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High-Tech manufacturing

Resource: “China’s high-tech push seeks to reassert global factory dominance”, reuters.com, 2022

China’s advanced manufacturing has been continuously upgraded in recent years to ensure its competitiveness. The emergence of new “smart manufacturing” products has increased the traction of China’s economy, making the industry attractive. In 2021, 35.299 billion yuan (around $5.2 billion) was invested in China’s manufacturing sector in a total of 169 projects, and Beijing allocated another 57.68 billion yuan (around $8.5 billion) for future private funding. [1] According to the National Bureau of Statistics, investment in the aerospace and machinery industry in particular was increasing the most (+56.4% in the first half of 2021), followed by investment in computer and office technology (+47.5% in the first half of 2021) and investment in the electronics and communications industry (+29.9% in the first half of 2021). In 2021, value added of manufacturing accounted for 27.44% of GDP. China’s manufacturing sector was showing a positive trend and recovering from the pandemic outbreak as the investment in China’s advanced manufacturing industry increased by 35.7% year-on-year in the first quarter of 2022. [2]

The high speed of growth of China’s advanced manufacturing owing to the raising of research and development expenditure. In 2021, the social research and experimental development expenditure increased by 14.2% over the previous year, with a growth rate of 4 percentage points faster than the previous year. [3] The ratio of R&D expenditure to GDP reached 2.44%, 0.03 percentage points higher than the previous year. Among them, basic research spending increased by 15.6% over the previous year, accounting for 6.09% of R&D spending, with an increase rate of 0.08 percentage points over the previous year. The full-time equivalent of China’s research and experimental development personnel exceeded 5 million person-years. By the end of 2021, China had 359.7 million valid invention patents and 7.5 high-value invention patents per 10,000 population, with an increase rate of 1.2 patents over the previous year. In 2021, China’s high-tech industry investment increased by 17.1% over the previous year. Enterprise innovation capacity further strengthened, and the number of high-tech enterprises increased by 18.7% year-on-year. [3]

Chinese local governments are expanding financial support and fully playing the opportunities of venture capital (VC) and private equity (PE) to support enterprises in IPOs and capital raising and expand direct financing channels. [4] In Beijing city alone, the high-tech manufacturing industry investment rose 38.6% year on year in the first half of 2021. [1] According to the National Bureau of Statistics, the data showed that, the investment in high-tech manufacturing for the whole country grew by 29.7%. On August 9 2021, Guangdong province proposed that by 2025, the added value of the manufacturing industry will account for more than 30% of GDP, and the added value of the high-tech manufacturing industry will account for 33% of the added value of industry above the scale. Chongqing, Shanghai, Zhejiang, and other cities have also formulated relevant target plans. In 2021 the government of Xi’an city started the construction of key projects with a total investment of 62.94 billion RMB in 63 projects covering electronic information, high-end equipment, precision manufacturing, and others. Beijing’s local government recently launched the first public promotion of projects in 2021, 111 projects for private capital, covering high-tech manufacturing, information services, and related fields, with a total investment of 133.4 billion RMB, of which 57.68 billion RMB was to be introduced to private capital. And the government of Tianjin city proposed to accelerate the construction of a number of high-quality projects to provide key support for optimizing the industrial structure and achieving high-quality development.