Why must China's industrial structure be dominated by manufacturing?

After the founding of New China, especially since the reform and opening up more than 20 years ago, China's industrial development has changed from less to more, from weak to strong, and the change of industrial structure basically conforms to the general law of the evolution of industrial structure in the world. In the process of the change of China's industrial structure, how effective the industrial structure policy is, how big the space for industrial structure policy to play under the new open economy conditions, and how it will go in the future are all important theoretical and practical problems to be solved urgently. Based on the empirical analysis of China's previous industrial structure policy performance, this paper discusses the future trend of China's industrial structure policy under the background of WTO.

First, China industrial structure policy performance analysis

China's industrial structure policy began in the first five-year plan period, when China basically followed the Soviet model and chose the industrial development strategy of giving priority to the development of heavy industry. The government used strict price control, mandatory orders and other administrative means to give priority to the allocation of scarce resources to the heavy industry sector, leading to the rapid establishment and development of heavy industry. This was an inevitable choice in line with history and logic under the harsh international political and economic background at that time, and also laid an economic and technical foundation for China to establish a complete industrial system in a short time. However, the advanced development of heavy industry has also caused a serious imbalance in industrial structure, which has restricted the speed and quality of China's long-term economic growth.

By the end of 1970s, China entered the period of reform and opening-up, and the imbalance of industrial structure was very serious. In order to correct the abnormal industrial structure and coordinate the development of various industrial sectors, while reforming the rural economic system, the government has successively issued policies to give priority to the development of textile industry, promote the development of "short-term" infrastructure and basic industries, and limit the development of "long-term" processing industries. Judging from the results of the implementation of these policies, the policies to promote the development of agriculture and textile industry have achieved remarkable results. By 1982, the long-term shortage of grain and industrial consumer goods in China has been fundamentally changed; The policy effect of promoting "short-term" industries and restraining "long-term" development is very limited. Throughout the 1980s, although the state encouraged investment in infrastructure and basic industries, and gave support in terms of capital, materials, energy and transportation, the development of infrastructure and basic industries always lagged behind the development of the national economy, and their "bottleneck" situation was not fundamentally reversed. On the contrary, the processing industry with overcapacity restricted by the state is growing at an alarming rate.

After the imbalance of industrial structure has been alleviated to a certain extent, while continuing to implement the structural adjustment policy of "promoting short and limiting long", the state began to pay attention to the upgrading of industrial structure. In the Seventh Five-Year Plan, the government clearly put forward "focusing on developing knowledge-intensive and technology-intensive products, striving to open up new production fields, and promoting the formation and development of emerging industries in a planned way" and "transforming traditional industries with new technologies". Judging from the results of the implementation of the Seventh Five-Year Plan, the structural imbalance is still serious, the establishment of emerging industries and the technological transformation of traditional industries are progressing very slowly, and the industrial policy objectives have basically not been realized, so that the industrial development plan of the Eighth Five-Year Plan is very similar to that of the Seventh Five-Year Plan. In the early 1990s, inspired by Deng Xiaoping's speech on his southern tour, a new round of investment boom was set off in China. Processing industry has become the main investment field because of its economic and technical characteristics, and small and medium-sized processing enterprises with small scale and low technology content have emerged rapidly. The eighth five-year plan for industrial development has not been implemented, but has aggravated the existing problems of unbalanced industrial structure, low industrial level and dispersion. In this case, the state is forced to use administrative means to comprehensively adjust the economy in order to achieve a "soft landing" of the national economy.

During the Ninth Five-Year Plan period, China successfully achieved a "soft landing" of the national economy, and at the same time made some progress in the adjustment and upgrading of industrial structure. The outstanding performance is that the proportion of general processing industry in manufacturing industry has decreased, while the proportion of relatively technology-intensive industries has increased, especially the pharmaceutical manufacturing industry, electrical machinery and equipment manufacturing industry and electronic and communication equipment manufacturing industry with high technology density and high technology industry characteristics have increased significantly. From 65438 to 0999, the electronic and communication equipment manufacturing industry accounted for 8% of the manufacturing industry. In 2000, the sales revenue of electronic and communication equipment manufacturing industry increased by 33.7% over the previous year. Driven by the country's proactive fiscal policy, infrastructure, communication facilities and traffic conditions have also been significantly improved; Household appliances have developed into an internationally competitive industry. The above progress in industrial structure adjustment and upgrading is not mainly the result of the government's industrial structure policy, but the change of economic operation situation and the deepening of market-oriented reform orientation have improved the adjustment function of the market mechanism. On the one hand, during the Ninth Five-Year Plan period, the basic situation of China's economy changed from insufficient demand to excessive demand, and there was a general surplus of commodities, which forced enterprises to adjust their production structure and upgrade their technical level. On the other hand, the comprehensive and systematic promotion of the market-oriented reform of the economic system has enhanced the basic role of the market in allocating resources. The market mechanism can not only adjust the industrial structure incrementally, but also adjust the stock through bankruptcy, merger and merger, so as to realize the major and rapid adjustment of the industrial structure.

Although the surplus economy during the Ninth Five-Year Plan created a good environment for the adjustment and upgrading of industrial structure, the structural deviation of the tertiary industry has not been effectively adjusted due to the constraints of system and policy, and the development of the tertiary industry is still relatively backward due to the restrictions of policy entry. During the Ninth Five-Year Plan period, the leading industries (machinery and electronics, automobile, chemical industry and construction) determined by the state were supported by huge financial funds and a large number of preferential policies, but they failed to grow into internationally competitive industries and play their due leading role in the national economy. The main reason is that the government's overprotective policies (including tariffs, entry restrictions and high prices) make them in a monopoly position and lack competition. In addition, the system separation between industrial development and scientific and technological development and the system problems of scientific and technological development and application also restrict the rapid upgrading of industrial structure.

From the above-mentioned empirical analysis of the performance of China's industrial structure policy since the reform and opening up, we can see that the industrial structure policy (mainly the policy of adjusting agriculture and light and heavy structure) has a remarkable effect in the early stage of reform and opening up, and its promotion to structural adjustment and upgrading in subsequent periods is very limited. Since the implementation of the industrial structure policy for more than 20 years, the imbalance of the three major industrial structures that have plagued China for a long time has not been fundamentally solved, the policy objectives of strengthening "short-term" industries and restraining "long-term" industries have not been realized, the leading industries supported by the government are still in a naive state, and there are still many problems such as small enterprise scale, low industrial concentration and slow technological upgrading. On the contrary, those industries that fail to get government support and strong protection get rid of the intervention of administrative plan and introduce market mechanism earlier and more thoroughly, but they often develop rapidly and steadily improve industrial concentration and international competitiveness. The home appliance industry is a typical example. In fact, the effectiveness of industrial structure policy is controversial not only at home, but also at home and abroad. In Japan, which is famous for its economic miracle, there are still different views on the role of industrial policy in economic development. Some famous Japanese economists once solemnly declared after completing a research project on Japan's industrial policy: "All the staff involved in this project believe that, except for a limited short period in the early postwar period, rapid growth is basically achieved. ..... It can even be said that the history of industrial policy in the main post-war period is the initiative and vitality of private enterprises, and it is a process of constantly denying the government's intention to control direct intervention. " (Note: edited by Ryutaro Komiya, etc. : Japan's Industrial Policy, International Culture Publishing Company, 1988, p. 535. Obviously, this conclusion of Japanese economists is basically consistent with the results of China's industrial structure policy practice.

Some experts have made a pioneering analysis of the reasons for the failure of China's industrial structure policy, and believe that the deep-seated reason for the failure of industrial structure policy is that the government does not have the power to promote structural adjustment and upgrading (the central government and local governments often formulate and implement policies from their own interests) and the ability (the government cannot judge the rationality of the selected industrial structure policy and effectively implement it). Therefore, under the condition that the market mechanism has been formed and perfected, it is the basic way to adjust the industrial structure effectively by using the market mechanism to allocate resources and adjust the industrial structure instead of the government's industrial structure policy.

Second, the policy orientation of China's industrial structure under the background of WTO

Although China's economy has experienced the process of continuous opening up after the reform and opening up, China's industrial structure policy is still implemented in a closed or quasi-closed environment. If it is the inherent requirement and inevitable result of China's market-oriented reform to adjust the industrial structure mainly through the market mechanism, then "WTO entry", as an external coercive factor, not only further strengthens the function of market mechanism to adjust the industrial structure, but also directly affects the composition of China's industrial structure and the allocation of resources among different industries.

1. The influence of China's entry into WTO on the policy space of China's industrial structure. There are two main tools for a country to implement industrial structure policy: one is to manage trade, including restricting the import of similar goods through tariff and non-tariff barriers, and encouraging exports through financial subsidies and government export credits; Second, preferential measures include government investment, preferential loans, giving priority to the introduction of technology from industries supported by the government, and foreign exchange demand for imported raw materials. Under the relatively closed economic conditions or the open economic conditions that developed countries can tolerate, the western countries led by the United States have basically adopted a tolerant attitude towards the government-led industrial development strategies implemented by Japan, South Korea, Singapore, Taiwan Province Province and other countries and regions for the needs of the Cold War. China opened to the west in 1980s, and western countries indulged China for the same reason. After the cold war, western countries began to accuse these countries and regions of unfair competition and imposed economic sanctions under various pretexts. A country can use these two policy tools to adjust its industrial structure and achieve certain results. Today, when developed countries are no longer tolerant, but pay attention to economic competition and demand strict implementation of WTO rules, the application of industrial policy tools such as trade management and preferential measures will be greatly restricted. From the point of view of managing trade, a series of WTO regulations have basically abolished the independent trade policy rights of each member country. Under the framework of WTO's non-discriminatory trade principle, it is impossible for China to protect its domestic market, leading industries and key industries with high tariff barriers. All kinds of non-tariff protection are also strictly restricted. Without the tools to manage trade policy, the industrial structure policy with the development of leading industries and key industries as its basic content can not be implemented to a considerable extent. Similarly, under the framework of WTO, various preferential measures aimed at supporting leading industries and key industries have also lost the space for implementation to a considerable extent. Due to the principle of national treatment of WTO, governments of all countries are required to treat domestic and foreign-funded enterprises equally. If the government chooses all domestic and foreign-funded enterprises in the industry as support targets, it will not only exceed the affordability of government finance and other resources, but also lose the significance of support. If we choose some domestic-funded enterprises as support targets, it will violate the principle of national treatment of WTO. It can be seen that China's entry into WTO has greatly limited the implementation space of industrial structure policies, greatly weakened the effect of industrial structure policies, and discriminatory and inclined industrial structure policies will tend to be ineffective. The weakening of the role of China's entry into WTO on industrial structure policy means that the role of market mechanism in regulating industrial structure is enhanced and the dominant position of market in allocating resources is established. The government should adapt to this change as soon as possible, and timely shift its industrial policy function from directly cultivating industries to creating an effective, fair and transparent market competition environment for the rational distribution of industries. Through full market competition and the role of market price reflecting the relative scarcity of production factors, the international competitiveness of the industry can be enhanced and the industrial structure can be optimized and upgraded.

2. The changing trend of China's industrial structure after China's entry into WTO.

(1) The adjustment of industrial structure will be accelerated. At present, developed countries have entered the post-industrial society. While devoting itself to developing high-tech information industry and tertiary industry, we will gradually transfer labor-intensive, capital-intensive and technology-intensive industries with relatively backward technology overseas. Newly industrialized countries and regions have also started the transformation and upgrading of industrial structure after completing industrialization. While undertaking the technology-intensive industries transferred from developed countries, they also transferred some labor-intensive industries and capital-intensive industries to other developing countries. At present, the global industrial restructuring led by developed countries will surely promote the industrial restructuring of China. On the one hand, China's increasingly perfect infrastructure, a large number of cheap and high-quality labor and vast market make China an ideal place for foreign investment and industrial transfer; On the other hand, after China's accession to the WTO, the China government should fulfill its commitment to the WTO, further deepen the reform of the market economy system, improve the legal and institutional environment, and gradually remove all kinds of restrictions on foreign-funded enterprises in the fields of financing, sales market and operation, so that foreign-funded enterprises can enjoy national treatment. The improvement of the operating environment and conditions of foreign-funded enterprises will greatly promote the expansion of foreign investment and accelerate the transfer of foreign industries to China, thus causing a large-scale adjustment of China's industrial structure.

(2) The layout of industrial structure will undergo major changes. Under the background of economic globalization, the international division of labor has changed from a simple industrial division between countries to the coexistence of inter-industry division and intra-industry division. China's entry into WTO marks China's active integration into the global economy, which enables China not only to participate in the international industrial division according to its own resource advantages, but also to go deep into the international (mainly multinational) industrial organization and participate in the production and competition of an industry that is at a disadvantage as a whole but still has comparative advantages in the industrial chain. Therefore, this change in international industrial division of labor will inevitably lead to an obvious hierarchical structure in China, and industries with different technical levels will coexist for a long time. At the same time, participating in the international higher-level industrial division of labor also laid a technical and management foundation for the advanced evolution of China's industrial structure.

(3) China's entry into WTO will transform China's industry from balanced development to unbalanced development. After joining the WTO, China will open its market to the world and win a more open international market. The domestic market and the international market will be integrated, and its domestic competitiveness will be directly reflected in its international competitiveness. In this case, it is neither necessary nor possible to develop all industrial sectors in a balanced way and establish an independent and complete industrial system. Because in the fierce global market competition, it is difficult for industries with inferior resources to survive because of the lack of competitive advantage. If these industries are blindly developed, it will inevitably waste resources and slow down economic growth. On the contrary, by concentrating scarce resources to develop advantageous industries and participating in international market competition, we can share more benefits of international division of labor, create more social surplus, accumulate more capital, and create conditions for upgrading industrial structure. Therefore, China's accession to the WTO will not only accelerate the process of industrial restructuring in China, but also objectively determine the direction of industrial restructuring in China. The present situation of international competitiveness and resource advantages of various industries in China determines the main position of labor-intensive industries and some skilled labor-intensive industries in the industrial structure at present.

While emphasizing the development of labor-intensive industries with comparative advantages, some scholars advocate the use of trade policy means such as tariffs, quotas and export subsidies and industrial policy means such as credit, subsidies and tax incentives to protect and promote the development of infant industries. It is believed that without the protection and support of the state, "even if the capital accumulates to a certain extent in the future, the capital-intensive and technology-intensive industries needed for further upgrading of the industrial structure will be difficult to develop in the face of the international oligopoly market." However, this view also has the following shortcomings. (1) exaggerates the implementation space of industrial structure policies and the government's ability to implement industrial policies. As mentioned above, in the relatively closed economic period, the government has a lot of room to implement industrial structure policies, but the performance of industrial structure policies is minimal. After China's entry into WTO, the government's ability to implement industrial structure policies is greatly limited by WTO rules, and it is difficult to implement independent industrial structure policies within a country. It is even more impossible for the government to lead the adjustment and upgrading of industrial structure. (2) The understanding of the importance of capital accumulation is biased. Although capital accumulation cannot automatically lead to the upgrading of industrial structure, it is even more impossible to establish and develop capital-intensive and technology-intensive industries that need a lot of capital support without establishing an industrial structure that can accumulate capital most effectively and quickly. If scarce capital resources are used to develop immature industries that do not have comparative advantages and international competitiveness, not only will the immature industries affect the accumulation of capital due to lack of profitability, but the advantageous industries will also be unable to get due development due to the extrusion of available capital, thus failing to provide more surplus, and the upgrading of industrial structure will also be hindered by insufficient capital accumulation. (3) There are deviations in the understanding of the strategic role of comparative advantage industries. Under the constraints of China's current resource situation, highlighting the development of labor-intensive industries with comparative advantages can not only provide financial support for the upgrading of industrial structure, but also provide technical and management support. Because comparative advantage exists not only between industries, but also in the industrial chain within capital-intensive and technology-intensive industries. According to the principle of comparative advantage, industrial structure can also form multi-level industrial structure with different technical levels. The industrial structure will not be hindered by the upgrading of technological faults. That is to say, with the accumulation of capital, technology and management experience, as well as the constant changes in comparative advantages, the original competitive industries or industrial links will be replaced by new and more competitive industries or industrial links, and the industrial structure will gradually evolve in the direction of upgrading.

Based on the above reasons, we believe that the comparative advantage strategy has the dual functions of improving industrial competitiveness and upgrading industrial structure. The role of government industrial policy is mainly to promote the gradual upgrading of industrial structure according to the inevitable changes of comparative advantages of various resources in the process of economic growth. In the future, except for a few industries related to national defense security, public products with "market failure" and natural monopoly industries that need government support and intervention, all other industries should be put on the market. For infant industries, the state should not mobilize scarce domestic capital to support them again in the buffer period of China's entry into WTO, but should introduce a fully competitive market structure to promote infant industries to improve their viability in the fierce domestic market competition. If some industries fail to grow into internationally competitive industries after the end of the tariff protection period, they should carry out industrial transformation, find and transfer to industries with comparative advantages and international competitiveness in the market.