoring of manufacturing to developed countries and rapid economic development in countries and regions like Mexico and Southeast Asia have intensified competition among nations to attract manufacturing production lines to their own territories.
Despite the shift of some labor-intensive goods production from China to other countries, the country’s deep integration into the global value chain has led many companies to return or continue to import a significant amount of intermediate products from China.
Song Xiquan, chairman of Yantai Tayho Advanced Materials Co., Ltd., emphasized that the shift in parts of the industrial chain does not indicate an overall trend. He highlighted the transformation and upgrading of China’s industries, citing the example of the textile industry where overall added value is increasing.
In 2023, China’s high-performance fiber production capacity accounted for over a third of the world’s total, with a 14.4 percent year-on-year increase in export volume. Tesla’s Shanghai gigafactory has achieved a component localization rate of over 95 percent, signaling a ‘win-win’ situation for both Tesla and its Chinese suppliers, according to Song Gang, the manufacturing vice president of Tesla Inc.
China now boasts all the industrial categories in the United Nations industrial classification and has nurtured 12,000 ‘little giant’ firms, over 90 percent of which are suppliers to well-known large enterprises both domestically and globally. These ‘little giant’ firms represent the novel elites of small and medium-sized enterprises, specializing in niche markets, and showcasing cutting-edge technologies and great potential.
Official statistics revealed that China leads the world in terms of output of more than 40 percent of 500 major industrial products. The country’s personal computers, smartphones, and solar panels contribute over half of the global production. In 2023, China’s total value-added industrial production approached 40 trillion yuan (about 5.57 trillion U.S. dollars), accounting for 31.7 percent of its GDP. The scale of its manufacturing industry has ranked first in the world for 14 consecutive years, according to the Ministry of Industry and Information Technology.
