Beijing has pledged to prevent industrial hollowing-out by safeguarding the share of manufacturing in its economy, noting that the trend has historically proven difficult to reverse in an official outline of priorities for the next five years.
As nations industrialise, the share of manufacturing in their economies typically peaks before declining. If left unchecked, the trend could lead to deindustrialisation, undermining economic strength and resilience, according to a book released last week by the Communist Party leadership. The publication offered a detailed interpretation of the proposals for the coming 15th five-year plan.
“In recent years, some advanced economies have attempted to revive their manufacturing sectors after deindustrialisation, but it has proven to be extremely difficult,” the authors said.
Last month, the Communist Party’s Central Committee unveiled the proposals for the 2026-2030 development blueprint, with a focus on building a modern industrial system by “maintaining a reasonable share of manufacturing” – though without setting a specific target.
For a populous, developing country like China, manufacturing forms the foundation of a robust real economy, the book’s authors said. This explained China’s prioritisation of its vast industrial base, they added, noting the country would double down on manufacturing amid growing unilateralism and protectionism.
China is the only country that possesses all industrial categories under the UN’s classification system. Manufacturing value added accounted for 24.9 per cent of gross domestic product in 2024, while the country has been the world’s largest manufacturer for 15 consecutive years, the authors said.
Dong Yu, executive vice-president of the China Institute for Development Planning at Tsinghua University, said Beijing had long been committed to preserving manufacturing’s share in the economy. “The 14th five-year plan already has such a requirement,” he said.
The current blueprint, covering 2021 to 2025, called for “maintaining a relatively stable share of manufacturing” and strengthening its competitive edge. Dong said this focus followed a decade-long decline leading up to 2021.
Manufacturing’s share of GDP fell from 32 per cent in 2011 to 26 per cent in 2020, before rising to 27 per cent in 2021 – the first increase in a decade, according to World Bank data.
But the authors of the government policy book stressed that China’s industrial base faces complex changes, including intense external pressure and competition.
“China’s manufacturing sector is generally large in scale but not yet strong in quality, and is currently at a critical juncture in its transition from size to strength,” they wrote.
Beijing has called for a nationwide push to strengthen industry and move up the global value chain. Last week’s proposals stated that advanced manufacturing would form the “backbone” of the modern industrial system that China seeks to build.
This demonstrated a focus on structural upgrades and greater resilience to adapt to global changes, Dong said.
Industrial policy has shifted significantly in many countries since 2020, driven less by economic competitiveness and more by geopolitical tensions, national security and supply chain resilience, according to a report by the International Monetary Fund released last month.
Western trade partners have accused China of fuelling overcapacity and global imbalances amid a tit-for-tat tariff war with the United States.
To absorb production, China has focused on expanding its domestic market and boosting household demand, Dong said. But as industries upgrade, some competition with other countries is unavoidable, he added, noting that protectionism is not the solution. — SOUTH CHINA MORNING POST