The world today is undergoing profound changes unseen in a century. A new round of scientific and technological revolution and industrial transformation has spawned new technologies, new industries, new forms of business and new models, unilateralism and protectionism are on the rise, and the comparative advantages of countries around the world have changed, and many factors have promoted significant adjustments in the industrial pattern of the global manufacturing industry.

The complex and changeable external environment has brought many challenges for the better development of China’s manufacturing industry. At the same time, we should also see that China’s manufacturing industry has obvious advantages in industrial base, innovation ability, human resources, market size and other aspects, which has laid a solid foundation for China’s manufacturing industry to move forward to high-quality development, climb to the high-end of the global value chain, and enhance the right to speak in the global industry. In general, the evolution of the global manufacturing landscape and the profound impact of scientific and technological revolution and industrial change have provided important opportunities for China’s manufacturing industry to realize and run and even lead in strategic emerging industries and future industries.

The global manufacturing value chain is “shortening”

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In recent years, the global manufacturing value chain has shown a “shortening” trend. Research by the McKinsey Global Institute shows that trade intensity (the ratio of total exports to total output) has declined in almost all goods-producing value chains, and the decline has been particularly pronounced in the most complex and traded value chains.

The “shortening” of the global manufacturing value chain is the result of multiple factors.

First, developing countries, especially China, have improved their innovation capacity and domestic supporting capacity, and many intermediate inputs have been produced at home without the need to purchase them on the international market.

Second, as economic growth and income levels rise, the size of the domestic market in developing countries continues to expand, and more domestically manufactured goods can be sold locally rather than exported abroad.

Third, robots, artificial intelligence, industrial Internet, intelligent manufacturing and other technologies continue to mature, “machine replacement” is more common, and the capital intensity and knowledge intensity of the industry continue to increase, making the industrial chain that is easy to achieve global labor cost arbitrage, even if it is distributed within a country has become profitable.

In addition, the undercurrent of “anti-globalization” and the promotion of “reshoring” of manufacturing in some countries have also had a certain impact on the “shortening” of global value chains. Many factors, such as increased supply chain responsiveness due to production proximity to the market and improved supply chain resilience due to value chain localization, have also played a role in the “shortening” of the global manufacturing value chain.