Minister Jin Zhuanglong on China's Industrial Development - Zhong Sheng on US Chips Investigation
Hello everyone,
I hope this finds you all well. Instead of doing a page-wise breakdown, I am just going to cover two pieces that I found useful from the paper.
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First, there’s an interview with Jin Zhuanglong, Minister of Industry and Information Technology, on Page 2. The first question deals with the current development trend of China’s industrial economy. Jin responds by saying that:
“China insists on focusing its economic development on the real economy. The pace of new industrialization has significantly accelerated, leading to a notable enhancement in overall industrial strength, quality and efficiency. In addition, innovation, competitiveness, and risk resilience capabilities have been significantly enhanced. Industrialization development stands at a new and higher starting point.” 我国坚持把发展经济的着力点放在实体经济上，新型工业化步伐显著加快，产业整体实力、质量效益以及创新力、竞争力、抗风险能力显著增强，工业化发展站在新的更高起点上.
He then makes three points about China’s industrial sector.
First, China has 41 major industrial categories, 207 subcategories, and 666 minor categories, making it the only country in the world with all industrial categories in the United Nations industrial classification.
Among the 500 major industrial products, China ranks first in the world in terms of output for more than 40% of its products. The output of a number of important products, such as personal computers, mobile phones, air conditioners, and solar panels accounts for more than half of the world’s output.
In 2022, China’s total industrial added value was 40.16 trillion yuan, accounting for 33.2% of GDP; the added value of manufacturing was 33.5 trillion yuan, almost double that of 2012. China is the world’s largest manufacturing country, and its manufacturing added value accounts for about 30% of the world’s total, ranking first in the world for 14 consecutive years.
工业“全”“多”“大”独特优势更加明显。一是体系全。我国拥有41个工业大类、207个工业中类、666个工业小类，是全世界唯一拥有联合国产业分类中全部工业门类的国家。二是品种多。在500种主要工业产品中，我国有四成以上产品产量位居全球第一，个人计算机、手机、空调、太阳能电池板等一批重要产品产量占全球一半以上。三是规模大。2022年我国全部工业增加值达到40.16万亿元，占GDP比重达到33.2%；制造业增加值达到33.5万亿元，几乎比2012年翻了一番。我国是世界制造业第一大国，制造业增加值占全球比重约30%，连续14年位居全球首位.
The next paragraph deals with the strengthening of the manufacturing sector. He says:
The industrial structure is rapidly upgrading, with the proportion of value added in high-tech manufacturing to total industrial output rising from 9.4% in 2012 to 15.3% in the first three quarters of 2023. The share of equipment manufacturing has increased from 28% to 32.9%.
The export structure continues to improve. In the first three quarters of 2023, the total exports of the ‘three new items’ — new energy vehicles, lithium batteries, and photovoltaic products — increased by 41.7% year-on-year.
The regional layout has been continuously optimized, with the establishment of 45 national advanced manufacturing clusters. Leading industries in these clusters have a total output value exceeding 10 trillion yuan, accounting for approximately 30% of the total output value in their respective industries.
制造业“强起来”的步伐持续加快。产业结构加快升级，高技术制造业增加值占规上工业的比重从2012年的9.4%提高到2023年前三季度的15.3%，装备制造业占比从28%提高到32.9%。在一些重点领域和关键赛道上，形成一批具有全产业链竞争力的优势产业。出口结构持续提升，2023年前三季度，新能源汽车、锂电池、光伏产品等“新三样”合计出口同比增长41.7%。区域布局不断优化，建设45个国家先进制造业集群，主导产业产值超10万亿元、合计约占所属行业总产值的三成左右。
He adds that the information and communication industry has achieved “leapfrog development.”
China has built a total of 3.282 million 5G base stations, achieving ‘gigabit access to cities’, ‘5G access to counties’ and ‘broadband access to villages’.
The technology industry has transitioned from ‘following and imitating’ to ‘leading innovation’. China’s global share of essential patent declarations for 5G standards has reached 42%, placing it in the forefront of research and development in cutting-edge technologies such as 6G and quantum communication.
China has become the world's largest and most dynamic digital consumer market, with industrial internet applications integrated into 49 national economic categories.
The overall scale of the cybersecurity industry has surpassed 200 billion yuan.
信息通信业实现跨越式发展。建成全球规模最大、技术领先的信息通信网络，算力规模全球排名第二，累计建设5G基站328.2万个，实现“市市通千兆”“县县通5G”“村村通宽带”。技术产业实现从“跟随模仿”到“引领创新”，5G标准必要专利声明量全球占比达42%，6G、量子通信等前沿技术研发处于全球第一阵营。融合应用加速赋能经济社会各领域全过程，我国已成为全球最大、最活跃的数字消费市场，工业互联网应用已融入49个国民经济大类。安全保障能力不断增强，网络安全产业总体规模突破2000亿元.
Jin then talks up China’s prospects for further industrial development. He says that China has moved early and established the “first-mover” advantage in key areas like next generation IT and new energy. He also promises to promote the “steady growth of the industrial economy” this year. Jin promises to “promote the ‘troika’ of consumption, investment and export, boost large-scale consumption of products like new energy vehicles and electronics, and explore and cultivate new consumption growth points, such as smart homes and domestic products.” 推动消费、投资、出口“三驾马车”协同发力，提振新能源汽车、电子产品等大宗消费，发掘培育智能家居、国货“潮品”等新消费增长点.
The next question deals with China’s enhanced industrial scientific and technological innovation capabilities. Jin gives data here:
In 2022, China became the world’s second-largest country in terms of R&D investment, with over 570 industrial enterprises making it into the top 2,500 globally for R&D investment, accounting for nearly 25% of the total.
The number of invention patent applications filed by China’s industrial enterprises has increased from 176,000 in 2012 to 555,000 in 2022.
27 national manufacturing innovation centres, two national and local manufacturing innovation centres, and 260 provincial manufacturing innovation centers have been established across the country, and a networked manufacturing innovation ecosystem has been basically formed.
23 national independent innovation demonstration zones and 178 national high-tech industrial development zones have become important forces leading the development of industrial technological innovation and high-tech industries.
In the fields of 5G, manned spaceflight, large aircraft, large cruise ships, high-end medical equipment, and other areas, significant milestone achievements have been made.
2022年我国成为世界第二大研发投入国，570多家工业企业入围全球研发投入2500强，占比近1/4。我国工业企业发明专利申请数从2012年的17.6万件提高到2022年的55.5万件。全国布局建设了27家国家制造业创新中心、2家国家地方共建制造业创新中心、260家省级制造业创新中心，网络化制造业创新生态基本形成。23个国家自主创新示范区和178家国家高新技术产业开发区成为引领带动产业科技创新和高新技术产业发展的重要力量。5G、载人航天、大飞机、大型邮轮、高端医疗装备等领域取得一批重大标志性成果，关键材料保障能力大幅提升，有力支撑国家重大战略实施和质量强国、航天强国、交通强国、网络强国、数字中国建设。
After this, Jin outlines five priorities:
First, implement the high-quality development actions related to key manufacturing industrial chains, further promote industrial infrastructure reconstruction projects and major technical equipment research projects, strengthen quality support and standard guidance, and continuously improve the resilience and safety level of the industrial and supply chains.
Second, strengthen the dominant position of enterprises in scientific and technological innovation, and further strengthen various innovative entities such as innovation entities, such as leading technology enterprises, high-tech enterprises, manufacturing champions, and innovative small and medium-sized enterprises.
Third, continue to optimise the innovation platform network, build 5-10 more national manufacturing innovation centres in key areas, and build a number of trial and validation platforms and pilot platforms in areas such as key materials and major equipment manufacturing.
Fourth, strengthen the support for scientific and technological innovation services.
Fifth, give full play to the role of high-tech development zones and demonstration zones
一是全面实施制造业重点产业链高质量发展行动，深入推进产业基础再造工程和重大技术装备攻关工程，加强质量支撑和标准引领，持续提升产业链供应链韧性和安全水平。二是强化企业科技创新主体地位，进一步壮大科技型领军企业、高新技术企业、制造业单项冠军企业、科技和创新型中小企业等各类创新主体。三是持续优化创新平台网络，在重点领域再新建5—10家国家制造业创新中心，在关键材料、重大装备等关键领域建设一批试验验证平台和中试平台。四是加强科技创新服务支撑，实施制造业卓越质量工程和新产业标准化领航工程，完善科技服务业发展政策，打造“火炬”品牌升级版，培育专业化市场化国际化科技中介组织。五是更好发挥各类园区作用，推进国家高新技术开发区提质增效，发挥好国家自主创新示范区作用，打造世界领先科技园区和创新高地，启动创建国家新型工业化示范区，培育世界级先进制造业集群.
The third question deals with tasks going forward. Jin outlines four of them:
First, “put the transformation and upgrading of traditional industries in a more important position, accelerate the high-end, intelligent, and green development of traditional industries…increase financial support for technological transformation of manufacturing enterprises, implement tax incentives and special re-lending policies, improve technological transformation standards for enterprises, strengthen the construction of laws and regulations, and promote equipment updates, process upgrades, management innovation, and digital empowerment. Implement manufacturing technology transformation and upgrading projects, focusing on key industries such as steel, non-ferrous metals, and light industry, widely apply digital intelligence and green technologies, and promote large-scale technological transformation and equipment updates…” 一是加快改造提升传统产业。我国传统产业体量大，在制造业中占比超过80%，是我国保持全球第一制造业大国地位的基本盘。我们要把改造提升传统产业摆在更加重要位置，加快传统产业高端化、智能化、绿色化发展，让传统产业“老树发新芽”。加大制造业企业技术改造资金支持力度，落实税收优惠和专项再贷款政策，完善企业技改标准，加强法规制度建设，推动设备更新、工艺升级、管理创新、数字赋能。实施制造业技术改造升级工程，聚焦钢铁、有色、轻工等重点行业，广泛应用数智技术、绿色技术，推动大规模技术改造和设备更新。深入实施“增品种、提品质、创品牌”行动，加快绿色、智慧、创新产品开发。促进产业在国内外有序转移，继续办好产业转移发展对接活动，支持中西部地区提升承接产业转移能力.
Second, accelerate strengthening the chains, extension and replenishment of chains, expand the advantages of scale, enhance technological advantages, promote the connection and coordinated development of upstream and downstream supply and demand, and enhance the competitiveness of the entire industrial chain. It is necessary to enhance the supply capacity of high-end products and promote high-end applications of rare earths in aerospace, electronic information, new energy and other fields. It is necessary to strengthen the innovation and iteration of new technologies and new products, pay close attention to the disruptive changes caused by new technological breakthroughs, identify risk points, and optimise and adjust development strategies in a timely manner. In view of the risk of overcapacity in some fields, it is necessary to strengthen standardisation guidance and quality supervision, increase industrial concentration, and promote the development of industrial clusters.” 要增强高端产品供给能力，促进稀土在航空航天、电子信息、新能源等领域高端应用。要加强新技术新产品创新迭代，高度关注新技术突破引发的颠覆性变革，找准风险点位，及时优化调整发展策略。针对部分领域产能过剩风险，要加强规范引导和质量监管，提高产业集中度，推进产业集群化发展.
Third, Jin informs that strategic emerging industries account for about 13% of China’s GDP at present. Jin calls to “actively develop new productive forces, and strive to seize the commanding heights of global industrial competition.” Some key sectors he talks about are new energy, new materials, and intelligent connected vehicles, application of Beidou in the communications field and mass consumption field, and biomanufacturing, commercial aerospace, and low-altitude economy. Develop and implement policy documents to foster future industries, promoting research and development as well as the widespread application of cutting-edge technologies such as AI, humanoid robots, metaverse, next-generation internet, 6G, quantum information, and deep-sea and aerospace exploration. 三是积极培育新兴产业和未来产业。目前我国战略性新兴产业占GDP比重约13%，我们要统筹技术创新、规模化发展和应用场景建设，积极发展新质生产力，努力抢占全球产业竞争制高点。要培育更多新支柱新赛道。用好国内大市场和丰富应用场景，发展壮大新能源、新材料、智能网联汽车等新兴产业，推进北斗在通信领域、大众消费领域规模应用，积极培育生物制造、商业航天、低空经济等新的增长点。要前瞻布局未来产业。制定实施培育未来产业的政策文件，推动人工智能、人形机器人、元宇宙、下一代互联网、6G、量子信息、深海空天开发等前沿技术研发和应用推广，构筑未来发展新优势.
Fourth, “promote AI-empowered new industrialization. Vigorously promote digital industrialization, develop and strengthen the core industries of the digital economy, and consolidate the technological foundation, including computing power, algorithms, models, and data. Adhere to the overall promotion of ‘construction, utilisation and research’, improve digital infrastructure and service systems such as 5G, computing power, and industrial Internet, and accelerate the construction of 5G factories. Accelerate the digital transformation of the manufacturing industry, deeply implement special actions to enable digital empowerment of SMEs, and effectively address issues such as their reluctance, hesitation, and lack of capability to transform.” He also talks prioritising the “deep integration of artificial intelligence and manufacturing as the main line, boosting intelligent manufacturing as the main direction, and focusing on scenario application as the traction.” 大力推进数字产业化，发展壮大数字经济核心产业，夯实算力、算法、模型、数据等技术底座。坚持“建、用、研”统筹推进，完善5G、算力、工业互联网等数字基础设施和服务体系，加快建设5G工厂。加快制造业数字化转型，深入实施中小企业数字化赋能专项行动，切实解决中小企业不愿转、不敢转、不会转等问题。大模型技术的一个侧重点是在生产领域的应用，要以人工智能和制造业深度融合为主线、智能制造为主攻方向、场景应用为牵引，统筹布局通用大模型和垂直领域专用模型，从供需两端发力，营造创新生态，高水平赋能新型工业化。深入实施智能制造工程，大力发展智能产品和装备、智能工厂、智慧供应链.
In the final bit, Jin offers more data:
As of November 2023, in China, the number of industrial enterprises above designated size increased from 344,000 in 2012 to 483,000. The number of small, medium and micro enterprises exceeds 52 million, and the number of high-tech enterprises reaches 465,000, becoming an important source of new technologies, new industries and new business formats.
The operating income of China’s top 500 manufacturing companies increased to 51.06 trillion yuan, double that of 2012.
Third, the emergence of specialised and new enterprises is accelerating. China has cultivated more than 103,000 specialised and sophisticated small and medium-sized enterprises, 12,000 ‘little giant’ enterprises, and 1,186 individual champion enterprises in the manufacturing industry.
Second, on Page 3, there’s a Zhong Sheng commentary. It criticises the US’ “hegemonic and coercive behaviour in the field of science and technology.”
The article says “the US Department of Commerce once again used the so-called ‘national security risk’ as an excuse to announce that it would launch an investigation into the supply chain of the US semiconductor industry and the defence industry to assess the dependence of its semiconductor supply chain on Chinese chips. There are also reports that the US has recently asked the Dutch company ASML to stop exporting photolithography machines to China before the relevant ‘ban’ comes into effect. The US keeps talking about fair competition, but keeps erecting obstacles in the technological development of other countries. The US has always unreasonably accused other countries of engaging in ‘economic coercion’, but its own economic coercion has seriously harmed the interests of its allies.” 美方在科技领域的霸道行径和胁迫行为还在不断升级。美国商务部不久前再次以所谓“国家安全风险”为借口，宣布将对美国半导体行业的供应链和国防工业展开调查，评估其半导体供应链对中国芯片的依赖程度。另有报道说，美方近日甚至要求荷兰阿斯麦公司在有关“禁令”生效实施前，停止向中国出口光刻机。美方口口声声喊公平竞争，却不停地在他国科技发展的赛道上设置障碍；美方一贯无端污蔑他国搞“经济胁迫”，但自己的经济胁迫行为已严重损害盟友利益.
The author explains that unlike the earlier US restriction on the sale of chips to China, this current investigation will focus on examining the use and procurement of traditional chips made in China by key industries in the US. “In order to restrict China’s access to advanced semiconductors, the US has implemented a suppressive approach of ‘neither allowing sales nor purchases’. This has seriously impeded normal economic and trade exchanges for chip and semiconductor equipment, materials, and components enterprises worldwide. This action not only harms the legitimate rights and interests of Chinese enterprises but also affects the interests of semiconductor enterprises in various countries, including the US. This is a typical act of economic and technological bullying, flagrantly violating international trade rules.” 为了限制中国获得先进半导体，美方对华搞“既不让卖也不让买”的打压，严重阻碍各国芯片及芯片设备、材料、零部件企业正常经贸往来，不仅损害中国企业正当权益，也影响包括美国企业在内的各国半导体企业利益。这是典型的经济和科技霸凌行径，严重违背国际贸易规则.
The next paragraph basically says that the policy of building small yards and high walls will not work. China’s semiconductor procurement volume in 2022 was approximately $180 billion, accounting for more than 1/3 of the global total. “The Chinese market is irreplaceable and exiting the Chinese market is not a feasible option. This is the consensus of global semiconductor companies.” 中国市场不可代替，退出中国市场不是一种可行选项，这是全球半导体企业的共识.
The author then says:
Even at the cost of inflicting grave self-harm (committing suicide自戕) the US would rather suppress and contain China’s technological development. This is the product of its deep-rooted Cold War mentality. The US seeks to exclude China from critical supply chains and limit China's ascent to the higher end of the value chain through state actions.. This approach involves politicising, instrumentalizing, and weaponizing economic, trade, and technological issues to serve its hegemonic agenda of containing China’s development and growth. The US has packaged its bullying behaviour of building a ‘high wall’ as safeguarding ‘national security’ and used various excuses to coerce other countries to implement a technological blockade against China. This has aroused widespread concern and criticism. ‘The United States' efforts to weaponize this technological advantage against China seem to be straining allies’. A report in The New York Times pointed out that European officials were worried that denying domestic companies access to China, one of the largest and most dynamic technology markets in the world, would harm the interests of these companies. 美方宁愿自戕也要打压遏制中国科技发展，是其根深蒂固的冷战思维在作祟。美方企图以国家行为将中国排除出关键供应链，限制中国向价值链更高端攀升，就是在将经贸和科技问题政治化、工具化、武器化，为其遏制中国发展壮大的霸权政治服务。美方将构筑“小院高墙”的霸凌行径包装成维护“国家安全”，以各种借口胁迫其他国家实施对华科技封锁，已经引发广泛担忧和批评。“美国将这种技术优势武器化以对抗中国的努力看来正在让盟友关系变得紧张。”美国《纽约时报》报道指出，欧洲国家政府官员担心，不让本国公司进入中国这个全球最大、最有活力的技术市场之一，会损害这些企业的利益.
The article then states that “China is pursuing innovation-driven development, and suppressing Chinese technology advancement is an attempt to hinder China's high-quality development and deprive the Chinese people of their right to progress. China's development and growth have an endogenous logic and cannot be stopped by external forces…suppression and containment will only stimulate the will and enthusiasm of the Chinese people. The US's restrictions on China's scientific and technological innovation will only strengthen China's determination to achieve high-level scientific and technological self-reliance…” 中国的发展是以创新驱动的，打压中国科技就是遏制中国高质量发展，剥夺中国人民的发展权利。中国的发展壮大有内生逻辑，是外部力量阻挡不了的。中国有自强不息的光荣传统，一切打压和遏制只会激发中国人民的意志和热情。美方对中国科技创新的限制，只会更加坚定中国实现高水平科技自立自强的决心。半导体业界人士公开反对美国针对中国的半导体出口管制措施，认为“你越给他们施加压力，他们越有可能加倍努力”.