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Made in China

The inventors of ancient China may have given the world gunpowder, but by the 1940s, their descendents would come to know a box of matches as yang huo, or foreign-made fire.

In fact, foreign-made goods were inescapable in the daily life of ordinary Chinese just half a century ago. A bicycle was a yang che (foreign-made car), a shovel was yang qiao and kerosene was known as yang you. Even the horses, a foreign breed taller and stouter than native breeds, were called yang ma.

The names underlined a bleak reality - that the country's manufacturing capacity was so poor that it could not produce even necessities, let alone more advanced industrial products.

Then came the economic reforms in the late '70s. Today, the 'made in China' label is stamped on products available the world over, from clothes to ships, lighters to TV sets, mobile phones and raw materials like steel.

The output and sales of its car industry - which began from scratch in the 1950s- rose to No1 in the world in January this year, overtaking the United States, the long-time leader of the world automobile industry.

China's steel output dwarfs that of any other country. Last year, it topped the chart for the 13th consecutive year with 500 million tonnes of steel - 37.67 per cent of the world's total, and more than the combined output of the eight countries that ranked behind it. In 1949, China ranked 26th with an output of just 158,000 tonnes, less than 0.1 per cent of the world's total.

By 2007, the Ministry of Commerce estimated, the country was leading the world - in output or exports - in more than 170 categories of manufactured products.

Unlike the industrial revolution experienced in Britain, the United States and Japan, which was built on inventions and technological breakthroughs - the steam engine, the gas engine and the semiconductor - China's growth was enabled by globalisation.

But the same conditions that China benefited from - the easy flow of ideas, capital and labour - are also driving the growth of other developing countries, analysts warn. Without scientific innovations that would allow the country to move up the production value chain, they say, China could easily lose its title of being the 'world's factory'.

'China has to strengthen its research and development capacity if it wants to firmly hold its position as a 'world factory',' Lu Tie , an industrial economist at the Chinese Academy of Social Sciences, said.

To remain competitive, the government needed to streamline its administration, crack down on pervasive corruption and remove arbitrary taxes and administrative charges to cut operating costs for businesses, he said.

John Wang, chief writer at the Taiwan-based Business Next magazine and a long-time observer of the mainland economy, suggested that Beijing invest more to train its workforce. 'By training its workers, China can move up the global production chain, and ready itself for an eventual shift from a manufacturing-centred economy to a service-centred one,' he said.

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