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Development and Competitiveness of China's Key Industries1

2010-12-15

Wei Jigang

The key industries such as petrochemicals, iron and steel, nonferrous metals, equipment making, electronic information, light industry, textiles, auto-making and shipbuilding have scored tremendous development since the beginning of the new century. Their industrial competitiveness has become visibly higher and they have demonstrated some new features.

I. Basic Information about Development of Key Industries

1. The key industries had posted high growth rates between the beginning of the new century and the outburst of the financial crisis, with their main product outputs being among the highest in the world rankings.

China's key industries have developed rapidly in recent years due to accelerated industrialization and urbanization, high-level marketization and opening up, continuous science and technology advance, active policy support, rich factor input, accelerated transfer of some industries from developed countries to China, as well as relevant factors. During the 2003~2008 period, the average annual added value growth was about 20% for the petrochemical industry, more than 20% for the light industry, 27.7% for the equipment industry, and 56% for the shipbuilding industry. During the 2001~2007 period, the textile industry posted an average annual added value growth rate of 20.1%. The auto sales grew at an average annual rate of 21% during the 2000~2008 period. The electronic information industry saw its sales revenue growing at an average annual rate of about 30% during the 2001~2007 period and its sale revenue growing 12.5% in 2008. The average annual growth rate of steel output was 20% during the 2001~2008 period, and the average annual growth rate of 10 commonly-used nonferrous metals was 16.4% during the 2002~2008 period.

The outputs of main products were among the world front ranks. In 2008, China produced 500.92 million tons of steel, 10.25 million tons of ethylene, 35 million tons of processed fibers, 7.48 million tons of copper products, 14.27 million tons of aluminium products, 9.35 million vehicles, 90.33 color TV sets. 47.57 million refrigerators, 82.31 million air-conditioners, 137 million micro computers, 560 million cell phones, and accomplished shipbuilding output of 28.81 million tons. Worldwide, nearly half of cell phones, ICs, color TV sets, displays, programmed switchboards, and digital cameras were produced in China.

2. The international financial crisis has caused great short-term shocks to the key industries, but most of these industries have maintained a high-growth momentum over the past year thanks to the support of a host of domestic policies.

The international financial crisis that occurred in the second half of 2008 has caused major shocks to the world economy. The sagging international market demand has greatly affected the development of China's key industries. The government has introduced a host of policy measures to deal with this crisis. The economic policies included the plan for the adjustment and rejuvenation of ten major industries, the drastic increase of government spending, the subsidized sales of home appliances to rural areas, the trade-in of automobiles and home appliances for new ones, the adjustment of the real estate transaction tax, the exemption of personal income tax from the interests of savings and deposits, the adjustment of tariffs for some export products and export rebates, and the promotion of border trade. The social policies included the deepening of the reform of the health system, the promotion of employment, and the stabilization of labor relations. These policy measures had given play to boosting economic growth, adjusting industrial structure, spurring domestic demand, promoting social stability, and stabilizing foreign trade. They eventually eased drastic economic fluctuations, and solved short-term difficulties encountered in industrial development, thus ensuring the staying power for sustained industrial growth and solving the long-term problems revealed in the crisis. Overall, these policies have produced the expected results. In 2009, most of the key industries maintained a fairly high growth but some of them were seriously affected and their growth was considerably lower than in the previous year.

The petrochemical industry grew 10.1% in 2009 year on year. Specifically, the growth was 15.9% for the chemical industry, 4.8% for the petroleum and natural gas industry and 5.2% for the petroleum refining industry.

The iron and steel industry maintained a high growth in 2009, with the pig steel output reaching 568.03 million tons or 12.9% higher over the previous year.

The auto industry produced and sold 13.791 million cars and 13.6448 million cars respectively, which were 48.30% and 46.15% higher over the previous year.

In the light industry, the output value of the enterprises above the state-designated scale totaled 10,761.45 billion yuan, or up 13.5% over 2008.

In the shipbuilding industry, the output value of the shipbuilding enterprises above the state-designated scale totaled 548.5 billion yuan in 2009 or up 28.7% over 2008. The accomplished shipbuilding output totaled 42.43 million tons, or up 47% year on year.

In the textile industry, the output value of the 53,110 textile enterprises above the state-designated scale totaled 3,797.989 billion yuan in 2009, up 10.3% over the previous year.

In the equipment-making industry, the output value and sales revenue were respectively 10.75 trillion yuan and 10.48 trillion yuan, or up 16.07% and 16.11% year on year.

The nonferrous metal industry produced 26.81 million tons of ten commonly-used nonferrous metals in 2009, or up 5.8% over the previous year. The electronic information industry posted the first negative growth in 2009 since the beginning of the new century and became the most seriously affected sector of the national economy. But as the adopted domestic policies began to demonstrate their effects and as the world economy gradually warmed up, this industry also began to make a turnaround in the second half of 2009. The enterprises above the state-designated scale realized 5,130.5-billion-yuan revenue for the year, or up 0.1% over 2008.

3. The key industries have scored considerable improvements in their independent innovation capacity, industrial layout and ownership structure.

(1) Both the independent innovation capacity and the inherent industrial quality improved slightly. Most of the key industries have followed a new technological innovation path through the course of "import, digestion, absorption and innovation". Thanks to their high growth, the key industries have gradually increased their R&D inputs and expanded their R&D forces year after year. Accordingly, a new technological innovation model that features the leading roles of enterprises, the guidance of markets and the cooperation between enterprises, universities and research institutions has been developed, the innovation outputs have been growing annually, technological breakthroughs have been made in some key sectors, and the overall capacity for independent innovation has become somewhat stronger.

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1The "key industries" in this report refer to the nine major industries that are included in the Plan for the Adjustment and Rejuvenation of Ten Major Industries adopted by the State Council in early 2009. They are petrochemicals, iron and steel, equipment making, light industry, textiles, auto making, nonferrous metals, shipbuilding, and electronic information.

 
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