By Xu Zhaoyuan, Research Department of Industrial Economy, Development Research Center of the State Council (DRC) & Hu Cui, Central University of Finance and Economics

Report No 71, 2014 (Total 4570)

Summary:

This is a study of how industrial support has brought about an increase in productivity of manufacturing industry in China, based on data of State-owned enterprises and non-State-owned enterprises above a designated size, from 2001 to 2007. It shows that manufacturing industry's productivity increased by 1.7 to 2.8 percentage points annually after the year 2000, thanks to improved industrial support. The contribution is similar to that of research, indicating that industrial supporting is important for competitiveness in China's manufacturing. However, as China enters a new economic period with slower growth, the number and size of enterprises will increase slowly and the contribution of industrial support to manufacturing's productivity may drop.

So, China needs to improve its industrial structure and get enterprises to join an industrial chain, and makes industrial support play a bigger role. Meanwhile, China needs more R&D and needs to improve innovation to give it a competitive edge.