An engineer inspects the operation of industrial robots and tests the production efficiency of mechanical arms. Photo: TUCHONG

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In recent years, China has continuously promoted high-quality economic development, aiming to transition from products “Made in China” to “Created in China.” There has been a noticeable acceleration in industrial transformation and upgrading, and China has made milestone progress. 

New leap in factor endowment structure

In 2023, China’s total R&D expenditure reached 3.32782 trillion yuan, with an R&D intensity — the percentage of revenue reinvested in R&D — of 2.64%. The total number of R&D personnel nationwide exceeded 6 million, and the number of valid domestic invention patents reached 4.015 million, making China the first country in the world to surpass the 4 million patent threshold. 

China’s national innovation index has further improved, making it the only developing country to enter the global top 15. China has the largest number of internationally ranked top 100 science and technology innovation clusters, with China leading the list for the first time, and nearly 400,000 high-tech enterprises, ranking second in the world for the number of “unicorn” tech enterprises.

From 2012 to 2022, the number of Chinese graduate students increased from 589,700 to 1,242,500, and the number of R&D employees increased from 3.247 million to 6.354 million. In 2022, the average years of education for the labor force’s newest generation increased to 14 years, heralding a shift from a “population dividend” to a “talent dividend.”

Key frontier technologies

Significant technological breakthroughs have been achieved by investing in areas such as microchips, 5G, and quantum computing. The Huawei Kirin 9000S chip broke the technology monopoly, achieving a 7nm process and performance close to foreign 5nm process products through architectural innovation and an increased transistor density. Customized 5G base stations and lightweight 5G technology have been commercially deployed, and breakthroughs have been made in industrial grade 5G chips, modules, and gateways, with a total of 3 international standards and 90 national standards released. The “Jiuzhang 3” optical quantum computing prototype has set a new world record for optical quantum information technology and quantum computing performance.

Advancements in aerospace engineering technology have launched China to the world’s most advanced astrionic level. In 2023, the Shenzhou-16 and Shenzhou-17 manned spacecrafts were successfully launched and docked with the Tiangong space station, making it possible to normalize crew rotations and scientific experiments. More than 10 types of over 20 domestically produced chips, with radiation resistance, high heat resistance, and cold resistance, completed on-orbit flight verification. The reusable spacecraft successfully returned to the designated landing site after 276 days in orbit, completing repeatable experiments. The Long March-5 carrier rocket unlocked key technologies such as large-scale fairing separation, large-diameter cabin arrow connection separation, and precise control of large-thrust direct orbit deviation, increasing China’s near-earth orbit carrying capacity to over 22 tons.

Exploration of the polar regions, deep sea, and oceans, pushes human boundaries to new limits. China’s independently developed “Striver,” a manned submersible, completed scientific exploration in Antarctica. With a maximum diving depth of 10,909 meters, this submersible filled a gap in China’s polar deep diving expeditions. The first self-designed and built ultra-deepwater ocean exploration drilling ship “Dream” successfully completed its trial voyage, with a total weight of 33,000 tons and a cruising range of 15,000 nautical miles. It has the capability to operate in unlimited marine areas worldwide and drill to depths of 11,000 meters in the ocean.

China has entered a new phase in the engineering of sea, land, and air transport. The independently developed medium-range narrow-body mainline aircraft, C919, successfully completed its maiden flight. The first domestically produced large-scale cruise ship, named Adora Magic City, was delivered and put into use, marking China’s capacity to simultaneously build aircraft carriers, large liquefied natural gas carriers, and large cruise ships in the shipbuilding industry. The high-speed maglev test prototype, with a speed of 600 kilometers per hour, completed system commissioning and testing last year. The cross-sea Fuzhou-Xiamen high-speed railway, designed for a speed of 350 kilometers per hour, was officially opened for operation in September, 2023. 

Significant progress has been made in diversified clean energy engineering projects. China’s independently developed Experimental Advanced Superconducting Tokamak achieved important results in multiple experiments by overcoming key technical challenges, such as controlling plasma with currents exceeding 1 million amperes in high-constraint mode, injection-coupling of high-power heating systems, and advanced divertor shape control. 

The Baihetan Hydropower Station, the world’s largest and most technologically rigorous hydropower project, is now in operation. It is equipped with 16 hydro-generating units, each with a capacity of 1 million kilowatts, meaning this station has the largest single-unit capacity in the world. The first set of 300MW-level advanced compressed air energy storage system compressors and expanders were successfully developed, promoting China’s advanced compressed air energy storage technology to a new level.

Digital economy reached new heights

The digital economy’s scale and penetration rate have grown rapidly. It is estimated that in 2022, China’s digital economy reached 50.2 trillion yuan, with a year-on-year growth of 10.3% and accounting for 41.5% of the GDP. This means that the digital economy is proportionally on par with the secondary industry, ranking among the top in the world in terms of scale and proportion. 

Smart manufacturing is advancing by leaps and bounds. China has cultivated 421 national-level intelligent manufacturing demonstration factories. In 2023, the value added of intelligent manufacturing for automotive equipment and unmanned aerial vehicle manufacturing increased by 60.0% and 20.5% respectively. The production of intelligent products, such as service robots and 3D printing equipment, increased by 23.3% and 36.2% respectively. China has become the world’s largest market for robots. 

A nationwide industrial internet network has been established, leading the world in digital infrastructure construction. Five national top-level nodes in Beijing, Shanghai, Wuhan, Chongqing, and Guangzhou, along with two backup nodes in Nanjing and Chengdu, have all come online. Secondary nodes have achieved full coverage in all provinces, municipalities, and autonomous regions, covering 45 national economic categories and over 85% of China’s industrial categories. Over 240 influential industrial internet platforms and 28 cross-industry and cross-domain platforms have been developed, connecting over 80 million pieces of equipment and serving more than 1.6 million industrial enterprises. 

Communication infrastructure such as 5G and quantum communication, as well as data infrastructure construction, lead globally. The construction of technology infrastructure, including artificial intelligence and cloud computing has accelerated, with convergence of digital infrastructure such as the industrial internet and intelligent transportation networks leading internationally. In 2022, China’s total computing power ranked second globally, accounting for approximately 33% of the global share, with a growth rate exceeding 50% for two consecutive years.

Data production ranks among the world’s best. In the digital economy era, the importance of data elements in industrial development is undeniable. In 2022, China’s data production accounted for 10.5% of the global total, ranking second globally, with data storage accounting for 14.4% globally, and the big data industry reached a scale of 1.57 trillion yuan. The process of “data resourceization,” including data collection, labeling, analysis, and storage, continues to deepen. The data labeling industry is expanding outward from Beijing, the Yangtze River Delta, and the Chengdu-Chongqing region, forming three major industrial clusters and generating technology spillover effects in surrounding areas.

New stage

The high-tech industry has become a key driving force for the development of China’s manufacturing industry. From 2018 to 2023, China’s investment in high-tech industries has maintained a growth rate of over 10%, far exceeding the national fixed asset investment growth rate. In 2023, the investment growth rate was 10.3% for high-tech industries, which was 7.3 percentage points higher than the growth rate for national fixed asset investment. Within the tech industry, investment in high-tech manufacturing and high-tech services increased by 9.9% and 11.4% respectively. 

In high-tech manufacturing, investment in aerospace equipment manufacturing, computer and office equipment manufacturing, and electronic and communication equipment manufacturing increased by 18.4%, 14.5%, and 11.1% respectively. In high-tech services, investment in technology transfer services and e-commerce services increased by 31.8% and 29.2% respectively. China has become the world’s largest exporter of high-tech products, transitioning from a historical model of processing trade with labor-intensive product exports to a general trade model, where exports are dominated by electromechanical products and high-tech products, significantly enhancing its international competitiveness. 

In 2023, China’s electromechanical product exports reached a value of 13.92 trillion yuan, accounting for 58.6% of total exports, while exports of labor-intensive products reached 4.11 trillion yuan, accounting for only 17.3% of total exports.

New energy product production scales have also exceeded global norms. In 2023, production of new energy vehicles, solar cells, and lithium-ion batteries for automobiles, known as the “new three products,” increased by 30.3%, 54.0%, and 22.8% respectively, as compared to 2022. Production of green energy-related products such as hydroelectric generators, wind turbines, and charging piles increased by 35.3%, 28.7%, and 36.9% respectively. Production of green materials such as ultra-clear glass for the solar industry, carbon fiber and its composites, and bio-based chemical fibers increased by 58.6%, 57.1%, and 50.7% respectively. 

The annual installation capacity of China’s renewable energy reached 1.45 billion kilowatts, accounting for over half of the country’s total installed capacity for power generation. The production scale of clean energy equipment, such as wind power and photovoltaic power, ranks first in the world. Global market shares of polysilicon, silicon wafers, batteries, and related components all exceed 70%. Production and sales of new energy vehicles both exceeded 9 million units, accounting for over 60% of global new energy vehicle production and sales for 9 consecutive years, ranking first in the world. 

In 2023, exports of the “new three” products, namely EVs, lithium batteries and solar cells, reached 1.06 trillion yuan, surpassing the trillion yuan mark for the first time, with a year-on-year growth of 29.9%. The “new three” products shape new international competitive advantages for industries. In 2022, the value added of the “new three products” in China reached 21.01 trillion yuan, accounting for 17.36% of the GDP. The total transaction volume of e-commerce platforms nationwide was 43.8 trillion yuan, with online retail sales reaching 13.79 trillion yuan. Among them, the online retail sales of physical goods amounted to 11.96 trillion yuan, accounting for 27.2% of the total retail sales of consumer goods. 

Online and offline integration continues, and the express delivery logistics market is rapidly expanding. In 2023, China’s express delivery volume is expected to exceed 130 billion packages, with a year-on-year growth of 19.5%, achieving a “monthly average of 100 billion” milestone. 

The proportion of production services exceeds that of consumer services, and the scale of technology-intensive and knowledge-intensive service industries has increased significantly. In 2022, the value added of production services in China exceeded 35 trillion yuan, accounting for nearly 60% of the service industry. In 2023, the financial industry, information transmission services, software and information technology services, and leasing and business services in the production services sector accounted for 27.8%, 13.8%, and 11.3% respectively. The supporting role of modern service industries and knowledge-intensive service industries is gradually becoming more prominent.

The industrial economy is the backbone and growth engine of the national economy. This industrial transformation and upgrade will further propel China’s economy on the track of high-quality development — towards a stable and promising future.

Shi Dan, Zhang Qizi, and Guo Chaoxian are from the Institute of Industrial Economics of the Chinese Academy of Social Sciences.

Edited by YANG XUE