Research Series on the Chinese Dream and China’s Development Path Qunhui Huang China’s Industrialization Process Research Series on the Chinese Dream and China’s Development Path Project Director Xie Shouguang, President, Social Sciences Academic Press Series editors Li Yang, Vice president, Chinese Academy of Social Sciences, Beijing, China Li Peilin, Vice president, Chinese Academy of Social Sciences, Beijing, China Academic Advisors Cai Fang, Gao Peiyong, Li Lin, Li Qiang, Ma Huaide, Pan Jiahua, Pei Changhong, Qi Ye, Wang Lei, Wang Ming, Zhang Yuyan, Zheng Yongnian, Zhou Hong Drawing on a large body of empirical studies done over the last two decades, the Research Series on the Chinese Dream and China’s Development Path seeks to provide its readers with in-depth analyses of the past and present, and forecasts for the future course of China’s development Thanks to the adoption of Socialism with Chinese characteristics, and the implementation of comprehensive reform and opening, China has made tremendous achievements in areas such as political reform, economic development, and social construction, and is making great strides towards the realization of the Chinese dream of national rejuvenation In addition to presenting a detailed account of many of these achievements, the authors also discuss what lessons other countries can learn from China’s experience This series will be an invaluable companion to every researcher who is trying to gain a deeper understanding of the development model, path and experience unique to China More information about this series at http://www.springer.com/series/13571 Qunhui Huang China’s Industrialization Process 123 Qunhui Huang Institute of Industrial Economics Chinese Academy of Social Sciences Beijing China ISSN 2363-6866 ISSN 2363-6874 (electronic) Research Series on the Chinese Dream and China’s Development Path ISBN 978-981-10-3664-4 ISBN 978-981-10-3665-1 (eBook) https://doi.org/10.1007/978-981-10-3665-1 Jointly published with Social Sciences Academic Press The print edition is not for sale in China Mainland Customers from China Mainland please order the print book from: Social Sciences Academic Press Library of Congress Control Number: 2017961749 © Social Sciences Academic Press and Springer Nature Singapore Pte Ltd 2018 This work is subject to copyright All rights are reserved by the Publishers, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publishers, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publishers nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publishers remains neutral with regard to jurisdictional claims in published maps and institutional affiliations Printed on acid-free paper This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd part of Springer Nature The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore Series Preface Since China’s reform and opening began in 1978, the country has come a long way on the path of Socialism with Chinese Characteristics, under the leadership of the Communist Party of China Over thirty years of reform efforts and sustained spectacular economic growth have turned China into the world’s second largest economy and wrought many profound changes in the Chinese society These historically significant developments have been garnering increasing attention from scholars, governments, and the general public alike around the world since the 1990s, when the newest wave of China studies began to gather steam Some of the hottest topics have included the so-called “China miracle”, “Chinese phenomenon”, “Chinese experience”, “Chinese path”, and the “Chinese model” Homegrown researchers have soon followed suit Already hugely productive, this vibrant field is putting out a large number of books each year, with Social Sciences Academic Press alone having published hundreds of titles on a wide range of subjects Because most of these books have been written and published in Chinese, however, readership has been limited outside China—even among many who study China—for whom English is still the lingua franca This language barrier has been an impediment to efforts by academia, business communities, and policy-makers in other countries to form a thorough understanding of contemporary China, of what is distinct about China’s past and present may mean not only for her future but also for the future of the world The need to remove such an impediment is both real and urgent, and the Research Series on the Chinese Dream and China’s Development Path is my answer to the call This series features some of the most notable achievements from the last 20 years by scholars in China in a variety of research topics related to reform and opening They include both theoretical explorations and empirical studies and cover economy, society, politics, law, culture, and ecology, the six areas in which reform and opening policies have had the deepest impact and farthest-reaching consequences for the country Authors for the series have also tried to articulate their visions of the “Chinese Dream” and how the country can realize it in these fields and beyond v vi Series Preface All of the editors and authors for the Research Series on the Chinese Dream and China’s Development Path are both longtime students of reform and opening and recognized authorities in their respective academic fields Their credentials and expertise lend credibility to these books, each of which having been subject to a rigorous peer review process for inclusion in the series As part of the Reform and Development Program under the State Administration of Press, Publication, Radio, Film and Television of the People’s Republic of China, the series is published by Springer, a Germany-based academic publisher of international repute, and distributed overseas I am confident that it will help fill a lacuna in studies of China in the era of reform and opening Xie Shouguang Acknowledgements After a relatively short gestation period, the Research Series on the Chinese Dream and China’s Development Path has started to bear fruits We have, first and foremost, the books’ authors and editors to thank for making this possible And it was the hard work by many people at Social Sciences Academic Press and Springer, the two collaborating publishers, that made it a reality We are deeply grateful to all of them Mr Xie Shouguang, president of Social Sciences Academic Press (SSAP), is the mastermind behind the project In addition to defining the key missions to be accomplished by it and setting down the basic parameters for the project’s execution, as the work has unfolded, Mr Xie has provided critical input pertaining to its every aspect and at every step of the way Thanks to the deft coordination by Ms Li Yanling, all the constantly moving parts of the project, especially those on the SSAP side, are securely held together, and as well synchronized as is feasible for a project of this scale Ms Gao Jing, unfailingly diligent and meticulous, makes sure every aspect of each Chinese manuscript meets the highest standards for both publishers, something of critical importance to all subsequent steps in the publishing process That high quality if also at times stylistically as well as technically challenging scholarly writing in Chinese has turned into decent, readable English that readers see on these pages is largely thanks to Ms Liang Fan, who oversees translator recruitment and translation quality control Ten other members of the SSAP staff have been intimately involved, primarily in the capacity of in-house editor, in the preparation of the Chinese manuscripts It is time-consuming work that requires attention to details, and each of them has done this and is continuing to this with superb skills They are, in alphabetical order: Mr Cai Jihui, Ms Liu Xiaojun, Mr Ren Wenwu, Ms Shi Xiaolin, Ms Song Yuehua, Mr Tong Genxing, Ms Wu Dan, Ms Yao Dongmei, Ms Yun Wei, and Ms Zhou Qiong In addition, Xie Shouguang and Li Yanling have also taken part in this work vii viii Acknowledgements Ms Wu Min is the SSAP in-house editor for the current volume Our appreciation is also owed to Ms Li Yan, Mr Chai Ning, Ms Wang Lei, and Ms Xu Yi from Springer’s Beijing Representative Office Their strong support for the SSAP team in various aspects of the project helped to make the latter’s work that much easier than it would have otherwise been The translation and draft polish process benefited greatly from the consistent and professional coordination service by Besteasy (Beijing) Translations Corporation We thank everyone involved for their hard work Last, but certainly not least, it must be mentioned that funding for this project comes from the Ministry of Finance of the People’s Republic of China Our profound gratitude, if we can be forgiven for a bit of apophasis, goes without saying Social Sciences Academic Press Springer Contents Introduction References China’s Industrialization Process: An Overview 2.1 Industrialization Process of PRC Before Reform and Opening Up 2.2 Industrialization Process Since Reform and Opening Up 2.3 China’s Achievements Through Industrialization 2.4 Basic Experience and Lessons from China’s Industrialization References 10 12 23 27 31 33 34 34 41 41 42 Progress Evaluation of China’s Industrialization 3.1 Evaluation Methods 3.1.1 Evaluation Method for Industrialization Level 3.1.2 Division Criteria for Different Regions 3.2 Evaluations Based on Individual Indicators 3.2.1 Evaluation Based on Per Capita GDP 3.2.2 Evaluation Based on Output Value Ratio of the Three Industries 3.2.3 Evaluation Based on Industrial Structure 3.2.4 Evaluation Based on Urbanization Rate 3.2.5 Evaluation Based on Proportion of Population Employed in First Industry 3.3 Comprehensive Evaluations References 46 48 48 51 53 57 Key Features of China’s 4.1 Rate 4.2 Regional Variations 4.3 Driving Force References Industrialization 59 60 67 71 79 ix 5.3 Industrial Development During the 13th Five-Year Plan Period 5.3.3 129 Adjustment of Industrial Development Policies During the 13th Five-Year Plan Period Under the background of establishing new international competition rules and deepening domestic reform, we will have to make due adjustments to our existing industrial polices from such aspects as policy targets, policy tools and policy effectiveness mechanism in line with the new environment and strategic deployments during the “13th Five-Year Plan” period We will help enhance the overall productivity of China’s industry and its international competitiveness through a more rational industrial policy system, more scientific industrial policies and more effective mechanism for the implementation of industrial policies Table 5.1 First, Focus of Scientific and Technological Polices Will Shift from Supporting Key Breakthroughs to Supporting Comprehensive Innovations At present, various technological support programs set up by China’s Ministry of Science and Technology, National Development and Reform Commission, Ministry of Industry and Information Technology and other relevant authorities apparently tend to prefer product innovation to process innovation, and technological innovation to technological diffusion This has been a main reason why China has a low capacity for industrialization of new technologies and a low efficiency for utilization of technological funds The process of industrial transformation and upgrading is not merely a process for making breakthroughs in technologies related to new products, but also a process in which follow-up breakthroughs will be made in new manufacturing process that fits in with technologies related to new products In allocating funds for technological transformation, we will not only try to apply as much as possible advanced manufacturing technologies and equipment, but also transform to the greatest extent advanced and applicable production technologies into industrial competitiveness through enhancing the skills of staff and improving the overall field management.38 Therefore, we have to revise and adjust the errors and deviations in China’s current industrial planning and industrial policies as soon as possible and accelerate the establishment of an industrial policy system that can help enhance the competitiveness of advanced manufacturing industry (1) Unveil China’s Modern Factory Construction Plans, and accelerate the cultivation of China’s “parent factory” We should organize technological, industrial and managerial experts to formulate and publish as soon as possible China’s Modern Factory Construction Plans, specifying competitive enterprises that possess advanced manufacturing prowess to accelerate the construction of China’s “parent factory” in the manufacturing industry (the term of “modern factory” may possibly be adopted) Using “modern factory” as a 38 He Junand Lyu Tie: Strategic Emerging Industries: From Policy Concepts to Theoretical Issues, Finance & Trade Economics, issue 5, 2012 130 Outlook for China’s Industrialization Table 5.1 Main contents for China’s industrial policy adjustment during “13th Five-Year Plan” period Policy contents Policies on R&D support Policies on technical transformation Policies on industrial organization Regional policies Open-up policies In the past Adjustments in 13th Five-Year Plan period Support fields Large-scale production and assembly Technological improvement Support mode Support fields Post support Subsidy for equipment purchase Support and service mode Financial support Key supportive targets Large enterprises Enterprise player Taking state-owned enterprises as industrial policy tools Economic size Complicated product integration, core components and parts based on multiple sciences, basic software Technological infrastructure construction Prior support “Parent factory” construction in large enterprises Process enhancement in small and medium enterprises Financial support + field management and skill enhancement services Enhancing transparency of evaluation process Large enterprises with breakthrough in cutting-edge technologies Start-up enterprises and high-tech small and medium enterprises Bringing into better play the role of state-owned enterprises in supplementing and reinforcing the market economy (strategic and public welfare) Capacity for sustainable growth Inter-regional competition subject Inter-regional competition mode Focus of policies on international direct investments Trade policy Twisted factor price Bringing in Expanding export Improving operational environment, and enhancing capacity for providing public services Going global, integrating global high-end factors Following on structural market, especially export to high-end market (continued) 5.3 Industrial Development During the 13th Five-Year Plan Period 131 Table 5.1 (continued) Policy contents Talent policy Policy focus Skill enhancement In the past Adjustments in 13th Five-Year Plan period Elite management talents and R&D talents General skill training mainly in vocational schools Elite management talents and R&D talents Engineers and high-skilled workers Lifelong learning system comprising “Vocational schools + research universities + enterprises + public service institutions” Source Huang Qunhui, Li Xiaohua, and He Jun: Directions for and Policies on Industrial Transformation and Upgrading during the “13th Five-Year Plan” period, p 26, Social Sciences Academic Press platform, we will speed up efforts to develop and apply advanced manufacturing technologies and tools such as artificial intelligence, digital manufacturing and industrial robots Only by extensively developing advanced manufacturing (we are referring to advanced manufacturing rather than advanced manufacturing industry), can we fundamentally cure the increasingly serious “cost disease” facing China’s manufacturing industry, and prepare beforehand for the problem of “large-scale relocation of manufacturing industry” China may face in the future (2) Effectively enhance the efficiency and transparency in the utilization of scientific and technological funds In term of the mode of utilization of technological funds, China currently adopts the mode of post support, which means R&D projects can largely get capital allowance from government in relatively mature stages In contrast, US, Japan, Germany and other developed industrial countries adopt more the mode of prior subsidy rather than post reward, thereby effectively helping subsidized enterprises to reduce innovation risks Their government authorities usually implement strict rules for capital utilization and project process evaluation, thereby ensuring the efficiency in the utilization of capital Moreover, developed industrial countries tend to pay more attention to the efficiency and transparency in the utilization of subsidy capital while keeping a watchful eye on the size of subsidy, thereby maximizing the effect of public funds in enhancing the innovation capacity and industrial competitiveness It is suggested that we should fully draw on the successful experience of these countries, and increase the size and proportion of R&D capital in prior support, meanwhile, increase the transparency in the utilization of technological funds and enhance the efficiency in the utilization of technological funds through social governance At present, the Ministry of Industry and Information Technology manages the funds for enterprise technological transformation, which are used for encouraging enterprises to upgrade existing production equipment and introducing new production equipment It is 132 Outlook for China’s Industrialization suggested that we can draw on the practice of “technical consultant” of the Japanese government and the practice of “management consultant” of Australia in supporting technological transformation We can set up a special management services expert team covering production management consultation and training, providing enterprises with guidance on production management and training ranging from quality management, field management and process optimization, and effectively improving the production and manufacturing level of China’s manufacturing enterprises (3) Speed up the construction of sharing technological institutions and scientific and technological infrastructure In the majority of fields, US, Japan, Germany, South Korea and other industrial powerhouses usually invest limited amount of supportive capital or funds directly to industrial development in either the middle, late stage of industrialization or the current period On the contrary, the industrial achievements of these countries are directly associated with their huge input of public resources into the construction of public supportive system and technological infrastructure It is suggested that we should draw on the experience of developed industrial countries, and rely upon high-quality overseas talents to build China’s Research Institute of Industrial Technologies to provide generic technical support to key manufacturing industry In the meanwhile, we will strengthen the construction of China’s advanced manufacturing technological and industrialization infrastructure, accelerate the establishment of China’s “Research Center for Advanced Manufacturing Industry” and expedite the construction of China’s technological infrastructure in high performance computing and engineering databases Second, the Focus of Organizational Policy Will Shift from Promoting Concentration to Cultivating Ecology For a long time, the objective of China’s industrial policy has been expanding enterprise size and increasing market concentration Such industrial organization policy has its rationality in a stage when industries need to converge to a few enterprises due to the formation of large-scale production capacity that can make full use of the economy of scale and scope and limited availability of financial and technological resources from the government However, the rapid dissemination of Internet-based emerging technological paradigm means that large enterprises are no longer the only carrier of industrial competitiveness First, the next generation of information technology as represented by cloud computing allows enterprises to outsource its information processing function more to third-party enterprises providing information services; additionally, thanks to rapid progress in data mining technologies and innovations in service modes, enterprises can still gain stronger data storage and computing capacity at fairly low costs even if they are geographically far from the small and micro enterprises providing information services In the meanwhile, emerging manufacturing technologies also make it more economical to operate on a small scale and in a decentralized manner For example, the development of personalized manufacturing and network-open community as represented by 3D printers will greatly expedite the development of extremely 5.3 Industrial Development During the 13th Five-Year Plan Period 133 decentralized organization mode such as micro-manufacturing and individual entrepreneurship with individuals and families as the unit Second, industrial organizational structure will become more oriented to networks and platforms The service-orientation of manufacturing industry and the integration of manufacturing technologies have made the demand-supply relationship between enterprises more open The same product or service of an enterprise may be supplied to totally different industries, instead of merely to different enterprises in one and the same industry Different enterprise chains are so interwoven that an open, multidimensional and complex network structure has been formed As a result, it will be quite difficult to tell and judge where are the core resources that might affect the long-term competitiveness of an industry It is not that a certain core technology or a certain enterprise determines the competitiveness of an industry, but that the quality of the whole system determines the vitality of an industry Under these circumstances, high-tech start-up enterprises and small and micro enterprises with unique technological advantages will become especially important On one hand, it is the technological capability of these enterprises that backs the technological advantages of large enterprises; on the other, and more importantly, it is the group of small and micro enterprises who maintains the dynamics of the entire technological innovation ecosystem through their ability to sustain technological diversity (1) Strengthen technological cooperation among domestic enterprises in strategic emerging industries For technologies that are still in the exploration stage and have large technological gap, we should concentrate our efforts to jointly tackle difficult issues For fields that already have technological infrastructure, we should seize the opportunities and accelerate the pace of engineering and industrialization In the past, we have largely followed a path of unbalanced development in our policies on science and technology Under the scientific policies, resources were converged to the few research universities and public research institutions while, under the technological policies, favor was given to the few enterprises which have solid foundation and preliminary global competitiveness In the past when there were relatively limited scientific and technological resources, the practice of cultivating very few scientific and technological elites can help China to make rapid breakthrough in the few key technological fields However, as innovation organizations become ecology-oriented, critical knowledge becomes decentralized and intellectual property competition gets “jungle-oriented”, such policy guidelines have become less adaptive to the technological demands for industrial development For instance, the gap between Chinese enterprises of major equipment and their foreign counterparts, to a large extent, is not the capacity for assembly technologies but the lack of the independent capacity for developing basic materials and control systems In fact, breakthroughs in basic materials and control systems cannot be achieved by an assembly enterprise, a material enterprise or a software enterprise alone In such a case, it has become especially important to diffuse the risks from making breakthroughs in cutting-edge technologies and allow different innovation players to complement their abilities Accordingly, 134 Outlook for China’s Industrialization the guidelines for industrial and technological policies should be shifted from cultivating scientific and technological elites to promoting cooperation among various innovation players First, we should strengthen the role of fundamental research in supporting emerging industries through industry-dominated cooperation between industrial enterprises, universities and research institutions For such cooperation, the focus of policy should not be continuing to impose increasingly strong commercialized incentives and industrialized research tasks onto scientific research activities, but be strengthening enterprises’ capacity for making strategic deployments and organizing projects in the field of cutting-edge technologies while improving the academic research mechanism and generic technology development and management mechanism for research universities and public research institutions Industry-dominated cooperation among industrial enterprises, universities and research institutions should not be reflected in the biasing of enterprises in allocating scientific and technological resources, but in enterprises’ capacity in choosing technological paths and managing complicated innovation projects involving cooperation among multiple entities (2) Roll out life-cycle technical support programs that better satisfy the requirements of high-tech startups and high-tech micro and small enterprises, the focus of policy and resources allocation should gradually shift from large enterprises to micro and small high-tech enterprises It is suggested that we should learn from the US and Japan SBIR projects and adopt in stages competitive and differentiated innovation support mode in line with the lifecycle of technological innovation: the first stage is to subsidize technical feasibility study, in which the government grants small amount of subsidy to enterprises; the second stage is for the government to further subsidize projects that have made preliminary success in the first stage Government subsidies in the first two stages are free of charge The difference lies in that in the technical feasibility stage, the principle is to generally grant small amount of subsidies on a wide scope The practice of granting relatively small amount in a single subsidy not only can avoid excessive input to failed projects, but also can extensively cultivate technical seeds Once into the stage of research and development, subsidies will be granted in large amount to certain outstanding enterprises so as to expedite the maturity of technologies The third stage is to commercialize technological achievements, so the government will not necessarily grant subsidies to every enterprise Rather, subsidies are granted with considerations of the market conditions and enterprise capacities for technological industrialization The main function of the government is to provide various services for technological industrialization (3) Strengthen support for the withdrawal of backward capacity We should establish the aid mechanism for withdrawal and adjustment upgrading In the aid of withdrawal, we should focus on the social security work of laid-off workers during the adjustment of excess capacity, and provide unemployed workers with re-employment training, information services and even subsidy The Central government should also give some financial support to areas with 5.3 Industrial Development During the 13th Five-Year Plan Period 135 concentrated overcapacity industries; and may provide special taxation preferential policies for backward areas to support the economic development there In terms of upgrading, we will actively support enterprises in overcapacity industries and provide their workforce with vocational training so as to improve labor skills and support enterprises in forming alliances for joint technological innovation and management innovations We will give financial support and taxation preferential policies to enterprise alliances in the development of new products, breakthrough in key generic technologies, transformation of and innovation in process flow and management procedures Third, Regional Policy Will Shift from Boosting Investment to Improving Environment During the past 30 years, inter-regional competition has been the dominant force in driving fast industrial growth and fostering increasingly complete industrial system in China These institutional arrangements were characterized by the system of dividing revenue and expenditure between the central and local governments and holding each responsible for balancing their budgets Under such arrangements, local governments at all levels were motivated to hold down prices of land, environment, labor and other factors and attract investments, especially large-scale industrial investments that can quickly bring back added value and taxation by affording investors with preferential taxation and financial policies Such incentive mechanisms fully aroused the enthusiasm of local governments in expanding the size of their economy and had obvious effects in encouraging productive investments from various enterprises However, it also led to a series of grave problems including twisted factor price and excess capacity Twisted factor price reduced the efficiency of resource allocation in the entire economic system, and aggravating overcapacity, together with accompanied vicious competition, undermined the profitability of the industrial sector As a result, industrial enterprises, small and medium ones in particular, lost their capacity for making innovative investment, further leading to the bad phenomenon that private capital divorces from the real economy Inter-regional competition is in itself a neutral concept In a sense, effective inter-regional competition should be an advantage for a developing country like China; the key problem lies in how we can devise appropriate incentive structures to guide the target and the way local governments compete with each other For technology-intensive advanced manufacturing industry, active investments from various entities are crucial for industrial development But unlike mature industries whose growth has to be driven by productive investments, diversified and exploratory innovative investments are the key to the growth of technologyintensive emerging industries Therefore, we must make due adjustments to the existing incentive structure of local governments that fits in well with the rapid expansion of mature industries in line with the technical and economic characteristics of advanced manufacturing and the requirements for transforming the mode for economic development First, we should transform the current taxation system 136 Outlook for China’s Industrialization dominated by indirect tax such as value added tax and turnover tax to one dominated by direct tax such as income tax, real estate tax, inheritance tax, and social insurance tax, thus weakening local government’s impulse to blindly pursue maximization of GDP Meanwhile, we will carry out supporting measures to reform the system of promotion and performance evaluation of local government officials, so as to guide inter-regional competition towards more diversified economic and social objectives and the long-term economic objective of perfecting the innovative and entrepreneurial environment Second, we will change the current practice of allowing policies for advanced manufacturing to blossom everywhere, and foster controlled inter-regional competition by encouraging the few eligible regions to first set up special zones for developing advanced manufacturing industries We will explore for the dominant technology roadmap, product design and business mode which are critical to cultivate and develop advanced manufacturing industry in China through staggered development among and diversified innovation in different regions 5.3.4 Open-Up Policy Will Shift from the Orientation of Driving Growth to Integrating Resources Attracting international direct investments and introducing technology and equipment are crucial for Chinese industry to develop its fundamental production capacity in the initial period of reform and opening up The basic logic for investment and trade policies under all previous open-up modes, i.e taking over overseas industries + opening up overseas market, include two aspects: first, leveraging the domestic advantages in factor costs, and rolling out more preferential supporting policies for investment to attract foreign capitals and equipment and management associated with these capitals to settle down locally Second, expanding foreign trade and accumulating the foreign exchange required for attracting foreign production equipment and other factors Meanwhile, finding market demand-based solutions for rapidly expanding domestic production capacity, thereby forming a self-circulation mechanism under which the industries continue to expand at a fast pace The technical diversity of advanced manufacturing industry and complexity of the innovation system has determined that we still have to rely heavily upon overseas resources and market to cultivate and develop the same However, since advanced manufacturing industry competes on the basis of different resources and paradigms, it also requires open-up policies that differ greatly from existing ones (1) The focus of open-up policy should gradually shift from supporting “bringing in” to encouraging “going global” As technologies and equipment associated with advanced manufacturing industry will affect the core competitiveness of a country or an enterprise, the country or enterprise in mastery of 5.3 Industrial Development During the 13th Five-Year Plan Period 137 these technologies usually strictly block the exportation of both of them It is impossible for Chinese enterprises to introduce and acquire these technologies and equipment by introduction Only by taking the initiative to go overseas and trying as much as possible to get integrated into the local innovation network of developed countries, can Chinese enterprises gradually accumulate related technological capability Of various entities in developed countries which might master innovation resources for advanced manufacturing industries, small and medium enterprises, high-tech service enterprises and research universities are important windows through which Chinese enterprises can get access to local innovation network The reasons are as follows: since small and medium enterprises have limited scales, Chinese enterprises will encounter little difficulty and incur fewer costs in utilizing technological resources of small and medium enterprises through merger and acquisition and other means High-tech service enterprises are mainly engaged in the sale of technologies, so it will be easier for Chinese enterprises to establish with them mechanisms for technical transaction and cooperative innovation Research universities set their main objectives at promoting scientific research, and will cause little technological competition and industrial conflicts of interests to Chinese enterprises (2) The structure of “bringing in” needs to be optimized Factors such as capital, equipment and final products that were previously introduced for traditional industries are still important to the development of advanced manufacturing industry, but now the development of advanced manufacturing industry are most in need of talents mastering key technologies and hidden knowledge Therefore, China should adjust its policies on international trade and investment with the focus on “introducing talents and knowledge” rather than introducing equipment and capital Overseas students not only possess profound professional knowledge but also are familiar with the R&D organization flows of developed countries For late-coming countries, talent flow, especially the back-flow of these talents is a channel for high-tech transfer more effective than multinational investments It need to be noted that, unlike financial capitals which concern about the factor costs and market scale for making investments in China, intellectual capitals pay more attention to the entrepreneurial and living environment in China, in addition to cost considerations Accordingly, industrial policies for advanced manufacturing industry should not only provide supportive aids to enterprises, but also provide suitable living and business environment (3) Following up on international high-end market and adjusting export structure The development experience of Japanese CNC machine tool industry and South Korean electronic industry suggest that, high-end market not only offers higher product added value to late-coming countries, but also provides important user innovation resources for them For traditional industries, the optimum development path may be gradually upgrading from overseas low-end market and market of emerging economies to high-end market and market of developed economies, but for advanced manufacturing industry, high-end market are more favorable for local enterprises to get direct access to 138 Outlook for China’s Industrialization experimental consumers and key innovation resources Therefore, we can first aim at markets of developed economies and then expand to markets of emerging economies Such a path may be more conducive to cultivating and accumulating industrial technological capability and long-term competitive edge 5.3.5 Talent Policy to Shift from Attracting Elite to Forming Gradient Our talent policy should gradually shift from merely cultivating and introducing elite R&D talents in the past to enhancing general skills of engineers, high-skilled workers and ordinary industrial workers We should focus on establishing a life-long learning system involving enterprises, vocational schools, research universities as well as reform research and service institutions On the basis of continuing to implement the country’s series of preferential policies for introducing high-level scientific and technological personnel, we will focus on developing a market mechanism for bringing back overseas high-level management and technical personnel through creating a better entrepreneurial environment In accordance with the talent requirements by the advanced manufacturing industry, we will intensify training and cultivation of “elite-type” practical technical and engineering talents and advise universities to set their majors in accordance with the work requirements of foremen or workshop leaders in modern factories It is suggested to set up “special funds for enhancing industrial skills in China’s manufacturing industry”, and give financial supports to first-class universities and enterprises in cultivating engineers and industrial technicians, in a bid to cultivate high-skilled industrial workers and make up the gap between China’s “low-quality vocational education” and the requirements raised by “high-end manufacturing industry” We should continue to develop vocational and technical schools and enhance the level of skills generally accepted by the industry while taking more effective measures to train engineers and high-skilled industrial workers At the same time, we will carry out targeted training on key process equipment such as machine tool operation, general industrial robot operation under government-supported training programs and improve the overall labor productivity of China’s manufacturing industry We will also strengthen cooperation among enterprises, vocational schools, engineering universities and government-run public service agencies, so as to foster a system of “lifelong learning” According to theories on modernization, the modernization process is an irreversible process and industrialization is the modernization of an economy If not otherwise affected by some overwhelmingly huge mutation factors, all developing countries would not give up their dream of realizing industrialization Following an industrialization path with Chinese characteristics, China has successfully advanced the industrialization to the late stage within a short span of some 30 years since 5.3 Industrial Development During the 13th Five-Year Plan Period 139 reform and opening up This is a remarkable achievement in the history of human development Though China may face even graver difficulties and challenges in its future process of industrialization, realizing industrialization 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From Industrial Structure to Modern Industrial System: Inheritance, Criticism and Development Journal of Renmin University of China (1) Huang, Qunhui 2012 National Conditions of the Large Industrial Country and Strategy of the Powerful Industrial Country China Industrial Economics (3) Huang, Qunhui 2013 China’s Industrialization Process: Stages, Characteristics and Prospects Economy and Management (8) Huang, Qunhui 2014 Economic New Normal, Late Stage of Industrialization and New Drivers for Industrial Growth China Industrial Economics (10) Huang, Qunhui 2015 China’s Economy in the Advanced Stage of Industrialization: Tendencies and Risks China Economist (2) Huang, Qunhui 2016a Laying a Solid Foundation for Real Economy Qiushi (4) Huang, Qunhui 2016b Reconstructing the New Ecosystem for China’s Industrial Economy Shanghai Securities News, February 26, 2016 Huang, Qunhui, and Jun He 2013 The Third Industrial Revolution and Strategic Adjustments for China’s Economic Development—From the Perspective of Technological Economy Transformation China Industrial Economics (1) 140 Outlook for China’s Industrialization Huang, Qunhui, and Xiaohua Li 2015 “12th FYP” Evaluation and “13th FYP” Strategy for China’s Industrial Development China Industrial Economics (9) Institute of Industrial Economics, Chinese Academy of Social Sciences 2009 Reactions of China’s Industry under Impacts of International Financial Crisis China Industrial Economics (4) Jiang, Feitao, et al 2014 Conversion of Mechanism for China’s Industrial Economic Growth Drivers China Industrial Economics (5) Landes, David S 2001 The Wealth and Poverty of Nations Translated by Men, Honghua, et al Beijing: Xinhua Publishing House Liu, Zhibiao 2011 From Latecomer to First-mover: Theoretical Reflections on the Implementation of Innovation-Driven Strategy Industrial Economics Research (4) Liu, Shijin 2013 Seeking New Dynamics and Balance for Chinese Economic Growth China Development Observation (6) Liu, Shijin, et al 2011 A Trap or High Wall?—Real Challenges and Strategic Choices Facing China’s Economy Beijing: China CITIC Press Lyu, Tie 2013 Trend Changes for Industrial Growth, Reprinted from Institute of Industrial Economics Chinese Academy of Social Sciences: China’s Industrial Development Report (2013), Economy & Development Publishing House Song, Hong 2010 Development Space for China’s Trade in the Future 10 Years International Economic Review (1) The Commission on Growth and Development, World Bank 2008 Growth Report—Strategies for Sustainable Growth and Inclusive Development China: China Financial Publishing House World Bank 2008 An East Asian Renaissance: Ideas for Economic Growth Beijing: China CITIC Press Wu, Xiaoying 2013 Measuring and Interpreting Total Factor Productivity in Chinese Industry Comparative Studies (6) Yuan, Fuhua, et al 2014 TFP and Labor Productivity Shocks: Empirical Facts and Long-term Growth [Printed in the Annual Report on China’s Economic Growth (2013–2014)] In ed Zhang, Ping, et al., China: Social Sciences Academic Press Postscript This book is not the English translation of a Chinese one that has been published, but of a manuscript I prepared after synthesizing all relevant findings of a great number of Chinese studies of Chen Jiagui and my research team I began to follow Mr Chen’s research on issues concerning China’s industrialization in 2003 Then we applied for a major research project from Chinese Academy of Social Sciences: Studies on the Problem of Industrial Modernization in China and began systematic studies on China’s industrialization and modernization of industry In the following ten years, our team published a large number of findings, including Studies on the Problem of Industrial Modernization in China, co-authored by Chen Jiagui, Huang Qunhui, et al., and published by China Social Sciences Press in 2004; Blue Book of Industrialization: The Report on China’s Industrialization (1995–2005), co-authored by Chen Jiagui, Huang Qunhui, et al., and published by Social Sciences Academic Press in 2007; Studies on the Problem of Industrialization and Industrial Modernization in China, co-authored by Chen Jiagui and Huang Qunhui, and published by Economy & Management Publishing House in 2009; China’s Industrialization Process and Work Safety, by Huang Qunhui, et al., and published by China Financial and Economic Publishing House in 2009; Blue Book of Industrialization: The Report on China’s Industrialization (2005–2010), by Chen Jiagui, Huang Qunhui, et al, and published by Social Sciences Academic Press in 2012; National Conditions of the Large Industrial Country and Strategy of the Powerful Industrial Country, by Chen Jiagui, Huang Qunhui, et al., and published by Social Sciences Academic Press in 2012 In addition, we have also published a great number of academic papers on this subject in such periodical as Social Sciences in China, Economic Research Journal, China Industrial Economics, and Economic Perspectives These findings have exerted great influences in the academia and society and played its due role in guiding China’s policymakers On February 2, 2013, it was unlucky that Mr Chen died of illness at an age of 69 Carrying on Mr Chen’s unfulfilled lifework, I think that the best way to commemorate him would be to continue with his studies in this field Therefore, over the past three years, my research team and I have made further studies and published some new research findings, such as Blue Book of Industrialization: “The © Social Sciences Academic Press and Springer Nature Singapore Pte Ltd 2018 Q Huang, China’s Industrialization Process, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-10-3665-1 141 142 Postscript Belt and Road” National Industrialization Process Report, by Huang Qunhui, et al., and published by Social Sciences Academic Press in 2015 This book not only offers many updated data on the basis of all previous research findings, but also includes some of my latest research findings Here I would like to thank my research team first, since the above research findings are the results of our joint efforts And particular thanks will also go to Zhong Hongwu, associate researcher with the Institute of Social Development, Chinese Academy of Social Sciences, Li Xiaohua and He Jun, researcher and associate researcher with the Institute of Industrial Economics, Chinese Academy of Social Sciences Chapter III, IV and V are the common results of our cooperation My biggest thanks should go to Xie Shouguang, president of Social Sciences Academic Press, for his support in the publication of this book Under his support, we have consecutively published four blue books on industrialization so far These four volumes on industrialization constitute the basis of this book It was also due to his persistent encouragement and urgings that I decided to put together a manuscript on the subject to be published in English Finally, I should also thank Deng Yonghong and Wu Min, editors from the Yearbooks Division of Social Sciences Academic Press Of course, I take full responsibility for any errors and short comings and welcome comments and suggestions for revision! Huang Qunhui March 20, 2016 Bibliography Cao, Zhongxiang 2013 Current Strategic Focus for China’s Marine Economic Development Macroeconomic Management (6) Huang, Qunhui 2015 China’s Manufacturing Industry Should Actively Respond to “Dual-End Extrusions”, People’s Daily, June 25 Huang, Qunhui, and He Jun 2015 Core capability, functional orientation and development strategy for china’s manufacturing industry—comments on Made in China 2025 China Industrial Economics (6) Huang, Qunhui, Li Xiaohua, and He Jun Direction and policies for industrial transformation and upgrading during “13th FYP” China: Social Sciences Academic Press Institute of Industrial Economics, Chinese Academy of Social Sciences 2015 China’s Industrial Development Report (2015) China: Economy & Management Publishing House Li, Xiaohua 2013 Development Gap and Path for Transformation and Upgrading of China’s Industry Review of Economic Research (51) Liu, Shijin 2014 Fostering growth new normal in reform China: CITIC Press Liu, Guangwu, and Tang Rui 2013 Discussions on construction concepts of urban comprehensive transportation hub Urban Rapid Rail Transit (4) Liu, Rongzi, Liu Kun, and Zhang Ping 2014 Status and recommendations for China’s marine industry development Science Technology for Development (5) Perez, C (1983) Structural change and assimilation of new technologies in the economic and social system Futures, 15 (15): 357–375 Pisano, Gary, and Willy Shih 2009 Restoring the American competitiveness Harvard Business Review 114–125 Su, Ming 2013 Studies of fiscal policies promoting China’s marine economic development Review of Economic Research (57) Xuan, Xiaowei 2015 Analysis of implementation of “12th FYP” and revelations for formulation of “13th FYP” Regional Economic Review (1) Yang, Weidong, and Deng Runfei 2014 Countermeasures for development of urban agglomeration comprehensive traffic under the background of urban integration China Transportation Review (1) Zhang, Yongjin, and Wang Jingxuan 2014 Comparative studies on big data policy of major developed countries Chinese Public Administration (12) © Social Sciences Academic Press and Springer Nature Singapore Pte Ltd 2018 Q Huang, China’s Industrialization Process, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-10-3665-1 143 ... China’s Industrialization Process: An Overview 2.1 Industrialization Process of PRC Before Reform and Opening Up 2.2 Industrialization Process Since... consider industrialization as a process of modernization, then the evolution of the industrial sector from a lower to a higher level in the process of industrialization may be regarded as the process. .. stage, the early stage of industrialization, the middle stage of industrialization, the late stage of industrialization, and post -industrialization stage, then after a rapid industrialization period,