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Three Major Risks Facing China's Industrial Transformation and Upgrading(No. 182, 2017)


By Xu Zhaoyuan, Research Team on “Risk Prevention and Countermeasures in the Economic Transformation Period”, DRC

Research Report No. 182, 2017 (Total. 5257) 2017-12-18

Abstract: In recent years, China has made notable progress in industrial upgrading bolstered by its distinctive advantages of large scale, sound technological foundation, a complete system of industries and comprehensive innovation factors. But Chinese industrial upgrading is also facing some risks, mainly in the following three aspects. First, The enterprises have the ability to produce high-quality products, and there is potential demand for high-quality products, whereas the enterprises are involved in low quality competition. As a result, the consumers lack confidence for domestic goods, which have induced “low quality trap” risks for enterprises. Second, due to the increase of manufacturing cost, weakening competitiveness of products, and the remanufacturing surge in the developed countries, China’s manufacturing export growth has become sluggish and even decreased. Third, owing to deficient market competition and high labor mobility, craftsmanship spirit is weak and production capacity is hard for improvement. To prevent the industrial upgrading risks, we should optimize and improve the market order, reduce the cost by a big margin, enhance the innovation ability, and take measures to promote the craftsmanship spirit of entrepreneurs, managers and staff members.

Key words: transformation and upgrading, quality improvement, risks