The State's Call for "Manufacturing as the Core": How to Play This Major Game?
Hello everyone, I'm your financial observer. Recently, Beijing hosted a very important meeting—the National Advanced Manufacturing Conference.
If you follow the news regularly, you might find the term "advanced manufacturing" a bit abstract or grand. But today, I'll break it down in simple terms: Why is the state making such a big deal out of this topic at the 2024 milestone? What does it have to do with each of our wallets, job opportunities, and even our lives over the next decade?
In short, the state is trying to "replace the engine" of China's economy. In the past, we relied on our large population, low costs, and willingness to work hard to sell products worldwide. But that approach no longer works. Now, we need to rely on intelligence, sustainability, and high quality to gain a solid footing.
Below, I'll break down the key points of this conference into five aspects for you to understand better.
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1. Setting the Tone: Manufacturing is the "Ballast Stone" that Cannot Be Lost
First, we need to clarify what advanced manufacturing is. Don't let the name scare you. Simply put, it's about using high-tech methods to produce high-value products.
- Traditional manufacturing might still rely on manual labor or old equipment to make basic parts.
- Advanced manufacturing uses artificial intelligence for scheduling, robots for welding, and green energy for power. The products made are either more precise (like chips), more environmentally friendly (like electric cars), or more intelligent (like smart robots).
Why does the state place so much emphasis on this?
Because the world is now competing on the value chain. In the past, it was about who had the cheapest products; now, it's about who has the best technology and the most secure supply chains.
- Premier Li Qiang said at the conference that we need to improve the autonomy and control of our value chains.
In other words, we can't always rely on others for critical technologies and materials. If they stop selling them to us, we must be able to produce them ourselves—and do so better.
The first signal from this conference is that the real economy is the foundation, and manufacturing is the backbone. No matter how exciting the internet and finance are, it's still the physical factories and machines that support the country's modernization. This is a reassurance to all manufacturing companies: the state supports you because you are the backbone of the nation.
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2. Transforming Old Industries: Old Factories Can Also Become Trendy Brands; 80% of the Base Needs to Be Upgraded
Many people think that "advanced" means only high-tech, new products, and that old factories or industries (like textiles, dyeing, chemicals) are doomed.
That's completely wrong!
Data shows that traditional industries account for about 80% of China's manufacturing value added. If these 80% fail, the remaining 10% of emerging industries won't be able to support the economy.
How to transform them? Three words: smart, green, and integrated.
1. Smart: For example, Yongtong Printing in Shaoxing, Zhejiang, used to rely on experienced workers to judge colors; now, large screens in the workshop display real-time data, and the system automatically adjusts parameters. As a result, carbon emissions remained the same, but output value and added value increased by more than 20%.
2. Green: Factories that were once polluting and energy-intensive must now be low-carbon and environmentally friendly. For instance, Yuexin Manufacturing Center no longer just sells equipment but provides “dyeing and finishing solutions” to help customers with green transformations.
3. High-end: A typical example is Juhua Group, which started in 1958 with fertilizer production and has become a global leader in fluorine chemicals. They have overcome key technologies, such as producing ultra-pure PFA materials for semiconductors with precision at the trillionth level and cooling fluids for AI data centers at a quarter of the import price.
In other words, old industries can become profitable through digital and green transformations.
3. Nurturing New Growth: Six Emerging Industries and Six Future Technologies, with Trillion-Level Markets Ahead
If traditional industries are the foundation, emerging and future industries are the drivers of growth.
The National Development and Reform Commission has outlined plans for the next five years: to build six emerging and six future industries.
- Six emerging pillars (set to explode in growth): integrated circuits (chips), aerospace, biomedicine, low-altitude economy (drones, flying cars), new energy storage (batteries), smart robots.
- Goal: Output value to reach nearly 6 trillion by 2025 and over 10 trillion by 2030.
- Explanation: These technologies are relatively mature and need large-scale application. For example, the low-altitude economy could lead to drone delivery and flying taxis; smart robots might be used not only in factories but also in homes.
- Six future technologies (early investment for a competitive edge): quantum technology, biofabrication, hydrogen and nuclear fusion energy, brain-computer interfaces, bionic intelligence (humanoid robots), 6G communication.
- Explanation: These technologies are still in their early stages but have huge potential. For example, brain-computer interfaces can reduce surgery to minimally invasive procedures, and bionic intelligence can help treat mental illnesses or enable paralyzed people to control machines.
Key point: The state emphasizes local adaptation. Not every region needs to focus on the same industries; each should develop according to its resources.
4. Breaking Barriers: From Follower to Leader; Hidden Champions are Making Breakthroughs
The conference highlighted many companies that are tackling key technologies.
- Breakthroughs in materials: Jushi Technology, a global leader in glass fibers. NVIDIA's CEO Jensen Huang said that the bottleneck in AI development is not chips but glass fiber materials. Jushi is breaking monopolies and exploring new applications.
- Breakthroughs in equipment and systems: Huaxin Intelligence produces advanced material handling systems for semiconductor factories, and this year, it hopes to turn losses into profits.
- Breakthroughs in medicine and technology: Shanghai Huihe Medical has developed minimally invasive heart valve devices, and Rongnao Technology is working on non-invasive wearable devices for mental health.
Core logic: These companies are often hidden champions or specialized innovators. The state supports them by encouraging them to lead research and development with upstream and downstream partners.
5. Policy Guidance: How Can Companies and the Market Respond?
Here are the specific guidelines from the conference for companies and the market:
- Government/policy: No one-size-fits-all approach; support will be tailored to different regions and companies.
- National-level clusters (e.g., the Yangtze River Delta for integrated circuits, the Pearl River Delta for electronics) will focus on cutting-edge technologies and national security.
- Regional clusters will strengthen and expand their industries.
- Provincial-level clusters will specialize in specific sectors and attract industrial transfers.
- Companies:
- Chain leaders should form innovation consortia and drive research and development with partners.
- Specialized and innovative companies should excel in niche areas and address shortcomings.
- Small and medium-sized manufacturers will receive support for digital and green transformations.
- Market/investors: The conference sends a signal of stability, indicating long-term support for manufacturing. Investors should focus on companies making progress in smart, green, and integrated technologies.
Summary: What Does This Mean for Ordinary People?
- Job opportunities: High-paying jobs will increase in smart manufacturing, green energy, biomedicine, and AI. Traditional manufacturing jobs will decrease, but skilled talents in these fields will be in high demand.
- Consumer experience: You'll see more domestically produced high-quality products at lower prices.
- Investment direction: Focus on companies with core technologies in integrated circuits, new energy, high-end equipment, and biomedicine.
- Life changes: The low-altitude economy will make travel more convenient, brain-computer interfaces will improve healthcare, and green manufacturing will enhance the environment.
In short, China's manufacturing industry is shifting from scale to quality. This is a profound transformation involving trillion-level markets. For companies, it's a matter of survival; for the state, it's the path to modernization; for individuals, it's the starting point for changes in the next decade.
Understanding this conference means understanding China's economic direction for the next five years.