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China's system of manufacturing

4 January, 2016 - 11:04

China has been an agricultural country since the establishment of the People's Republic of China (PRC) in 1949. In 1978 China promoted and implemented the Four Modernizations (1979–82) in the fields of agriculture, industry, national defense, and science and technology. It also introduced a market-based economy to reform China. Since then its economy has grown very quickly. China has maintained stable annual growth, even during the financial turmoil in 2008.

Before the 1980s, the manufacturing policy in China was quite similar to that of the USSR. It was characterized by state ownership in production, collective farming, and centralized administrative planning. China's production policy involved heavy industry such as steel and automotive manufacturing. However, this was of rather low quality and mainly for national use only. The manufacturing system relied greatly on manual labour with low product quality. The opening up of Special Economic Zones after 1980 introduced new technology and management skills to increase productivity and product quality.

After the return of Hong Kong to China in 1997, many Hong Kong manufacturers started to invest in low-tech and high-tech machinery in China. This stimulated the fast evolution of the manufacturing economy. China began to offset its economic policy, modifying state ownership of production and collective farming as well. This new policy provided a greater degree of freedom to the public in production and economic activities, while centralized administrative planning remained under the control of the national government. Manufacturing activities involved many heavy industries, including domestic and military products. Moreover, China frequently gave incentives and privileges to investors to push the development of production in Special Economic Zones. Today, China has been called the 'world's factory' with goods from light industry (such as electronic products) to heavy industry (including automotives, train and planes) being manufactured in many provinces. However, despite the introduction of automation technologies, many semi- or manual-manufacturing systems are still being used in remote villages and provinces. This provides a cheaper labour force and a simple assembly process.  

By now you should have some idea of the development of manufacturing systems in several major countries. Now have a go at Self-test 1 to check how well you have followed the stages of the development of manufacturing systems.