http://www.globaltimes.cn/content/1021507.shtml
China needs to boost innovation to move from ‘world’s factory’ to manufacturing power
By Hu Weijia Source:Global Times Published: 2016/12/2 0:28:39
China's reputation as the world's factory means it may come as a surprise that the country spends almost twice as much on integrated circuits (IC) from overseas than it does on crude oil. That would be no big deal if China didn't import a lot of oil, except that it does. In the first 10 months this year, the country spent $92.6 billion on crude oil imports, eclipsing the US as the world's top buyer of foreign oil in certain months, according to customs data.
Meanwhile, overseas companies producing and selling IC took $181.4 billion out of China's wallet, causing a huge trade deficit in the industry, per customs statistics.
China needs to urgently boost its IC industry and encourage core-technology innovation in the manufacturing sector to strengthen competitiveness. Despite the fact that products marked "Made in China" are sold in almost every corner of the world, it seems that the country still has a long way to go before it becomes a real global manufacturing powerhouse.
For example,
Chinese drone maker DJI alleges that its products account for 70 percent of the global consumer drone market. However, media reports have said that although domestic components are largely used by the high-tech company, some of its drones with a particular camera need to use a sensor provided by Japan's Sony Corp to improve their performance.
China has become the world's largest exporter of goods, but many key components with high added value are still produced by foreign companies. This allows multinational firms from countries like the US and Japan to earn a large amount of money from the Chinese market, while at the same time authorities in those countries criticize China for registering a trade deficit with them.
China is the only country in the world that boasts all the industries defined in the UN's industry classification system. However, it is obvious that some foreign enterprises still hold a strategic piece of the industrial chain and that China will remain an assembly line for overseas high-tech firms if the country doesn't pursue a path of independent innovation. A complete industrial chain built in the country could help manufacturers improve efficiency and reduce costs.
China's IC industry has for many years been struggling to catch up, yet Japan, South Korea and the US still take the lead, despite competitiveness from enterprises in Southeast China's Taiwan. China to an extent lags behind other countries in providing State support and funding to the IC industry. To rectify this, the government should focus more on boosting innovation for key components to upgrade its manufacturing sector.
