manufacturing

Long-term vision, national old-for-new initiative, will further boost China’s low-carbon technology success

 

Illustration: Xia Qing/GT

Illustration: Xia Qing/GT

China’s ongoing campaign to encourage enterprises and households to increase trade-ins of old manufacturing equipment and rundown consumer goods with new, modern and tech-studded ones is gaining pace. This is an effective step to boost domestic consumption and reduce the country’s carbon footprint, which is good for China’s all-around sustainable development in the long run.

The highly accommodative economic policy put in place by China’s central government earlier this year will help modernize the country’s massive inventory of industrial and household equipment. At the same time, it will stimulate the positive sentiment of the country’s vast consumers, persistently boosting GDP expansion. 

The sheer size of China’s existing industrial and household inventory, targeted by the nationwide old-for-new campaign, will demonstrate the significance of the government-coordinated initiative. This will create a new horizon for China’s development in the coming years. 

Ten of millions of Chinese consumers are increasing their spending on consumer goods under the new round of trade-in program, unleashing huge consumption potential, bolstering sustained recovery and injecting new momentum into the country’s economic growth. China will also provide financial support to establish recycling systems for discarded home appliances. Local governments and appliance companies are encouraged to offer preferential policies for consumers who buy or trade for green and intelligent home appliances.

Through the massive trade-in program, new machine tools and manufacturing equipment installed at Chinese factories and assembly lines will strengthen the country’s manufacturing power. Targeted efforts to incentivize big-ticket item consumption like electric cars, home appliances, and furniture with discounts and coupons will boost retail sales, leading to increased factory production. Trade-ins in the field of home décor, kitchen appliances and bathroom products will drive the development of new and modern building materials. 

According to the government-released plan, by the end of 2025, the country will increase the recycling volume of old home appliances by 15 percent and the recycling volume of old-fashioned, environmentally polluting ICE (internal combustion engine) vehicles by 50 percent from 2023 levels. The program will continue over several years to provide lasting momentum for the country’s economic growth.

Looking back at the past 45 years, the Chinese government has consistently accurately predicted the trajectory of global industrial evolution and people’s consumption patterns. The government has become increasingly forward-looking and visionary. 

Many years ago, policymakers began focusing on nurturing China’s homegrown innovation capability in low-carbon industrial production, investing significant resources in scientific exploration and technological development. This effort has led to the country’s current advantages in manufacturing high-end batteries, electric vehicles, solar panels and wind turbines, as well as modern transport systems like high-speed trains and urban metro networks.

In the years ahead, a country’s low-carbon manufacturing technology and industrial capacity will decide its role in leading and driving the global economy. Countries, regardless of size, will inevitably embrace clean new energies and low-carbon lifestyles as the only sustainable way for the Earth. 

China’s growing low-carbon manufacturing power also illustrates that low-carbon industrial capacity is, and will continue to be, advanced capacity welcomed by the world, rather than the “overcapacity” claimed by US officials. The Biden administration has not considered the long-term implications of imposing excessively high tariffs on Chinese EVs, batteries, solar panels and other high-tech products. This reckless and even thoughtless decision will inflict long-term harm on the US’ green transformation.

It is wise for China to promote a new wave of massive trade-ins of old manufacturing equipment and rundown consumer products, with modern, low-carbon, intelligent technology with internet connectivity or AI guidance, which are offered at a low price. Affordability, exemplified in the inexpensive batteries and EVs now being assembled in China, will be a significant variant for global consumers when they make purchases, whether by opening their wallets or using their mobile phones to pay. 

Data from China’s Ministry of Commerce showed that, as of the end of 2023, the number of household appliances in major categories such as refrigerators, washing machines and air conditioners had exceeded 3 billion units, indicating huge potential for renewal and replacement. 

During the country’s old-for-new promotional campaign, consumers can enjoy subsidies equivalent to 10-percent of the product price, as well as discounts and shopping coupons given by retailers. Green and energy-saving household appliances containing innovative technology are highly encouraged as they are both of good quality and cost-effective. 

Sales of green and energy-saving electric appliances skyrocketed by 110 percent during the five-day May Day break from May 1 to 5, compared with the same period last year. The new initiative has significantly unleashed new consumer vitality in China. To accelerate the transition to EVs replacing ICE cars, a number of Chinese automakers including BYD, Nio and Xpeng have offered preferential terms for consumers who scrap old and polluting cars in exchange for zero-emission EVs. 

In summary, China’s national old-for-new initiative is conducive to gradually phasing out fossil-fuel guzzlers and other outdated equipment and products with clean EVs and technology-intensive replacements. This initiative will bolster the country’s industrial upgrade, stimulate the purchasing desire of Chinese consumers and improve people’s quality of life. Ultimately, the initiative will support the rising competitiveness of Chinese economy. 

The author is an editor with the Global Times. [email protected]

Inner Mongolia’s Baotou shines in solar, wind power

Automation machines are in operation at the production workshop of a solar technology company in Baotou, Inner Mongolia autonomous region, on May 11, 2024. [Photo/Xinhua]

Baotou, Inner Mongolia autonomous region, is seeing fast growth in its solar and wind power industries.

In recent years, the city has leveraged its strengths in equipment manufacturing to seize opportunities in the new energy sector, and now it boasts three key industrial sectors: rare earth materials, solar power and wind power equipment manufacturing.

Why has China’s manufacturing industry become a ‘scapegoat’ for the US?: Global Times editorial

Workers build large cargo ships in Yichang, Central China's Hubei Province on Sunday. In 2020, the output value of Yichang's shipbuilding industry, hit by the epidemic for almost half a year, reached 9 billion yuan ($1.4 billion). It was also the fourth year in which the industry built more than 100 ships, holding first place in Hubei Province. Yichang has become a shipbuilding center in the middle and upper reaches of the Yangtze River. Photo: cnsphoto

Workers build large cargo ships in Yichang, Central China’s Hubei Province. File Photo: cnsphoto

On April 17, the Office of the US Trade Representative once again wielded the “Section 301” stick, this time targeting China’s maritime, logistics and shipbuilding sectors. On the same day, the Biden administration also called for a significant increase in import tariffs on Chinese steel and aluminum products. These moves are another dangerous step by Washington dragging the US and China into an escalating trade war vortex, not only a misinterpretation or even distortion of China’s manufacturing competitiveness but also a deviation from the fundamental principles of the World Trade Organization (WTO).

This is the latest Section 301 investigation launched by the US against China. Although the current scope of the investigation is somewhat different from the past, the fundamental purpose remains the same: to misinterpret normal trade and investment activities as threats to US national security and corporate interests, and to blame China for its own industrial issues. Recently, US Trade Representative Katherine Tai claimed in a hearing that China’s alleged unfair policies and practices “have devastated many working communities and industries” across the US, citing industries such as steel, aluminum, and electric vehicles as examples. However, according to the White House, imports of steel from China only account for 0.6 percent of total US steel demand, far less than countries like Canada and Mexico. Not to mention, due to high tariffs, Chinese electric vehicles have hardly entered the US market, so where does the claim of “devastating” come from?

In the face of the numerous groundless accusations in the US application document, China, with frankness and integrity, naturally fears no trouble and will staunchly defend its own rights and interests. The development journey of China’s manufacturing industry is evident to the world, and it can be boldly stated that the development of China’s industries is the result of enterprises’ technological innovation and active participation in market competition. Right and wrong have their own clear distinctions; regardless of how Washington tries to label China with various new and old accusations, it will not change the fact that the US is engaging in protectionism and unilateralism. The previous US administration’s initiation of the Section 301 investigation against China and imposition of tariffs on China have been ruled by the WTO to have violated WTO rules and have faced opposition from numerous WTO members. This time will be no exception.

At this juncture, Washington’s sudden concentrated attacks on China’s manufacturing industry are, to some extent, influenced by the factors of the US elections. The Biden administration probably hopes to win the votes of blue-collar workers in swing states by doing so. But looking beyond the surface, behind China’s manufacturing industry becoming the “scapegoat” for Washington, there is a fundamental issue – the US has yet to truly face up to the development of China’s manufacturing industry and economy. If Washington cannot have a clearer understanding of “Made in China,” then the future of China-US economic and trade relations will inevitably encounter obstacles and challenges.

The rise of China’s manufacturing industry, especially in heavy industries such as steel, shipbuilding, and railway equipment, is a natural result of resource optimization in the process of global economic integration. The journey of China’s manufacturing industry to its current state, with strong competitiveness and vitality, has not been easy. It has been achieved through overcoming obstacles, backed by a large market size, efficient infrastructure, a well-developed supply chain system, and continuously improving technological innovation capabilities. Relying on unfair means to “force growth” will not lead to the full blossoming of “Made in China.” Washington should be well aware of this, as the traditional manufacturing industry in the US, represented by the shipbuilding industry, lost its competitive advantage due to excessive protectionism many years ago.

The crisis currently facing the traditional manufacturing industry in the US should serve as a wake-up call for Washington. It should be a moment for deep reflection, rather than being used as a tool for elections or as an excuse for cracking down on China. How to revitalize the declining traditional manufacturing industry in the US, and how to move economic development from virtual to real, are crucial matters concerning the national interests of the US. Choosing to blame others will only worsen the situation. Compared to unilateral investigations, the more optimal solution for Washington should be to follow the trend of globalization, adhere to the principle of comparative advantage and market economic laws, and develop industries that align with their own factor endowments, rather than attempting to help disadvantaged industries with trade protection. Doing so will ultimately be futile.

China has achieved economic leaps through continuous opening-up, and it will continue to move forward firmly on this path in the future. As the two largest economies in the world, China and the US should also work together to maintain the stability of the global industrial chain and promote global economic growth on the basis of mutual respect and equal benefits. We urge the US government to recognize the achievements of China’s manufacturing industry, respect the rules and direction of globalization, and stop wielding the “Section 301” stick recklessly. This could be the first step toward a more constructive relationship.

China’s private Caixin manufacturing PMI up to 51.1 in March, hitting 13-month high

PMI Photo:VCG

PMI Photo:VCG

China’s private Caixin manufacturing purchasing managers’ Index (PMI) rose to 51.1 points in March, up 0.2 points from February, marking the fifth consecutive month in expansion territory and a new high since March 2023, according to data released on Monday.

The reading followed China’s official factory activity data released by the National Bureau of Statistics (NBS) a day earlier, which showed an expansion for the first time in six months. The figures show signs of improvement in China’s manufacturing production and business operations and a noticeable improvement in economic activity in the first quarter, experts said. 

Overall, the manufacturing sector continued to improve in March, with both supply and demand expanding at a faster pace. External demand also increased, leading to higher purchasing volumes. Business optimism is on the rise too, Wang Zhe, a senior economist from Caixin Insight Group wrote in a note on Monday.

According to the Caixin manufacturing PMI sub-index, both supply and demand expanded at a faster pace in March. The manufacturing production index and new orders index continued to rise, with the production index reaching its highest level in 10 months. 

Due to improved external demand, the new export orders expanded for a third consecutive month in March to their highest level in 12 months. 

Surveyed private companies reported that market conditions have markedly improved, leading to an increase in demand and a rise in new business volume.  

Entrepreneurs also reported rising optimism about growth momentum and anticipate continued improvements in production and sales in the coming months, according to the survey.

The Caixin manufacturing PMI followed China’s official manufacturing PMI released a day earlier which came in at 50.8 for March, up from 49.1 in February, returning to expansion territory in six months.

The numbers show that China’s economic recovery has gained significant pace. “The pace of economic expansion in the domestic market has further accelerated, with a strengthening of domestic demand and a recovery in consumer and overall business confidence,” Zhou Maohua, an economist at China Everbright Bank told the Global Times on Monday.

Both domestic consumption and investment momentum are growing, leading to a noticeable improvement in economic activity in the first quarter compared to the fourth quarter last year, Zhou said.

China’s industrial profits rose 10.2 percent in the first two months of 2024, reversing a decline of 2.3 percent in 2023. 

In January-February period, retail sales expanded by 5.5 percent year-on-year, while the fixed-asset investment gained 4.2 percent in year-on-year terms. The industrial output grew 7 percent year-on-year in the first two months.

Chinese textile industry’s growing innovation capacity help unleash new opportunities in global market

The opening ceremony of the 3rd China Chaoshan International Textile and Garment Exhibition (CTGE) is held in Shantou, South China's Guangdong Province on March 28, 2024. Photo: Courtesy of CTGE

The opening ceremony of the 3rd China Chaoshan International Textile and Garment Exhibition (CTGE) is held in Shantou, South China’s Guangdong Province on March 28, 2024. Photo: Courtesy of CTGE

A new wave of vigorous industrial transformation is picking up speed, as the global industrial chain has become increasingly reshaped, which is expected to bring new opportunities and challenges to China’s textile industry.

Increasingly, Chinese textile enterprises are boosting their digital transition based on 5G, industrial internet and artificial intelligence (AI) innovations. The sector is also witnessing a higher level of consolidation in the country.

The Chaoshan region, east of Guangdong Province, South China, has taken a pioneer in the development of the textile industry in China and the world. Since the reform and opening-up drive was kicked off in late 1970s, Shantou city, Guangdong, has seen a very fast development of textile and garment industry. In 2023, the total output value of the city’s textile and garment enterprises above the government’s designated size reached 111.8 billion yuan ($15.73 billion).

At the three-day China Chaoshan International Textile and Garment Exhibition (CTGE), which closed in Shantou city on Saturday, a good number of textile companies showcased their new technologies and clothing materials as they strive to achieve a rapid upgrade in the textile industrial chain.

The technological innovation in clothing materials and changes in the industrial and supply chains have made the Chinese textile sector very competitive in the global market place, compared with other textile plants elsewhere. China’s standing as a strong textile manufacturing power is unlikely to change.

Low-carbon innovation

Over recent years, Shantou city is speeding up industrial transformation and upgrade, introducing environment-friendly equipment and highly innovative technologies. By making use of 5G, AI and latest robotic technology, the city’s traditional labor-intensive assembly lines are giving way to green, low-pollution, high-tech, and high-value manufacturing tools. As a result, innovation has injected rising impetus to accelerate the textile sector’s growth.

The digitalization rate in Shantou’s textile and garment industry has reached 55.6 percent, while nearly 75 percent of the equipment for raw material processing, weaving, dyeing and other procedures are becoming increasingly smarter, local government officials said during the CTGE.

Intelligent manufacturing has not only enhanced the city’s production efficiency but also considerably contributed to the much-desired green transition.

Guangdong Rongchang Textile Industry Co told reporters that the company has deployed a set of digital control systems including Internet of Things (IoT) and enterprise resource planning, which enables the company to collect and analyze data through the whole production process, like energy consumption and quality control.

“New technologies help us curb the consumption cost in using raw materials and energy in manufacturing, while greatly improve recycling of wastes and achieve green and low-carbon manufacturing,” the company said.

“China is not only the producer churning out goods, it is also a strong creator,” Livia Stoianova, the founder of a famous French high-end brand On Aura Tout Vu, told Global Times at the CTGE on Thursday. Traditional industries like textile need to be revamped and improved, by leveraging new technology, she said.

In terms of scientific research and technological innovation levels, Chinese textile companies are deemed “very advanced” now, an industry insider told the Global Times on Sunday. The insider said that the textile industry will continue to develop high-quality smart fibers used not only for making clothing, but also for other emerging industries, like nano-fiber.

As an industry with a traditional comparative advantage in China, the textile sector covers multiple production steps including raw material manufacturing, spinning, weaving and knitting, and garment production. Today, China has the world’s largest and most complicated textile system, with the country’s manufacturing and international trade scale also leading the world, according to media reports.

Leading in fiber-making

In 2022, China’s total fiber processing volume reached more than 60 million tons, accounting for some 50 percent of the world’s fiber processing volume, data from the China National Textile and Apparel Council said.

Nevertheless, the US government has ramped up suppression of China’s textile industry, like fabricating so-called “forced labor” narrative to stymie Chinese textile and apparel companies that use Xinjiang-grown cotton as raw materials.

And, a number of Western media outlets echoed their governments to hype the transfer of the industry and supply chain from China to other developing countries. Some even wrongly claimed that China had lost its comparative advantage in labor-intensive manufacturing, such as the textile industry.

“Although China has faced restrictive policies in the textile industry imposed by the West, we still keep attracting foreign investment, thanks to our active innovation, continuous opening-up and our technological advantages,” Ma Qingxuan, vice president of Shantou Textile and Garment Industry Association, told the Global Times on Thursday.

“The US restricts Xinjiang-produced cotton, but China owns other advantages in textile materials such as nylon and polyester,” Ma said.

Due to China’s vast market opportunities in textile, the Guangdong exhibition has attracted many foreign executives and officials, who expressed their hope to accelerate cooperation with China.

On March 21, the Chinese mainland, ASEAN and Hong Kong signed a memorandum of understanding on regional cooperation in textile manufacturing, which will contribute to the development of new quality productive forces and in-depth industrial cooperation along the Belt and Road Initiative (BRI), according to a statement on the website of the China National Textile and Apparel Council.

“As far as the textile manufacturing is concerned, China still has more competitive advantages in terms of production cost,” Oranuch Wannapinyo, commercial consul at the Commercial Section Royal Thai Consulate-General, told the Global Times on Thursday at the CTGE.

“China can produce on a larger scale. Thailand often places large orders for Chinese textile companies, and also orders raw materials from China to produce domestically in the form of original equipment manufacturing,” she said.

In addition, Thailand and China have been closely cooperating in the textile field, including holding seminars and lectures, as well as exchanging and sharing resources under the framework of the BRI, Wannapinyo said.

China’s official PMI surges to 50.8 in March, returning to expansion territory in 6 months

The manufacturing line of a NEV factory in Southwest China's Chongqing Municipality Photo: VCG

The manufacturing line of a NEV factory in Southwest China’s Chongqing Municipality Photo: VCG

China’s official manufacturing purchasing managers’ index (PMI) returned to expansion range in March after running below 50 for five consecutive months, the National Bureau of Statistics (NBS) said on Sunday, as manufacturing activity increased with the fast resumption of work and production following the Spring Festival holidays.

The figure, although partly driven by the seasonal factor, showed that the economic recovery has further consolidated, highlighting the resilience of the Chinese economy, experts said, and they are more confident about GDP growth in the first quarter.

In March, the manufacturing PMI came in at 50.8 amid an increase in market activity, up from 49.1 a month earlier, returning to expansion territory.

The manufacturing sector has seen a recovery of production and strong market demand, with the production sub-index reaching 52.2 in March, up 2.4 points from the previous month, while the new orders index surged to 53.0.

Driven by strong demand, the purchasing volume index was reported at 52.7, an increase of 4.7 points, according to the survey.

Manufacturing activities expanded in March with the rapid resumption of work and production after the Spring Festival holidays, as the sector showed a significant expansion in business conditions, according to NBS senior statistician Zhao Qinghe.

In the survey of 21 industrial lines, 15 returned to expansion territory, an increase of 10 from the previous month, said Zhao.

Zhang Liqun, an analyst at the China Federation of Logistics and Purchasing, said that the significant rebound of the manufacturing sector and the PMI surge above the expansion-contraction line of 50 was not only driven by seasonal factors, but also provided further verification of the positive development trend of China’s economic recovery. 

The sub-index for production and operation activity increased by 1.4 points, indicating that business confidence has largely recovered, and the effects of pro-growth policies aimed at stabilizing growth and boosting confidence since the beginning of the year began to see results, Zhang said.

Experts believe the return of the PMI to the expansion range shows that China’s economy is bottoming out and rebounding, and economic growth was substantial in the first quarter.

With the PMI reaching 50.8 and other indicators such as fixed-asset investment and retail sales rising, China’s economy showed signs of recovery in the first quarter, Cao Heping, an economist at Peking University, told the Global Times on Sunday.

“The GDP growth rate could have reached 5.2 percent in the first quarter, which is quite optimistic, ” Cao said.

While welcoming the growth in the PMI, it is also important to focus on the transition of China’s economy from quantity growth to quality improvement, experts said.

The PMI rebound won’t be overly rapid, as the economy is transitioning from quantitative expansion to qualitative improvement, with the continuous optimization of the economic structure. Quality enhancement is more important for China’s economy than total volume increase, Cao noted.

China has been the world’s top manufacturing hub for 14 consecutive years. The authorities have implemented pro-growth policies to accelerate manufacturing output, paving the way for high-quality development. 

It’s necessary to further refine and implement the mapped-out stimulus measures – such as promoting a new round of large-scale renewal of manufacturing equipment and trade-ins of cars and home appliances – to provide strong support for the high-quality development of the manufacturing sector, Zhao said. 

On March 14, the State Council, the cabinet, released a plan to promote the large-scale renewal of equipment and the trade-in of durable consumer goods, opening up a huge market worth trillions of yuan. The action plan is aimed at bringing more high-quality durable consumer goods into people’s lives, smoothing the recycling chain of resources, and significantly improving the quality and level of economic circulation.

Japan’s renewed airliner ambitions may have regional spillover effect

Illustration: Tang Tengfei/Global Times

Illustration: Tang Tengfei/Global Times

Japan aims to develop a next-generation passenger aircraft by around 2035, with a plan to mobilize a combined 5 trillion yen ($33 billion) in public and private investment over the next 10 years, Kyodo News reported on Wednesday. 

Japan’s aviation ambitions are noteworthy, as they demonstrate that the country is doubling down on high-end manufacturing to reboot its economy despite challenges, which may generate a spillover effect on the Asia-Pacific supply chain.

Earlier this month, Japan’s central bank finally ended its era of negative interest rates following signs that the country’s decades-long deflation or low inflation is coming to an end. 

Another significant recovery has been seen in the stock market, with its main index climbing past its all-time high after a 34-year wait. Some optimists believe that Japan’s economy is awakening from its decades-long torpor, and confidence levels have hit a new high. 

Against this backdrop, some analysts believe high-end manufacturing will become a focus of Japan’s efforts to restart its economic engine. As a restructuring of the Asia-Pacific industrial chain seems to have accelerated, Japan might have realized that it must rely on high-end manufacturing, as well as scientific and technological innovation, to seize new development opportunities in the increasingly intense international competition. 

At this moment, Japan announced plans to develop a next-generation passenger jet. It seems that analysts guessed the trend correctly.

Citing officials of the Ministry of Economy, Trade and Industry, Kyodo News said the aircraft industry is expected to be a growth driver for Japan. The country’s new aircraft development project is likely to involve multiple companies, leveraging Japan’s technologies and experience in areas such as aircraft bodies, engines and equipment.

In the mid-1990s, Japan had a highly diversified manufacturing economy. However, in the following three decades, some traditional manufacturing industries, such as fax machines, digital cameras, electronic watches and home audio systems, gradually declined. Now, it’s become increasingly clear that Japan is attempting to revive its manufacturing industries, especially in high-end sectors.

The Japanese government has implemented several initiatives to revitalize the semiconductor industry. According to the Japan Times, the country is expected to drastically hike investment in chip gear by $7 billion this year, citing an industry association – an 82 percent increase from last year.

After its “lost decades,” Japanese society experienced a sense of frustration and powerlessness, but now its confidence is recovering. Japan was once a leader in world production, known for its expertise in cutting-edge technologies such as comprehensive hydrogen energy utilization. Therefore, Japan’s current efforts to develop high-end manufacturing are worthy of attention. This will potentially intensify the already fierce competition in the Asia-Pacific region.

However, Japan faces significant challenges – from talent reserves to the integrity of the supply chain – in attempting to rebuild its manufacturing influence, especially in high-end sectors. 

For instance, Japan’s new effort to develop a next-generation airliner by 2035 is bound to encounter obstacles. Its previous attempt to establish itself as a commercial aircraft maker failed in 2023. Now, the country’s renewed push for a homegrown airliner is likely to face similar challenges and difficulties.

Nevertheless, Japan has shown its determination to develop high-end manufacturing. China, as an important participant in the Asia-Pacific supply chain, is also ramping up efforts to develop advanced manufacturing. We should be aware that Japan’s development could make competition in the global market more intense, and be prepared to cope with it.

A key issue is how to prevent competition from moving toward a zero-sum game. To solve this problem, all participants in the Asia-Pacific supply chain, including Japan, need to open up their markets, curb trade protectionism, oppose economic decoupling, and strengthen industrial chain cooperation.

The author is a reporter with the Global Times. [email protected]