The Twelfth Five-Year Plan Period Is a Key Period for Accelerating the Transformation of the Pattern of Industrial Development

From: English Edition of Qiushi Journal Updated: 2011-09-20 10:44
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    China followed a new path of industrialization with Chinese characteristics during the Eleventh Five-Year Plan period, actively responded to the global financial crisis, made fresh achievements in the development of industry and IT application, and brought the overall level of the country’s industry up to a new level. China’s industrial added value reached 13.46 trillion yuan in 2009, 1.5 times that of 2005 in terms of comparable prices and 40.1% of the total size of the national economy. The output of more than 200 industrial products and the export volume of manufactured goods ranked first in the world and the scale of the manufacturing industry ranked second in the world.


    A ceremony is held to mark the end of operations at a steel plant belonging to the Shougang Group in Beijing’s Shijingshan District on December 19, 2010. As promised, the Shougang Group announced the end of its steel-making operations in Beijing at the end of 2010. This represents a major contribution that the Shougang Group has made to economic and social development, the restructuring of China’s iron and steel industry, the improvement of Beijing’s environmental conditions,and the drive to establish Beijing as a high-tech, green, civil and world-class city. The move also represents an important turning point that will influence the Shougang Group’s development in the future. / Photo by Xinhua

    Continued progress was made in adjustment of the industrial structure. China has made significant progress in optimizing and upgrading the industrial structure in recent years by increasing funding for technological upgrades, making conditions stricter for enterprises to operate in certain industries, eliminating backward production capacity and promoting the merging and reorganizing of enterprises. It is estimated that we eliminated backward production capacity in the iron smelting industry by 111.72 million tons, in the steel-making industry by 66.83 million tons, in the coke industry by 105.38 million tons, in the cement industry by 340 million tons and in the paper-making industry by 10.3 million tons during the Eleventh Five-Year Plan period, accounting for approximately 50% of the total backward production capacity.

    New breakthroughs were achieved in our ability to make independent innovations. China has already made a number of major innovative achievements in fields such as manned space flight, the lunar orbiter project, high-speed railways, high performance computers and complete sets of equipment in the power and petrochemical industries. We accelerated efforts to carry out major national science and technology projects such as the project to develop advanced digitally controlled machine tools and constantly improved the ability of industrial enterprises to make innovations and cope with risk.

    Major headway was made in energy conservation and emission reduction. China’s energy consumption per unit of added value for large-scale industrial enterprises dropped 1.98% in the first year of the Eleventh Five-Year Plan period, 5.46% in the second, 8.43% in the third and 6.62% in the fourth, a total decrease of 20.76%. Calculations indicate that the country’s energy consumption per unit of added value for large-scale industrial enterprises dropped 4% during the first three quarters of 2010, with the contribution of industrial enterprises to energy conservation reaching more than 80% of total reduction in the country. Water consumption per unit of added value, sulfur dioxide emissions and the rate of comprehensive utilization of industrial solid waste reached the targets set in the Eleventh Five-Year Plan ahead of time.

    New opportunities for the development of small and medium-sized enterprises were created. The Chinese government worked out a number of policies to boost development of small and medium-sized enterprises in recent years, creating favorable conditions for their development. The 10.23 million small and medium-sized enterprises in the country contributed 50% of the country’s total tax revenue and provided nearly 80% of all jobs in urban areas, playing an important role in ensuring the economy thrived, increasing job opportunities, promoting innovation and improving people’s lives.

    New achievements were made in development of the communication industry and IT application. China ranked first in the world in terms of the scale of telecommunication networks and the number of telephone and Internet users. There are now 1.135 billion telephone users, 420 million Internet users and 121 million broadband users, respectively 1.53 times, 4.06 times, and 3.14 times those in 2005. Steady progress has been made in integrating IT application and industrialization. Application of IT has been expanded in the fields of equipment manufacturing, energy conservation and emissions reduction and the development of emerging industries such as e-commerce, animation and games, and software services is thriving.

    Progress has been made in responding to the global financial crisis during this period. Confronted with the impact of the global financial crisis, we resolutely implemented the policy decisions of the central government, formulated and carried out an adjustment and revitalization plan for ten major industries and effectively implemented policies designed to expand domestic demand, such as the policy of providing subsidies for rural residents to purchase home appliances, automobiles, motorcycles and farm machinery and the policy of providing subsidies for trading-in old automobiles and home appliances for new ones, all of which made a positive contribution to the stable and rapid development of the national economy. The industrial growth rate returned to 16% in October 2009, marking the completion of a turnaround in which growth rates have continued to increase steadily. The industrial sector of the economy experienced steady growth in 2010, with an estimated growth rate of 13.5% for the year.

    However, it should also be noted that Chinese industry is still facing a complex situation filled with development opportunities and daunting challenges as well as a combination of overlapping new and long-standing issues. Addressing this situation will require careful observation, scientific analysis, accurate judgment and an active response.

    Looking at the overall situation, there are a number of factors that could affect the development of Chinese industry in the current stage. One, resource and environmental constraints on industrial development are likely to worsen. Due to the current development model emphasizing quantity over quality, which requires high input, consumes large amounts of energy and causes serious pollution over a long period of time, Chinese industry has put a great deal of pressure on resources and the environment, presenting a grave challenge for the sustainability of its development. Two, enterprises are pressured by continuously rising production costs. The prices of labor, raw materials, land, fuel and electricity have constantly risen in recent years, seriously hindering enterprise production and operation. Three, breakthroughs in independent innovation efforts are urgently needed. China’s manufacturing industry has long occupied a position in the lower end of the value chain in the international industrial division of labor and lacks core technologies and world famous brands with independent intellectual property rights. The security of Chinese industry is at risk, in particular because some core technologies and key parts, components and equipment are subject to the control of foreign enterprises. Four, surplus production capacity is still a major problem. Reckless expansion is still taking place in steel-making, cement and other traditional industries, and excessive development in emerging industries such as wind power and polycrystalline silicon has resulted in underutilization of capacity. Five, international competition is intensifying. Trade protectionism has emerged in developed countries following the global financial crisis, under a variety of changing guises such as currency depreciation and technical barriers, putting new pressure on the development of Chinese industry. All this shows that the development of Chinese industry has entered a critical period and that only through transformation of the pattern of development can we ensure sustained development, making transformation of the pattern of industrial development urgent.

    At the same time, we should also clearly recognize that Chinese industry has entered a critical period of strategic opportunities for transforming the pattern, adjusting the structure and upgrading technology. The overall strength of Chinese industry and its ability to cope with risk have steadily improved over the last 30-plus years of rapid development, creating a solid material foundation for industrial development. The strategy of expanding domestic demand has helped accelerate the pace of urbanization, move the pattern of urban and rural consumer spending toward more high-end items and increase the purchasing power of consumers, greatly increasing the potential for industrial development. The deep integration of IT application with industrialization and continuation of marketization and internationalization have provided a strong impetus for the development of industry. The development of the circular economy, low-carbon technologies, strategically important emerging industries, and producer services industries has created new avenues for the growth of industry. Profound shifts in the pattern of the global economy have provided Chinese industry with opportunities to actively participate in forming the newly emerging international industrial division of labor.

    Transforming the pattern of industrial development involves profound changes. The Twelfth Five-Year Plan period will be a crucial period in China’s efforts to transform the pattern of economic development.

    1. We must pursue the overall strategic goal of transforming and upgrading Chinese industry. We will strive to increase the total added value, overall industrial quality and international competitiveness of Chinese industry, whilst making efforts to ensure that industrial growth is environmentally friendly, beneficial to the people and endogenous, driven by innovation. This will help promote China’s transition from scale to strength in industry. We must be careful to balance efforts to transform the pattern of development and efforts to promote economic growth, striving to make the transformation and upgrading of industries meet the general requirements for ensuring steady and rapid economic growth to prevent major fluctuations in the rate of economic growth.

    2. The main approach must be to adjust the industrial structure. We will strive to develop the advanced equipment manufacturing industry, adjust and optimize the raw and semi-finished materials industries, and upgrade the consumer goods industry to improve the overall competitiveness of manufacturing industry. We will work to integrate development of the manufacturing industry with development of the service industry, work to balance the development of labor-intensive industries with development of capital-intensive and technology-intensive industries, and development of heavy industry with the development of light industry. We will adjust the product structure to produce more saleable products and increase the added value of products and services to promote upgrading of the structure of consumer spending. We will accelerate efforts to eliminate backward production capacity and carry out steady merging and reorganizing of industrial enterprises to increase the level of concentration in industries with economies of scale and thereby create a favorable situation in which the development of large, medium-sized and small enterprises are balanced.

    3. We will continue fostering strategically important emerging industries as a key link in development. We will concentrate efforts to make major breakthroughs in next generation IT, energy conservation and environmental protection, new energy sources, biotechnology, high-end equipment manufacturing, new materials and alternate-fuel automobiles to create new avenues for the growth. We will take advantage of the central leading role of major national science and technology projects and give top priority to R&D work on major technology issues to support industrial development with innovative new technologies. We will make good use of the fundamental role of the market, the major role of enterprises and the guiding role of government and formulate and put into force development plans, qualifications required for operating in certain industries and technical standards. We will concentrate efforts on the development of producer services industries such as modern logistics, software services, e-commerce, information services and industrial services.

    4. Developing our ability to make independent innovations provides important support for industrial development. We will intensify efforts to make innovations in technology by concentrating science and technology resources to make breakthroughs in core and key technologies through major national science and technology programs and gradually apply new advances in science and technology in production. We will continue to upgrade technology in enterprises, upgrade traditional industries through the application of new technologies, production processes, equipment and materials, and guide enterprises to combine upgrading of technology with upgrading of their products to bring the overall quality of Chinese industry up to a new level. We will improve product quality and develop brand names, work to develop new products with high added value, constantly improve the level of services, and actively guide and promote consumer spending.

    5. An important focus of efforts is to develop an industrial system that is resource-conserving, environmentally friendly and essentially safe. We will promote green development by giving more consideration to ecological concerns in industrial development and design, making resource utilization more effective, raising the efficiency of production processes and keeping pollution to a minimum. We will work to ensure clean development by focusing on energy conservation and emission reduction in transforming the pattern of development, accelerating efforts to promote clean production and concentrating on reduction of energy and resource consumption and reduction of emissions and control of pollution in designated industries and enterprises. We will promote energy-saving development by developing remanufacturing industries, promoting the development of a circular economy and making more comprehensive use of resources. We will pursue safe development by improving technical standards, accelerating the upgrading of production safety equipment and strengthening regulation of production safety to improve the overall level of essential safety of production.

    6. We will continue to increase IT application during the process of industrialization as an important means of industrial development. We will actively work to increase the dependence of the economy on IT by increasing IT application in all links in industry from R&D and design to processing and manufacturing, raw materials purchasing, stock management, and sales and marketing, and by upgrading and improving all aspects of traditional industries and supporting the development of strategically important emerging industries. We will vigorously promote IT application in many areas by developing information systems important for use in public finance and taxation, finance, medical care, education and the social safety net to strengthen government administration of society and improve public services. We will accelerate development of the IT industry by promoting integration of telecommunication networks, cable television networks and the Internet, promoting R&D work for 4G communication technology and production of 4G products, developing and upgrading the software industry and promoting R&D work for and operation of the Internet of Things.

    7. We will ensure that deeper reforms and further opening to the outside world provide strong drive for industrial development. We will actively and carefully carry out reform of the telecommunication system and salt industry in accordance with the national reform of the finance, taxation and price systems. We must encourage, support and guide development of the non-public sector of the economy and implement measures to allow private capital investment in the telecommunications industry and gradually allow private investment in the national defense science, technology and industry. We will steadily carry out reform to establish greater government departments, truly transform the way government functions, make innovations in management style and improve the industry and IT management system. We must continue to take advantage of both domestic and foreign markets and resources, optimize the structure of imports and exports of manufactured goods, utilize foreign capital more effectively, and support the efforts of domestic enterprises to “go global” and operate on a transnational basis.

(Originally appeared in Qiushi Journal, Chinese edition, No.23, 2010)

Note:Author: Former Minister of Industry and Information Technology of the People’s Republic of China

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