Manufacturing Industry Transformation, External Dependence and Innovation

Abstract

China’s manufacturing industry is facing challenges because of digital revolution of global manufacturing industry and imbalance of payments. China’s manufacturing imbalances are reflected in the balance of payments surplus. Double “external dependence†on export and foreign investment is the reason of its difficult transformation. The formation of this difficulty includes both policy factors and structural factors during the process of its participating in the division of global value chain. Solution to this problem lies in the changes of policy ideas, establishment of the policy environment for fair competition and encouragement in innovation.