V-5 Question: Goods with the label "made in China" are in shops all over the world. Hence China is nicknamed the "world's factory." What do you think of this label?

A: Recently, the manufacturing industry in China has experienced rapid growth. China's total manufacturing output has leapt into the fourth place in the world. Market shares of color TVs, washing machines, refrigerators, air-conditioners, microwaves and motorcycles ranks top in the world. However, increase in quantity alone does not make China qualify as the "world's factory."

In history, several countries, the Great Britain, the United States and Japan have served as the "world's factory" one after another. Compared with these countries, China is still weak in the following areas:

First, the scale of production is small, both in terms of production of finished machines, machine parts or sales. At present, the total output value of China's manufacturing industry accounts for only 5 percent of the world market, whereas that of Japan accounts for 15 percent, and that of the United States 20 percent. Science and technology products "made-in-China" are by far too few to claim a meaningful market share in the world.

Second, low technology content. Compared with that of developed countries, the technology level is low for some of China's traditional manufacturing sectors such as steel, non-ferrous metals, power generation, mechanics, petrochemical engineering, coal, and construction. China has to import many hi-tech products or products with high added value. In addition, the productivity of China's traditional manufacturing industry is only one third of the world average, and one 10th of the average of developed countries. Added value of China's hi-tech industry only accounts for 4 percent of the GDP, far below the level of developed countries as well as that of newly industrialized countries.

Third, R&D by Chinese enterprises is in its infancy. Insufficient funding handicaps R&D efforts. Firms are slow in translating innovation into products. China still relies on imports for core technology and key equipment in most of the industries.

Building a "world's factory" requires a long process and is a complicated project. Although China is not yet a "world factory," it has solid framework to become one. According to statistics, the value of China's processing trade reached $831.9 billion in 2006, up 21 percent year on year. Exports went up 26 percent while imports were up 17 percent. A major source of China's trade surplus is processing trade. After China became a WTO member, more and more multinational companies sell their products, purchase raw materials, recruit staff in China, or set up centers in China for new product development, price setting or coordinating their subsidiaries in other parts of Asia.

(China.org.cn)