From “Made in China” to “Intelligent Manufacturing from China”
By Bian Yongzu, Xu Zhiling
After missing the opportunity of the world first and second industrial revolutions, China’s manufacturing industry lagged behind western developed countries. But it seized its opportunity at the end of last century when the third industrial revolution and globalization was in full swing, adding powerful fuel to China’s economic growth. Over four decades since the start of reform and opening up, China grew rapidly into the “world’s factory”, and “Made in China” began to bring its prominent cost advantage into play. However, with the emergence of problems like overcapacity, the traditional manufacturing model is now in urgent need of transformation and upgrading.
The supply-side reform initiated by the Chinese government is restructuring the whole industrial spectrum, focusing on the emerging and high technologies, while upgrading the traditional sectors. During the process, de-capacity, de-stocking, de-leverage, cost cut and increase of public goods supply are among the top priorities.
The intelligence revolution driven by the development of AI is triggering a 4th industrial revolution. It will increase the productivities across the board significantly, change our ways of living and working, and have a profound impact on the whole of society. China’s manufacturing industry is now at the starting point of this new, powerful, and unstoppable trend, which offers the prospects of huge new markets.
The structure of international industrial division is now undergoing a reshaping process, with new waves of technological revolution and industrial revolution sweeping in one after another. China has firmly gripped the historical opportunity this time by accelerating transition of its model of economic development, and this will certainly lead a transformation in China’s manufacturing industry from “Made in China” to “Intelligent Manufacturing from China”.
Made in China 2025 — 5 major projects achieve initial results
China’s State Council published the guideline Made in China 2025 in May 2015, with broad long-term visions of Made in China 2035 and Made in China 2045, which lays out the roadmap to making China the world leader in manufacturing.
Under the guidance of Created in China 2025, the authorities established 11 major missions involving a range of areas that are essential to China’s industrial upgrading, and refined these missions to a series of specific guidelines. Five of these are major projects – the construction of national centers for manufacturing innovation, strengthening the industrial bases, improving intelligent manufacturing, enforcing green manufacturing, and pursuing high-end equipment innovation. Two are guidelines to foster Chinese brands in service-oriented manufacturing and equipment manufacturing. Four involve cultivating talent in new materials, IT, healthcare, and high-end manufacturing. Known as “11+X”, the top-level design is well on the way to implementation.
The five major projects have all been launched and are achieving initial results.
In terms of the construction of innovation centers, the first national center for power battery innovation has been set up; at the same time 19 provincial centers for manufacturing innovation has been established too.
In terms of the industrial bases, the first batch of 19 basic public service platforms for industrial technology has been set up. Technologies like fuel injector assembly for gasoline engines, thulium doped fiber laser, the industrialization of T400 carbon fiber, the key technologies of intelligent high-speed train manufacturing, and differentiated fiber production technology have all reached international leading level.
In terms of intelligent manufacturing, two centers for Additive Manufacturing and Industrial Robots will soon be set up. The Chinese government undertook 226 comprehensive standardization tests on new applications, and chose 109 pilot and demonstration projects in intelligent manufacturing. Overall these have delivered an average production efficiency increase of 38%; efficiency of energy use has increased by 9.5%, and operational costs have dropped by 21%.In the area of green manufacturing, the Chinese government have launched 57 programs to reduce high-risk pollutants, organized 99 pilot companies to carry out green design, published a product list that includes 119 products that involve green manufacturing, and incentivized the establishment of 51 national low-carbon industrial parks. The energy consumption per unit of the industrial added value of enterprises above scale is estimated to drop 5%, the utilization of fly ash, smelting slag and gypsum will reach 71%, 75% and 47% respectively.
In the area of high-end equipment innovation, products like high-precision CNC gear grinders, multi-axis sophisticated heavy machine tools, and CNC stamping production lines have all reached world leading level. The ARJ21 regional aircraft has already been put into commercial operation, the C919 trunk line twinjet airliner made its maiden flight in May, and the AG600 amphibious aircraft will make its maiden flight this year too. At the same time, the Long March 5 Series Launch Vehicle and the world’s first Quantum communication satellite have both been successfully launched.
The Increasing Contribution of High-end Manufacturing to the Economy
According to spokesperson Xing Zhihong of National Statistics Bureau, China’s manufacturing industry accelerated its transition to middle-and-high-end manufacturing in the first half year of 2017. The growth rate of the added value of high-tech industry and equipment manufacturing was double the overall industrial growth rate over the same period.
Shenzhen is the best example of the rapid development in China’s manufacturing industry. A group of emerging new high-tech manufacturing companies such as the world’s biggest manufacturer of communication equipment, Huawei Technologies, the biggest producer of new energy power batteries, BYD, the biggest gene sequencing institute, the BGI, and the DGI unmanned aerial vehicle all emanate from Shenzhen.
The driving role of innovation in Shenzhen’s development is becoming more evident. In spite of the influence of international financial crisis, the average annual GDP growth of Shenzhen since 2010 has been sustained at almost 10%. Within this figure, the growth of strategic emerging industries has been nearly 20%, and its contribution to economic growth has reached nearly 50%.
China to Catch up with the World in Artificial Intelligence
In recent years, China’s unique strength in Big Data is playing an increasingly important role in the 4th industrial revolution, the core of which lies in artificial intelligence.
According to the report How Artificial Intelligence Can Help China’ s Economic Growth from Accenture, AI can contribute 1.6% to China’ s annual economic growth, and achieve production growth of 27% by 2035.
The government has designated artificial intelligence as a strategic area.
“Artificial intelligence” featured in the Report on the Work of the Government for the first time during the two sessions of 2017. The State Council issued The Development Plan of New Generation Artificial Intelligence on July 20, 2017, which set a target of making China the world leader in artificial intelligence by 2030. By that time the scale of core industries should exceed 1 trillion RMB (150 billion USD), and the scale of related industries should exceed 10 trillion RMB (1.50 trillion USD). Approved by the Ministry of Science and Technology, the AI Industry and Technology Innovation Strategical Union was officially set up on July 23, 2017.
With the strong support of the government, the AI industry is attaining rapid development in China. It is already narrowing the gap with the US, and can be expected to surpass the US in the foreseeable future. In some areas this is already happening. In terms of in-depth studies in AI, whether in the quantity of academic papers published or the number of citations, China already leads the field. The volume of leading AI papers to which Chinese academics contributed climbed from 23% in 2006 to 43% in 2015, and the number of citations rose from 25.5% 6 to 56%.The performance of China’s AI companies in algorithms, computing power and data analysis has significantly improved in recent years. 9 Chinese companies – including IFLYTECK, Tencent and BAT – have been listed in the 50 Smartest Companies of 2017 by the MIT Technology Review. IFLYTEK and Tencent were ranked in the top 10, respectively 6th and 8th. According to an analysis published by the Tencent Research Institute on AI industry development in China and the US, the number of AI companies worldwide had reached 2542 by the end of June this year, of which 592 are Chinese companies, representing 23% of the total.
At the International Joint Conference on Artificial Intelligence held at Melbourne in August 2017, China’s researchers and companies and their research results attracted extensive attention. China’s participants represented almost one quarter of the total, and nearly one third of the scientific achievements displayed at the conference came from China, surpassing the combined total from the US and Europe.
At this new juncture in industrial development, intelligent manufacturing is a field where China will play a leading role in the future world.
Bian Yongzu, researcher of Chongyang Institute for Financial Studies, Renmin University of China;
Xu Zhiling, intern of Chongyang Institute for Financial Studies, Renmin University of China