Industrial Upgrading In China Research Articles

Convergence or Divergence: A Computational Text Analysis of Stakeholder Concerns on Manufacturing Upgrading in China

Stakeholder participation is essential to the reasonable design and smooth implementation of industrial policies. Discourse analysis can be employed as a valuable methodology to decode stakeholder (dis)agreements. Following stakeholder theory, we examine four stakeholder groups, namely the government, enterprises, media, and academia, to analyze the public focus of industrial upgrading in China. We adopt a computational text analysis approach (keyword frequency calculation, word collocation analysis, and theme identification) to understand the divergent and convergent stakeholders’ concerns toward manufacturing upgrading in China from 2015 to 2020, which is widely considered as a manufacturing upgrading policy formulation stage. Our results show that stakeholders mainly focus on innovation capability and digital transformation for China's manufacturing upgrading. There, industrial planning is the major issue for government and academia. Contradistinctively, enterprises’ main concern is servitization. Enterprise internationalization is more frequently mentioned than manufacturing upgrading in the media industry. Policymakers should engage in various tactics to make the policies endorsed by other stakeholders. Most importantly, the government should fully integrate the views of entrepreneurs in the policy initiation stage. We provide practical implications for the Chinese government to implement better the Made in China 2025 plan.

The horizontal and vertical coordination of policy mixes for industrial upgrading in China: an ambidexterity perspective

ABSTRACT The established literature demonstrates the critical role of the policy mix in the formulation and implementation of government policies for industrial upgrading. However, existing studies mainly examine the policy mix from either a horizontal or a vertical coordination perspective; very few examine both dimensions. To gain further insights, the current study involves an analysis of how China’s central government manages horizontal and vertical coordination to pursue upgrading in manufacturing industries on the basis of an ambidextrous policy mix perspective and a thorough examination of both the external attributes (i.e., policy level) and content (i.e., policy instruments and themes) of policy documents. This analysis reveals several viable policy implications in relation to China’s manufacturing transformation. In particular, it finds that China’s policy mix for achieving manufacturing upgrading is highly coordinated on both horizontal and vertical dimensions. Governments at all levels apply the same set of policy instruments; environmental instruments are the most frequently used, followed by supply- and demand-side instruments. The core policy topics within the manufacturing upgrading structure include innovation, industrial transformation, industrial agglomeration, demonstration projects and service-oriented manufacturing. Therefore, this study establishes recommendations for future policies, which should focus on reinforcing guidance regarding national policies, encouraging local governments to apply innovative policy tools and increasing the use of demand-side policy instruments.

Dynamic interaction between outward foreign direct investment and home country industrial upgrading: Regional differences in China

AbstractThis study examines the dynamic interaction between outward foreign direct investment (OFDI) and home industrial upgrading in China by using a panel vector autoregressive model over the period 2004–2017. To investigate regional differences, the 30 Chinese provinces were divided into 3 regions. To investigate regional differences, 30 Chinese provinces were divided into region 1, region 2, and 3 regions, which represent economically developed regions, comparatively economically developed regions, and economically less developed regions. The empirical results show that OFDI significantly promotes industrial upgrading across the whole sample, while the reverse is not significant. Further, considering the heterogeneity of regional economic development levels, the results show that the OFDI from region 1 and industrial upgrading promote each other, while the opposite is true for region 3. In region 2, industrial upgrading has an incentive effect on OFDI, but not significantly affected by OFDI. In addition, to supplement our analysis, impulse response function and variance decomposition are used to demonstrate the interaction process between OFDI and industrial upgrading of the home country. Therefore, to achieve industrial upgrading, Chinese governments should adhere to the long‐term national policy of “going global,” enhance the strength of OFDI, and formulate development strategies according to local conditions.

Technology upgrading and labor degrading? A sociological study of three robotized factories

In recent years, the technology-driven industrial upgrading in China has resulted in human labor being replaced with robots. This article explores the impact of "intelligent manufacturing" on workers from the following two perspectives: labor relations and the labor process. The authors argue that workers on the shopfloor are experiencing some forms of labor degradation due to robotization, i.e., more flexible labor relations, deskilling, and strengthened technical control. Such a corporation-led and machine-centered industrial upgrading is driven by state policy, capital, and the labor market.

How do zombie firms affect China’s industrial upgrading?

Industrial upgrading to create a new growth engine for China’s economic development is crucial. Using data from the Chinese Annual Survey of Industrial Firms, we demonstrate that zombie firms have hindered industrial upgrading in China. We employ the Bartik method to construct instrumental variable to control for endogeneity, and find that when the proportion of an industry’s zombie firm assets increases by 1%, the level of industrial upgrading reduces by approximately 0.85%. Two mechanisms are identified. The first is resource mismatch at the industry and firm levels. The second is the suppression of innovation effects. Study results demonstrate why China’s industrial upgrading is weak from the perspective of firm structure. Our findings suggest that the government should make better use of market-oriented policies and the “creative destruction” mechanism to deal with zombie firms, in order to promote industrial upgrading.

The impact of labor mobility on industrial upgrading in China

Using the data of 2010 population census and 2015 1% population sample survey in China and the data published by the National Bureau of Statistics, the index of industrial structure transformation was adopted to measure the explained variable of industrial upgrading, and the least squares model was constructed to investigate the impact of migrant labor force on industrial upgrading and its influencing mechanism. Research shows that the migrant labor force has a positive impact on the transformation of industrial structure, and increasing the proportion of urban migrant labor force is conducive to promoting the transformation of agricultural economic structure into non-agricultural industries. Furthermore, the paper discusses the mechanism through which labor flow affects industrial upgrading, and the test results show that labor flow promotes urban industrial upgrading through local market effect and human capital accumulation mechanism. Labor flow is a process of improving the efficiency of resource allocation. Cities attract a large number of foreign labor, which is of great significance to the transformation and upgrading of urban industrial structure.

Marine economic growth, technological innovation, and industrial upgrading: A vector error correction model for China

Few studies have discussed marine industrial upgrading and its association with marine economic growth and technological innovation. This study uses a vector error correction model (VECM) to explore the short-term and long-term relationship between marine economic growth, technological innovation, and industrial upgrading in China from 2006 to 2016. Results reveal the existence of two co-integration relationships between the three variables: specifically, in the long term, marine economic growth positively affects marine technological innovation, and vice versa; however, neither promote industrial upgrading and neither are promoted thereby. These findings indicate that marine economic growth and technological innovation are mutually promoting in the long term, but the mutual driving mechanism between the upgrading of marine industry and the other two variables has not yet formed. The study also reveals that the shift from secondary industry toward tertiary industry is not conducive to improving marine technological innovation, which is especially alarming given the current service-oriented tendency of China's marine industry. Key policy implications include the need to expand the relative size of the marine economy, prioritize developing marine secondary industry, develop marine technology, and train high-level marine professionals.

Ownership structure and R&D: The role of regional governance environment

The Regional Governance Environment (RGE) is the key issue along with the rapidly industrial upgrading in China. We seek to investigate the moderating effect of the RGE on the relationship of firms’ ownership structure and R&D based on the Chinese listed firms during 2007–2018. The results show that the ownership concentration has a negative effect on R&D intensity, which is restricted by the improvement of RGE. Meanwhile, the ownership restriction has a positive effect, which is significantly strengthened by the improvement of RGE. The conclusion is valid through a series of robust tests. Our study contributes to the relationship between firms’ ownership structure and R&D investment from the perspective of external governance, such as RGE. Some implication is also presented for industrial upgrading policy based on firms’ R&D investment.

Modern urbanization and industrial upgrading in China: evidence from panel data

We explored the mechanisms of, and relationships between, modern Chinese urbanization and industrial upgrading. To these ends, we used a panel-data, vector autoregression model, a coupling, co-ordination degree model, and a panel threshold model incorporating data from 2003 to 2017. The empirical results suggest that modern urbanization and industrial upgrading are bidirectional in nature, and that the effect of the latter is greater than that of the former. Although the extent of coupling co-ordination has increased annually, significant spatial differences are apparent. The interrelationship between urbanization and industrial structure is complicated, being affected by regional economic levels, material and human capital, market environments, technological progress, foreign direct investment, financial support, and the extent of openness. All factors exhibited threshold effects. Our findings shed new light on the co-ordinated development of modern urbanization and industrial upgrading, and have implications for China’s economic development in the new normality.

High-Speed Rail and Industrial Upgrading in China：Facts and Mechanisms

China’s economy has shifted from a high-speed growth stage to a high-quality development stage, which is the most distinctive feature of China’s economy in the new era. Industrial upgrading is the core and key to China’s future high-quality economic development. The overall change of the international pattern leads to China’s need to find more internal driving forces for economic development. In this context, the biggest innovation of this paper is to explore a new way to promote industrial upgrading relying on the integration of domestic market from the perspective of domestic market integration and resource allocation. This paper regards the construction of the high-speed rail as a quasi-natural experiment. Based on the panel data of 2004-2016, a multi-period DID model is constructed to study the impact and mechanism of high-speed rail on industrial upgrading.The study finds that, on the whole, the construction of the high-speed rail can significantly improve the rationalization and advanced level of a city’s industrial structure, and the estimation results are still robust after considering the assumptions and a series of factors that may interfere with the estimation results. The analysis of the impact mechanism finds that the construction of high-speed rail significantly promotes the flow of labor between cities, and promotes the rationalization and upgrading of industrial institutions by triggering economies of scale, technological innovation and capital labor allocation. Among them, economies of scale have the greatest contribution to the rationalization and upgrading of industrial structure, followed by technological innovation and capital labor allocation. Therefore, it is necessary to create conditions to exert technological innovation and spillover effects and improve capital labor allocation. Further mechanism decomposition shows that high-speed rail construction has a more significant effect on the overall economic development level and the higher-level industrial structure of the city, and the higher-level changes in the industrial structure are mainly due to the optimal re-allocation of resources between cities; cities with relatively poor development base benefit from the optimization and re-allocation of resources within the city after the construction of the high-speed rail, and the level of rationalization of the industrial structure has been significantly improved.The findings of this paper on the facts and mechanisms for the promotion of the high-speed rail to promote industrial upgrading show that high-speed rail construction will promote the deepening of industrial division of labor between regions, improve resource allocation efficiency, and urge new developments in production industry and economic development, but it does not mean that all cities can achieve the desired effect after the construction of high-speed rail. The construction of high-speed rail in China is accompanied by the general trend of industrial transfer and upgrading in developed regions. Compared with the existing poorly-developed regions, the high-speed rail has optimized the allocation of factors in cities with relatively good economic development. The large differences in the capital, technology and infrastructure of the region under the big economy determine the particularity of China’s industrial upgrading. Based on the research findings, this paper proposes the following policy recommendations: In the historical process of large-scale construction of China’s high-speed rail, accelerated industrial restructuring, and transformation of economic development mode, it is necessary to coordinate the synchronization of high-speed rail construction and industrial transformation and upgrading, and continue to improve the efficiency of resource allocation by developing and optimizing high-speed rail networks to reform and innovate. Deeply excavating and continuously releasing the resource reconfiguration effect of high-speed rail construction will provide support for industrial upgrading and high-quality development under the new normal economic development.

A Study of the Impact of Innovation on Industrial Upgrading in China: A Spatial Econometric Analysis Based on China’s Provincial Panel Data

This study provides an in-depth analysis of the impact of innovation on industrial upgrading from theoretical and practical perspectives. In terms of theory, based on the endogenous growth theory model, a multi-sectoral growth model is constructed to portray the inherent logical connection between innovation and industrial structure upgrading. The results show that innovation has an important impact on industrial structure upgrading. Industrial structure upgrading depends on differences in innovation level among industries and the substitution relationship of finished products in the industry. From an empirical perspective, based on the panel data of 31 provinces in China from 2005 to 2017, the spatial effect of innovation on industrial upgrading was analyzed using the spatial Durbin model. The results show that innovation and industrial structure upgrading has significant spatial correlation effects, and regional innovation can drive China’s industrial upgrading. Meanwhile, the space spillover effect is an important factor that cannot be ignored in industrial upgrading.

Measuring the Benefits of the “One Belt, One Road” Initiative for Manufacturing Industries in China

China has shifted its focus from export-led growth to technology-driven growth. The “One Belt, One Road” initiative (OBOR) is aimed at promoting economic integration with the rest of the world that might boost China’s ability to upgrade its manufacturers. We evaluate the impact of the OBOR initiative on the manufacturing industries of China. In other words, we examine whether the greater openness entailed by the initiative has been a catalyst for upgrading China’s export portfolio. We demonstrate that the proposition has been such a catalyst formally and adduce some empirical support for the proposition by using a panel of the top 80 exporting countries in the world during the period from 2002–2017 to evaluate the impact of the economic integration brought by the OBOR in terms of upgrades to Chinese manufacturers. Meanwhile, when domestic R&D generates knowledge spillover, the benefits of greater openness become partly indeterminate, thus counterfactual analysis was adopted to preclude potential endogeneity. By relating the values of exports at the two-digit harmonized system level to data on sectors to conduct integration within global production networks, we find that the greater openness brought by the OBOR initiative has actively increased manufacturing complexity and facilitated industrial upgrading in China.

What Drove Changes in the Embodied Energy Consumption of Guangdong’s Exports from 2007–2012?

China’s economy has been highly reliant on exports in recent years, with Guangdong its biggest province in export trade volume. Despite the global financial crisis of 2008, exports from Guangdong continued to increase significantly; however, the energy consumption embodied in exports is unknown. In this study, we investigate the changes of energy embodied in exports from 2007 to 2012 in Guangdong Province. We use EIO (Environmental Input-Output) and LMDI (Logarithmic Mean Divisia Index) method to find out the drivers of such changes embodied in total exports and export of each sector. Our results show: Firstly, from 2007 to 2012, the export structure in Guangdong has changed, reflecting in low energy intensity industry experiencing faster growth in exports than high energy intensity industry. Secondly, the growth rate of embodied energy consumption in Guangdong’s exports is slowing, with average annual growth from 2007 to 2012 of 6.8%. Thirdly, though Guangdong’s exports grew significantly, the energy consumption embodied therein decreased by 23% from 2007 to 2012, representing a drop of 50.51 Mtce. Finally, the most prominent change driver differed across sectors: For low value-added industries, such as metal smelting and rolling, the main contributor was export structure change, whereas for high value-added industries, such as communications, computers, and other electronic equipment, the main contributor was technical change. Guangdong is playing a leading role in industrial upgrading in China, and this has made the embodied energy consumption decreased obviously in Guangdong. It will be interesting to further investigate the trends of embodied energy consumption of other provinces in China, as this would give us deeper understanding of Chinese resource and environment problems.

Exploiting the Implementation Gap: Policy Divergence and Industrial Upgrading in China's Wind and Solar Sectors

AbstractThis article argues that manufacturing policies of Chinese local governments have provided an important corrective to some of the weaknesses inherent in the central government's indigenous innovation framework, most importantly its inattention to the importance of advanced manufacturing capabilities for innovation. Based on an original dataset of over one hundred executive interviews conducted with 43 Chinese wind and solar firms, I identify both central government R&D funding and continued local government support for manufacturing as critical factors in enabling innovation among China's renewable energy firms. In particular, this article shows that firms have utilized a combination of both central and local government policies to establish unique engineering capabilities required for innovation in commercialization and scale-up to mass production. The findings suggest that continued local government support for the manufacturing economy has not undermined central government innovation policies, but has (1) broadened the range of resources available to entrepreneurial firms and (2) enabled new options for industrial upgrading that are outside the conceptualization of innovation underlying the central government's indigenous innovation framework.

Exploration and Practice of Training Mode of Applied Innovative Talents

With the economic structural adjustment and industrial upgrading in China, the training of various applied innovative talents our society needs is a problem which contemporary universities should consider first. According to the connotations of the training objectives for applied innovative talents and major characteristics of the training mode for applied innovative talents and E-commerce major, this paper has conducted exploration and practice on the following four aspects: the innovation of international applied talents training system, the construction of innovative teaching team, the reform and innovation in teaching methods and the deepening of teaching management reform.

The new industrial revolution and industrial upgrading in China: achievements and challenges

One recent development in the area of manufacturing is the New Industrial Revolution (NIR). This paper examines the contours shaping the NIR, and analyses the challenges facing China in its pursuit to achieve technological parity with advanced nations. China’s economic rise is strongly associated with its ascending the technology ladder. The country is now the world’s workshop. As the labour-intensive strategy based on cheap labour has run up against its limits, policy makers have devised plans that focus on industrial upgrading, promote indigenous innovations and establish national brands. This way China would avoid the middle-income trap and eventually become an innovative powerhouse.

Constructing a Ladder for Growth: Policy, Markets, and Industrial Upgrading in China

Indigenous firms in developing countries with large domestic markets have unique advantages: the low end provides “natural” protection from foreign competition, while higher-end segments provide incentives for foreign firms to localize activities and develop channels for future capability building. Paradoxically, in their eagerness to support development efforts of local firms, states often nullify these advantages and limit the opportunities and capabilities that local firms can leverage in the upgrading process. Using the case studies of three large industrial sectors in China that faced similar prospects but had widely different outcomes, this paper develops a framework for understanding how policy shapes the growth and segmentation of markets, and thus the opportunity for industrial upgrading of indigenous firms. The cases show how restrictive demand- and supply-side policies often inadvertently limited the opportunities for upgrading through their effect on the availability of know-how, inputs, and resources required for industrial upgrading (the supply side), and through their effect on the incentives for upgrading (the demand side). Given that each segment is a crucial rung on the development ladder, industrial upgrading efforts stall when state policy inadvertently knocks out rungs on the development ladder.

Exploiting the Implementation Gap: Policy Divergence and Industrial Upgrading in China's Wind and Solar Sectors

This article argues that manufacturing policies of Chinese local governments have provided an important corrective to some of the weaknesses inherent in the central government’s indigenous innovation framework, most importantly its inattention to the importance of advanced manufacturing capabilities for innovation. Based on an original dataset of over 100 executive interviews conducted with 43 Chinese wind and solar firms, I identify both central government R&D funding and continued local government support for manufacturing as a critical factors in enabling innovation among China’s renewable energy firms. In particular, this article shows that firms have utilized a combination of both central and local government policies to establish unique engineering capabilities required for innovation in commercialization and scale - up to mass production. The findings suggest that continued local government support for the manufacturing economy has not undermined central government innovation policies, but has (1) broadened the range of resources available to entrepreneurial firms and (2) enabled new options for industrial upgrading that are outside the conceptualization of innovation underlying the central government’s indigenous innovation framework.

Link education to industrial upgrading: a comparison between South Korea and China

Purpose – Why is the “education to industrial innovation” equation not working in China? Why has education development contributed to South Korea’s success but not promoted technology development and industrial upgrading in China? The purpose of this paper is to compare South Korea and China and try to address that puzzle. The author will also identify which mediating factors are crucial in linking education development to industrial innovation and industrial upgrading. Design/methodology/approach – This study will use the historical comparative method to compare South Korea and China. The author will try to explore the differences in education and industrial upgrading in the two countries, and identify which factors are producing different educational development effects, mainly by narrative comparison. Data will mainly come from online databases such as Statistics Korea, the Center on International Education Benchmarking, the UNESCO Institute for Statistics, China Education Statistics and the World Bank, as well as from second-hand resources. Findings – In summary, this research has revealed that education itself or the production of human capital may not be sufficient conditions for technology innovation or industry upgrading. For human capital to affect industrial upgrading positively, it is not enough for the Chinese government just to invest in education. Other intermediating market and social contexts are crucial too, especially the allocation of resources between the private and the public sectors, and the existence of a proper employment structure. Originality/value – The role of education in economic development for the developing world is debated a lot. However, there is little development study research which directly explores the relationship between education and industrial upgrading via macroeconomic analysis. In a globalized world, the situation of international industrial value chains is an important element for sustainable long-term development. Industrial structures and their transformation are becoming more and more important for developing countries. While most past research has treated the absorbing economy’s structure as a condition that determines education’s contribution to development, this paper will treat the industrial structure as the dependent variable, and analyze how education would contribute to the upgrading of industrial structure and, in turn, be of benefit to sustainable economic development.

Competence development on the shop floor and industrial upgrading: case studies of auto makers in China

Industrial upgrading in China is rapidly increasing the competence requirements for employees on the shop floor. The institutional environment in China, however, does not seem very supportive: the quality of vocational education is often low and Chinese labor law provides strong incentives for companies to use temporary labor. This paper examines the competence development practices for blue-collar workers in automobile companies in China. Against expectations, automobile companies in China do not pursue ‘low road’ strategies but have designed intensive internal training programs and long-term career paths for blue-collar workers. Different theoretical explanations for the competence development approaches are discussed: human capital theory, high-commitment work systems theory, production systems theories, industrial relations and institutionalist theories. The paper is based on qualitative case studies of German, Japanese and domestic automobile manufacturers in China.