China's Industrial Development in the 21st Century

The following sections are included:

• Contents

• Acknowledgements

• List of Contributors

The following sections are included:

• CHINA'S INDUSTRIAL DEVELOPMENT IN THE GLOBAL ERA

• THE WORLD'S MANUFACTURING BASE

• NEW DIRECTION OF STATE INDUSTRIAL POLICY

• NEW ENERGY INDUSTRY: HELPING CHINA MOVING TOWARD A GREEN FUTURE

• THE AIM OF THIS BOOK

• BOOK STRUCTURE OVERVIEW

China made history in the first quarter of 2009 to become the largest auto market in the world for the first time. Thanks to China's sound economic fundamentals and government stimulus package, China's automobile industry is now the only automobile market to exhibit robust growth. The formation of auto giants with large production capacities is expected to be the key strategy to strengthening the global competitiveness of domestic automobile enterprises. However, the implementation of the mergers and acquisitions (M&A) strategy is a difficult task. Also, China is seeking to drive the development of green-energy technology to become the world's largest producer of alternative fuel vehicles; while the development of new forms of engine-driven vehicle will be a long-drawn-out business.

The following sections are included:

• INTRODUCTION

• SUSTAINING THE DECLINING DEMAND

• PROMOTING MERGERS AND ACQUISITIONS AND RESTRUCTURING

• ENCOURAGING INNOVATION AND R&D

• OFFSHORE DRILLING RIG: MARITIME ENGINEERING

• CHANGXING SHIPBUILDING BASE

• APPENDIX 1

• APPENDIX 2

China's steel production reached 500 million metric tons in 2008. The growth of the steel sector has benefited from the rapid economic development and strong domestic demand. However, it is facing two challenges: overcapacity and production fragmentation. First, for long-term sustainable development, domestic steel enterprises will have to put a cap on their production output. Second, China's steel industry is perhaps the most fragmented in the world. The lack of production consolidation results in duplicated development and cut-throat competition among domestic steel enterprises. Most of these steel firms suffer from weak competitiveness and low production output. The steel industry is big, but not strong. Mergers and acquisitions (M&A) are the key strategy for the development of China's steel industry.

Against the backdrop of China's determination to develop a low carbon economy, wind power as a renewable energy with zero emission is now becoming a major driving force in the green campaign. Compared to other new energy industries, wind power is relatively mature in technology and is developing the fastest. Over the past 25 years, favourable policies, concession programmes and technology transfers have greatly boosted the wind power industry in China. By 2009, China had already become the second largest wind power generator and the largest wind turbine manufacturer in the world. However, challenges, such as weakness in technological innovation and a structural problem between limited access to the power grid and overheating production, have to be addressed to ensure sustainable development of the industry in China.

China is facing a looming water crisis due to factors from supply and demand sides. Existing measures to increase water supply, including groundwater exploitation and large-scale water transfer projects, failed to solve the problem of water shortage. The Chinese government thus turned to recycled water at the beginning of 21st century. The wastewater treatment industry grew significantly in the past decade, while the recycled water industry is still in its infancy. As the government pays more attention to recycled water, there is much room for development in both industries. Though the government has continuously made efforts to reform the water price structure, low water price is still a major institutional obstacle to these industries at present.

The Chinese government is now taking concrete steps to increase the share of non-fossil energies in its primary energy consumption. As one of China's emerging industries of strategic importance, the solar thermal industry for the utilization of solar heat is expected to play a significant role in the green campaign. Based on its core technology which is leading in the world, China has always been the largest market for solar thermal applications and the largest producer of solar heat collectors in the world. In addition to the traditional household applications, building integrated solar systems and other solar thermal technologies in industrial and agricultural production are the huge potential markets to be opened. Despite the rosy outlook, a variety of challenges facing the industry have to be addressed to ensure a healthy development.

While China has been successful in the utilization of solar energy in terms of solar thermal applications, solar photovoltaics (PV) for electric power generation is only a fledgling industry in China. Despite the fact that China is the world's largest solar cell producer, the development of China's solar PV market has been sluggish. It was only in recent years that the installed capacity saw a moderate growth in the country. In the meantime, the focus is now undergoing a transition from off-grid to grid-connected applications, including building-integrated PV systems and large-scale PV power station. In the future, the domestic market has to be explored and the cost of solar electricity has to be reduced by developing the research and development of solar PV technologies.

The fast pace of industrialization and economic development has greatly spurred on domestic high-speed railway construction over the last decade. China's vast geographical area and its population of 1.3 billion have naturally created a high demand for freight and passenger travel. Developing an efficient and reliable system of railway transportation based on the high-speed railway network is crucial for China. The construction of high-speed rail represents China's scale of technological progress. From design and construction through to management, China is seeking to become the world's leader in the high-speed railway sector. The appeal of high-speed rail lies in its environmental friendliness. A substantial reduction of greenhouse gas (GHG) output can be achieved through the development of high-speed railways. However, huge challenges still remain for China in building a highly efficient and reliable railway network in the coming years. Lo efficiency and high operational costs are pressing issues.

The air transport sector is the fastest developing sector among China's various transportation modes. China has also recorded the highest growth of air passenger traffic in the world. The impressive improvements in China's airport industry since the early 1990s have been mainly due to state investment and various reforms. China's airport deregulation reforms have taken place in four stages, with each involving different combinations of airport ownership, management and governance structures. From 2002, the state has further loosened its regulatory controls over the airport industry to speed up the commercialization of airports. Through implementing new reform measures, the government provided more investment opportunities for the non-state sector. Nevertheless, China's airport industry faces three severe challenges to full modernization, namely, uneven regional distribution overall poor performance, and fierce competition within the domestic transport industry.

The following sections are included:

• Index