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Friday, September 22, 2023

China must develop its manufacturing sector towards higher-end, intelligent and better value-added products, experts say.

BusinessChina must develop its manufacturing sector towards higher-end, intelligent and better value-added products, experts say.

According to experts, China is expected to expand its high-level opening-up and strengthen international economic and trade cooperation to promote the high-quality development of foreign trade. This move is aimed at offsetting impacts from external challenges, such as geopolitical issues and weakening global demand. They added that foreign-trade enterprises need to optimize their products, while the government is expected to stabilize enterprise expectations by creating a more enabling business environment.

Gao Lingyun, director of the international investment division at the Institute of World Economics and Politics, part of the Chinese Academy of Social Sciences, said that China places a high premium on opening up wider to provide greater facilitation to foreign trade and investment. The country has already adopted sustained steps to foster a world-class, market-oriented business climate governed by a sound legal framework. Gao also emphasized that the country needs to further consolidate its industry clusters with stronger business advantages to offset the exodus from Chinese manufacturing led by cost-sensitive companies.

Tang Yao, an associate professor of applied economics at Peking University’s Guanghua School of Management, said that China’s steady economic rebound provides a solid base for the country to stabilize foreign trade and investment. However, facing fierce competition in global markets, the country needs to coordinate well on economic fronts like industrial policies, market access, financial support, and cross-border payments. Tang also stressed the importance of institutional opening-up and a stable and consistent policy environment to boost enterprise confidence.

Xu Hongcai, deputy director of the China Association of Policy Science’s Economic Policy Committee, suggested that Chinese foreign-trade enterprises need to produce more technology-intensive products. This is considering that China exports consumer goods and mechanical and electrical products, among others to Europe and the United States. While ASEAN countries can also manufacture daily necessities to meet their needs and look forward to importing more high-tech products, China needs to focus on providing high-value-added products to offset rising costs.

Overall, experts believe that China’s manufacturing sector still has relatively low overall costs, given its technically skilled workforce, good infrastructure, strong business ecosystem, and cheap energy. The window of opportunity must be harnessed to climb up the value chain and provide global customers with high-value-added products to offset rising costs. In addition, institutional costs must be slashed on a sustained basis to attract foreign investment as good quality institutions are widely seen to reduce investment risks and thereby reduce the costs of doing business.

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