Key industries playing catch up with west

PUBLISHED : Monday, 02 March, 2009, 12:00am
UPDATED : Monday, 02 March, 2009, 12:00am

The mainland's manufacturing, energy and metals industries are only about a third as competitive as their international counterparts, according to research by the Chinese Academy of Social Sciences, a top government think-tank.

The researchers also called for greater consolidation of corporate research and development to raise manufacturing performance. The call is in line with government bailouts designed to bolster key industries amid the economic downturn.

In the past six weeks, Beijing has rolled out 10 sets of guidelines for as many industries, ranging from car-making to electronics manufacturing. Nine of the industries are either in manufacturing or energy and, although details varied, all of the industry plans promised to encourage mergers and acquisitions as well as innovation.

According to the National Bureau of Statistics, overall industrial output grew by 9.5 per cent last year, the slowest pace since 2004 and down 5.4 percentage points from 14.9 per cent from 2007. The producer price index, a key indicator of overall industrial activity, recorded a 3.3 per cent drop in January, registering in negative territory for the second month in a row.

The slowdown was blamed on rapidly deteriorating global economic conditions in the second half of last year.

'Industrial companies across the board [also] rely heavily on foreign patented technologies and are held back by low productivity,' study co-author Huang Qunhui said.

'In addition, decentralisation and unco-ordinated development has further hurt the international competitiveness of such sectors as steel and energy.'

Dr Huang and his colleagues assessed data on 15 industries which together account for more than 60 per cent of the country's annual total industrial output.

Each of the chosen industries was gauged on its efficiency, structure and sustainability in comparison with their counterparts in developed economies.

The researchers assessed the 15 industries as a whole and came up with an average score of 36.7 out of 100, with 100 representing the standards of a fully industrialised nation.

'That means our research concluded that China still has a long way to go before realising full industrialisation,' Dr Huang said.

Gu Qiang from the Ministry of Industry and Information Technology hinted that monopoly status may be the main reason some state-owned manufacturing and resources companies were successful at home but struggled overseas.

'The top bracket of the 500 biggest Chinese companies are seldom competitive in overseas markets ... Those that can sell in the United States are usually smaller, sometimes, private Chinese enterprises,' Mr Gu said. 'I don't think that's a coincidence.'