Beijing’s decision to establish a new
fund designated to support manufacturing upgrading shows the country’s
unswerving determination to foster high-end manufacturing despite external
obstruction and internal economic pressure, experts said on Tuesday.
The 147.2 billion yuan ($20.95 billion) National Manufacturing Transformation and Upgrading Fund has been set up by some 20 companies in China, led by the Ministry of Finance (MOF). Participants include state-owned heavyweights such as trainmaker CRRC Corp and financial company Chasing Financial, according to a filing publicized by the CRRC on Monday.
The MOF, the largest shareholder of the fund, has a 15.29 percent stake, followed by China Development Bank Capital Co with 13.59 percent, the filing read.
The fund will focus investment on new materials, new-generation information technology, electric equipment and other areas in China, the CRRC disclosed in the filing.
The fund is being up at a time when the country’s manufacturing upgrading is facing challenges like slowing growth in investment and the negative impact of the tariff battle between China and the US.
Manufacturing investment rose by 2.5 percent on a yearly basis in the first three quarters, compared with 2.6 percent in the first eight months and 3.3 percent in the first seven months, figures from the National Bureau of Statistics (NBS) showed. Growth slightly rebounded to 2.6 percent in the first 10 months.
Industrial added value grew by 4.7 percent on a yearly basis in October, slowing from 5.8 percent growth in September, also according to NBS data.
“It’s necessary for the government and state-owned companies to shoulder more responsibility for countercyclical investment to fuel industrial upgrading. Few private companies would be capable of pumping money into business transformation amid an economic slowdown,” Tian Yun, vice director of the Beijing Economic Operation Association, told the Global Times on Tuesday.
On the positive side, certain advanced technology sectors in China have grown at a stunning speed that largely outpaced the rate of overall industrial growth, showing the achievements as well as the unstoppable trend of industrial upgrading, experts said.
One example is the new material industry. According to data from the NBS, the added value of the 3D printing equipment industry grew by 157.4 percent on a yearly basis in October, while the smartwatch industry surged by 87.3 percent during the period.
Li Chunding, head of the Economics and Trade Department of the College of Economics and Management at China Agricultural University, said that in his observation, many clothing producers in East China’s Zhejiang Province have shifted their pure cheap-labor manufacturing bases to overseas locations, while the areas with higher added value, like design, remain in China. Li called it a vivid example of China’s efforts to climb the value chain via industrial upgrading.
“I think that external pressure such as the trade war has also made China more motivated to insist on, or even speed up, industrial upgrading,” he said.
But Tian cautioned that the fund should bear market factors in mind to ensure that money goes into projects that can be commercialized.