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Industry of China

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A 50 MW molten-salt power tower in Hami, Xinjiang, China

The industrial sector comprised 38.3% of the gross domestic product (GDP) of China in 2023.[1] China is the world's leading manufacturer of chemical fertilizers, cement and steel. Prior to 1978, most output was produced by state-owned enterprises. As a result of the economic reforms that followed, there was a significant increase in production by enterprises sponsored by local governments, especially townships and villages, and, increasingly, by private entrepreneurs and foreign investors, but by 1990 the state sector accounted for about 70 percent of output. By 2002 the share in gross industrial output by state-owned and state-holding industries had decreased with the state-run enterprises themselves accounting for 46 percent of China's industrial output. In November, 2012 the State Council mandated a "social risk assessment" for all major industrial projects. This requirement followed mass public protests in some locations for planned projects or expansions.[2]

History

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Main articles: Industrial history of China and industrialization of China

Industry and construction account for about 48% of China's GDP. China ranks first worldwide in industrial output. Major industries include mining and ore processing; iron and steel; aluminium; coal; machinery; armaments; textiles and apparel; petroleum; cement; chemical; fertilizers; food processing; automobiles and other transportation equipment including rail cars and locomotives, ships, and aircraft; consumer products including footwear, toys, and electronics; telecommunications and information technology. China has become a preferred destination for the relocation of global manufacturing facilities. Its strength as an export platform has contributed to incomes and employment in China. The state-owned sector still accounts for about 40% of GDP. In recent years, authorities have been giving greater attention to the management of state assets—both in the financial market as well as among state-owned-enterprises—and progress has been noteworthy.

Since the founding of the People's Republic, industrial development has been given considerable attention. Article 35 of the 1949 Common Program adopted by the Chinese People's Political Consultative Conference emphasized the development of heavy industry, such as mining, iron and steel, power, machinery, electrical industry, and the chemical industry "in order to build a foundation for the industrialization of the nation."[3]: 80–81 

During the Third Five-Year Plan period, the Chinese government embarked on the Third Front campaign to develop industrial and military facilities in the country's interior in preparation for defending against the risk of invasion by the Soviet Union or the United States.[4]: 41–44  Through its distribution of infrastructure, industry, and human capital around the country, the Third Front created favorable conditions for subsequent market development and private enterprise.[4]: 177 

Among the various industrial branches the machine-building and metallurgical industries have received the highest priority. These two areas now account for about 20–30 percent of the total gross value of industrial output. In these, as in most other areas of industry, however, innovation has generally suffered at the hands of a system that has rewarded increases in gross output rather than improvements in variety, sophistication and quality. China, therefore, still imports significant quantities of specialized steels. Overall industrial output has grown at an average rate of more than 10 percent per year, having surpassed all other sectors in economic growth and degree of modernization. Industrial output growth 1978–2006 Some heavy industries and products deemed to be of national strategic importance remain state-owned, but an increasing proportion of lighter and consumer-oriented manufacturing firms are privately held or are private-state joint ventures.

Beginning in 2010 and continuing through at least 2023, China has produced more industrial goods per year than any other country.[5]: 1  Since 2010, it has had the world's largest construction market.[6]: 112 

Structure

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Since the 1950s, the trend away from the agricultural sector toward industrialisation has been dramatic, and is a result of both policy changes and free market mechanisms. During the 1950s and 1960s, heavy industry received most attention and consequently grew twice as rapidly as agriculture. After the reforms of 1978, more attention to the agricultural sector as well as a move away from heavy industry toward light resulted in agricultural output almost doubling with only marginal increases for industry.

Before 1978, state-owned and collectively owned enterprises represented 77.6 percent and 22.4 percent respectively of China's exclusively public-ownership economy. The policy of reform and opening-up has given extensive scope to the common development of various economic sectors. Individual and private industrial enterprises and enterprises have mushroomed with investment from outside mainland China.

Domestically, modernisation and economic growth has been the focus of the reformist policies introduced by Deng Xiaoping, and in attempting to achieve this, the leadership has implemented the Four Modernizations Program that lays special emphasis on the fields of agriculture, industry

In the countryside, the "responsibility system" has been implemented and basically represents a return to family farming. Under this system, families lease land for a period of up to thirty years, and must agree to supply the state an agreed quota of grain or industrial crops at a fixed low cost in return. The remaining surplus can either be sold to the state or on the free market. As a result, peasants have been increasing their agricultural output in response to these incentives.

Together with the responsibility system, there have also been a number of reforms relating to rural businesses—especially in the spheres of commerce and manufacturing. The increase in personal income brought about through the responsibility system has led to a burgeoning of small-scale enterprises that remain completely in private hands.

Reform of state-owned enterprises has always been the key link of China's economic restructuring. The Chinese government has made various attempts to solve the problem of chronic extensive losses in this sector and by now almost every state-owned enterprise has adopted the company system. After being transformed into joint stock companies, the economic benefit of the state-owned enterprises increased steadily and their overall strength and quality were remarkably enhanced, gaining continuously in their control, influence and lead in the whole national economy.

The role of free market forces has also been instrumental in altering China's sectoral make-up. After 1979, the forces of supply and demand meant that consumers could play a greater role in determining which crops would be planted. This had the effect of making more profitable the planting of such crops as fruit, vegetables and tea. As a consequence, however, traditional grain crops have suffered, as farmers prefer to plant the more profitable cash crops.

Increases in light industrial production and more profitable crops brought about by the loosening of market controls had not always been enough to satisfy consumer demand, which in turn led to inflation. Rather than increased demand being met with increased supply, the manufacturing sector and economic infrastructure were still too underdeveloped to supply a population of over one billion people with the commodities they wanted or needed. Instead, a 'dual track' pricing system arose which had promoted arbitrage between official and free-market prices for the same commodities.

Inflation and the unavailability of consumer goods had made some commodities too expensive for ordinary Chinese workers, as well as resulting in a general decline in living standards. Another factor arising from inflation in China had been corruption among the higher echelons of the CCP. Managers of factories in regulated industries—usually high-level Party cadres—have been selling factory produce on the free market at grossly inflated prices. Inflation and corruption had become so embedded in the system by 1988, that the leadership was forced to take some drastic economic measures.

In response to the general economic malaise, Prime Minister Li Peng adopted several austerity measures in the middle of 1988. The primary goal of these measures was to reduce economic growth and included such measures as limiting joint ventures, curtailing capital investment, tightening fiscal and monetary controls, reimposing centralised control on local construction projects and cuts in capital investment.

China's eighth Five Year Plan (1991–1995) reflected the goals of slowing the economy down to a manageable level after the excesses of the late 1980s. The growth rate of GNP was planned to average 6% per annum, and government investment to be drawn away from national construction programs towards agriculture, transportation and communications.

However, the national economy also showed similar signs of stagnation. Although eighteen months of austerity measures had lowered inflation to 2.1%, after eighteen months of rising unemployment, stagnation of industrial output and a breakdown of the Chinese financial system because of debt defaults, the government was forced to loosen the economic screws in the mid-1990s.

Increased investment into capital construction programs and Township and Village Enterprises (TVEs) was the government's solution to reviving the economy. However, by mid-1991 signs re-emerged that the economy was about to overheat once again. Rises in industrial production within TVEs of 32% for the first half of 1991, refusal to heed calls for curbs on investment capital construction in the provinces as well as the re-emergence of double-digit inflation. The rapid growth of early 1991 indicated that the government was still going to have to struggle further with enforcing its economic policies.

The national economy had been characterised by a large share of industry—standing at 61.2% of total GDP in 1990—with a smaller share of 24.4% devoted to agriculture and a much smaller service sector constituting only 14.4% of GDP. Such a constitution of GDP was a reflection of the Soviet influence of a planned economy since the 1950s. The dominance of the industrial sector in the PRC's GDP constitution has not always been the case however, and it has been largely through governmental intervention that this evolution took place.

In 2004, of the industrial added value created by all state-owned industrial enterprises and non-state industrial enterprises with annual turnover exceeding five million yuan, state-owned and state stock-holding enterprises accounted for 42.4 percent, collectively owned enterprises 5.3 percent, the rest taken up by other non-public enterprises, including enterprises with investment from outside mainland China, and individual and private enterprises. The result is a dynamic juxtaposition of diversified economic elements.

In 2004, of Chinese enterprises ranking in the world's top 500, 14 enterprises of China's mainland were all state-owned. Of China's own top 500, 74 percent (370) were state-owned and state stock-holding enterprises, with assets of 27, 370 billion yuan and realizing profit of 266.3 billion yuan, representing 96.96 percent and 84.09 percent respectively of the top 500 corresponding values. Small and medium-sized enterprises and non-public enterprises have become China's main job creators. Private enterprises alone provided 50 percent of employment of the entire society.

Industrial output

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China has achieved a rapid increase in the gross value of industrial output (used before China switched to GNP accounting in 1986), which, according to official Chinese statistics, rose by 13.3% annually between 1950 and 1979. The greatest sustained surge in growth occurred during the first decade, with the rate averaging 22% annually during 1949–60.[7] During 1961–74, the yearly growth rate fell to about 6%, partly as a result of the disruptions brought on by the collapse of the Great Leap Forward (which accompanied the withdrawal of Soviet technicians in mid-1960) and of work stoppages and transportation disruptions during the Cultural Revolution. Growth averaged 10% from 1970 to 1980 and 10.1% from 1979 to 1985. Major policy reforms of 1984 further accelerated the pace of industrial growth, which reached 20.8% by 1988. After a brief retrenchment period in 1989–90 as government policies prioritized inflation control over other concerns, expansion of the country's industrial sector resumed apace, exceeding 20% in 1992 and 18% in 1994. Industrial output was officially up 13.4% in 1995, with state enterprises contributing the majority.

While approximately 50% of total industrial output still derives from the state-owned factories, a notable feature of China's recent industrial history has been the dynamic growth of the collectively owned rural township and village enterprise as well as private and foreign joint-venture sectors. Also apparent has been the spatial unevenness of recent industrial development, with growth concentrated mainly in Shanghai, the traditional hub of China's industrial activity, and, increasingly, a number of new economic centers along the southern coast. The coastal provinces of Jiangsu, Guangdong, Shandong, Shanghai and Zhejiang provinces together account for close to 33% of the country's total industrial output and most of its merchandise exports. One key factor in this industrial geography has been the government's establishment of several Special Economic Zones in Guangdong, Fujian and Hainan provinces, and its designation of over 14 "open coastal cities" where foreign investment in export-oriented industries was actively encouraged during the 1980s.

China's cotton textile industry is the largest in the world, producing yarn, cloth, woolen piece goods, knitting wool, silk, jute bags, and synthetic fibers. Labor-intensive light industries played a prominent role in the industrial boom of the late 1980s and early 1990s, accounting for 49% of total industrial output, but heavy industry and high technology took over in the late 1990s. In addition to garments and textiles, output from light industry includes footwear, toys, food processing, and consumer electronics. Heavy industries include iron and steel, coal, machine building, armaments, petroleum, cement, chemical fertilizers, and autos. High technology industries produce high-speed computers, 600 types of semiconductors, specialized electronic measuring instruments, and telecommunications equipment.

Since 1962, industry has been providing agriculture with farm machines, chemical fertilizers, insecticides, means of transportation, power, building materials, and other essential commodities. Handicraft cooperatives also have been busy making hand-operated or animal-drawn implements. Production of a variety of industrial goods has expanded, increasingly in order to supply the country's own expanding industrial base. In addition to fertilizers, the chemicals industry produces calcium carbide, ethylene, and plastics. Since 1963, great emphasis has been placed on the manufacture of transportation equipment, and China now produces varied lines of passenger cars, trucks, buses, and bicycles. In 1995, output included 1,452,697 motor vehicles (more than double the 1991 figure). Output for 2009 was over 13.7 million units. The industry underwent a major overhaul in the late 1990s in order to stimulate efficiency and production. Large numbers of joint ventures with foreign firms helped introduce new technology and management to the industry.

Machinery manufacturing

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China's machinery manufacturing industry can provide complete sets of large advanced equipment, including large gas turbines, large pump storage groups, and nuclear power sets, ultra-high voltage direct-current transmission and transformer equipment, complete sets of large metallurgical, fertilizer and petro-chemical equipment, urban light rail transport equipment, and new papermaking and textile machinery. Machinery and transportation equipment have been the mainstay products of Chinese exports, as China's leading export sector for successive 11 years from 1996 to 2006. In 2006, the export value of machinery and transportation equipment reached 425 billion US dollars, 28.3 percent more than 2005.[8]

Energy industry

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The world's largest hydropower plant, the Three Gorges Dam, Yangtze River, China
This paragraph is an excerpt from Energy policy of China.[edit]
China is both the world's largest energy consumer and the largest industrial country, and ensuring adequate energy supply to sustain economic growth has been a core concern of the Chinese Government since the founding of the People's Republic of China in 1949.[9] Since the country's industrialization in the 1960s, China is currently the world's largest emitter of greenhouse gases, and coal in China is a major cause of global warming.[10] China is also the world's largest renewable energy producer (see this article), and the largest producer of hydroelectricity, solar power and wind power in the world. The energy policy of China is connected to its industrial policy, where the goals of China's industrial production dictate its energy demand managements.[11]   

Automotive

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Chang'an avenue in Beijing
This paragraph is an excerpt from Automotive industry in China.[edit]

The automotive industry in mainland China has been the largest in the world measured by automobile unit production since 2008. As of 2024, mainland China is also the world's largest automobile market both in terms of sales and ownership.

The Chinese automotive industry has seen significant developments and transformations over the years. While the period from 1949 to 1980 witnessed slow progress in the industry due to restricted competition and political instability during the Cultural Revolution, the landscape started to shift during the Chinese economic reform period, especially after the government's seventh five-year plan prioritized the domestic automobile manufacturing sector.

Foreign investment and joint ventures played a crucial role in attracting foreign technology and capital into China. American Motors Corporation (AMC) and Volkswagen were among the early entrants, signing long-term contracts to produce vehicles in China. This led to the gradual localization of automotive components, and the strengthening of key local players such as SAIC, FAW, Dongfeng, and Changan, collectively known as the "Big Four".

The entry of China into the World Trade Organization (WTO) in 2001 further accelerated the growth of the automotive industry. Tariff reductions and increased competition led to a surge in car sales, with China becoming the largest auto producer globally in 2008.[12][13] Strategic initiatives and industrial policy such as Made in China 2025 specifically prioritized electric vehicle manufacturing.

In the 2020s, the automotive industry in mainland China has experienced a rise in market dominance by domestic manufacturers, with a growing focus on areas such as electric vehicle technology and advanced assisted driving systems. The domestic market size, technology, and supply chains have also led foreign carmakers to seek further partnerships with Chinese manufacturers. In 2023, China overtook Japan and became the world largest car exporter.[14] However, the industry also faced heightened scrutiny, increased tariffs and other restrictions from other countries and trade blocs, especially in the area of electric vehicles due to allegations of significant state subsidies and Chinese industrial overcapacity.[15][16]

Steel

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This paragraph is an excerpt from Steel industry in China.[edit]
The steel industry in China has been driven by rapid modernisation of its economy, construction, infrastructure and manufacturing industries.[17]

Mining industry of China

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This section is an excerpt from Mining industry of China.[edit]

China's mineral resources are diverse and rich. As of at least 2022, more than 200 types of minerals are actively explored or mined in China. These resources are widely but not evenly distributed throughout the country. Taken as a whole, China's economy and exports do not rely on the mining industry, but the industry is critical to various subnational Chinese governments.

Mining is extensively regulated in China and involves numerous regulatory bodies. The Chinese state owns all mineral rights, regardless of the ownership of the land on which the minerals are located. Mining rights can be obtained upon government approval, and payment of mining and prospecting fees.

During the Mao Zedong era, mineral exploration and mining was limited to state-owned enterprises and collectively-owned enterprises and private exploration of mineral resources was largely prohibited. The industry was opened to private enterprises during the Chinese economic reform in the 1980s and became increasingly marketized in the 1990s. In the mid-2000s, the Chinese government sought to consolidate the industry due to concerns about underutilization of resources, workplace safety, and environmental harm. During that period, state-owned enterprises purchased smaller privately-owned mines. China's mining industry grew substantially and the period from the early 2000s to 2012 is often referred to as a "golden decade" in the mining industry.

Petroleum industry of China

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This section is an excerpt from Petroleum industry in China.[edit]
Chinese oil production 1960–2015
The impact of the petroleum industry has been increasing globally as the People's Republic of China ranks seventh for oil production and second in crude oil consumption in the world.[18][19] China became the world's largest oil importer in 2013.[20]

See also

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References

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  1. ^ "National Data". National Bureau of Statistics of China. March 1, 2022. Archived from the original on August 11, 2021. Retrieved March 23, 2022.
  2. ^ Keith Bradsher (November 12, 2012). "'Social Risk' Test Ordered by China for huge Projects". The New York Times. Retrieved November 13, 2012.
  3. ^ Harrell, Stevan (2023). An Ecological History of Modern China. Seattle: University of Washington Press. ISBN 9780295751719.
  4. ^ a b Marquis, Christopher; Qiao, Kunyuan (2022). Mao and Markets: The Communist Roots of Chinese Enterprise. New Haven: Yale University Press. doi:10.2307/j.ctv3006z6k. ISBN 978-0-300-26883-6. JSTOR j.ctv3006z6k. OCLC 1348572572. S2CID 253067190.
  5. ^ Garlick, Jeremy (2024). Advantage China: Agent of Change in an Era of Global Disruption. Bloomsbury Academic. ISBN 978-1-350-25231-8.
  6. ^ Curtis, Simon; Klaus, Ian (2024). The Belt and Road City: Geopolitics, Urbanization, and China's Search for a New International Order. New Haven and London: Yale University Press. doi:10.2307/jj.11589102. ISBN 9780300266900. JSTOR jj.11589102.
  7. ^ National Bureau of Statistics of China.
  8. ^ China Facts and Figures 2007: Machinery Manufacturing and Automotive Industries.
  9. ^ Andrews-Speed, Philip (November 2014). "China's Energy Policymaking Processes and Their Consequences". The National Bureau of Asian Research Energy Security Report. Retrieved December 5, 2014.
  10. ^ McGrath, Matt (November 20, 2019). "China coal surge threatens Paris climate targets". Retrieved December 9, 2019.
  11. ^ Rosen, Daniel; Houser, Trevor (May 2007). "China Energy A Guide for the Perplexed" (PDF). piie.com. Retrieved April 25, 2020.
  12. ^ Marr, Kendra (May 18, 2009). "China emerges as world's auto epicenter". NBC News. Archived from the original on May 16, 2024. Retrieved May 16, 2024.
  13. ^ "Motoring ahead". The Economist. October 23, 2009. ISSN 0013-0613. Archived from the original on May 26, 2024. Retrieved May 16, 2024.
  14. ^ Hoskins, Peter (May 18, 2023). "China overtakes Japan as world's top car exporter". BBC News. Archived from the original on November 14, 2023. Retrieved August 3, 2023.
  15. ^ "China's EV overcapacity may set it on a political collision course with the US". South China Morning Post. May 14, 2024. Archived from the original on May 22, 2024. Retrieved May 22, 2024.
  16. ^ "EU companies warn China on EV overcapacity". Financial Times. Archived from the original on May 22, 2024. Retrieved May 22, 2024.
  17. ^ "China Steel industry". Archived from the original on April 10, 2011. Retrieved June 27, 2010.
  18. ^ "IEA Atlas of Energy". International Energy Agency. May 2018. Archived from the original on January 10, 2021. Retrieved January 13, 2021.
  19. ^ "China overtakes US as the biggest importer of oil". BBC News. October 10, 2013. Archived from the original on October 10, 2013. Retrieved October 11, 2013.
  20. ^ "China overtakes US as the biggest importer of oil". BBC News. October 10, 2013. Archived from the original on October 10, 2013. Retrieved October 11, 2013.
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