A longitudinal comparison on production efficiency of China’s manufacturing industr
y
| Year | Ratio of industrial value added (%) | Per capital labor productivity (RMB 10,000 yuan/year) |
| 2005 | 28.35 | — |
| 2006 | 29.41 | — |
| 2007 | 28.64 | — |
| 2008 | 40.79 | — |
| 2009 | 40.59 | — |
| 2010 | 38.60 | 19.8589 |
| 2011 | 22.64 | 21.5620 |
| 2012 | 22.01 | 21.1078 |
| 2013 | 20.95 | 19.4232 |
| 2014 | 20.61 | 19.1647 |
Notes: 1. Ratio of industrial value added = industrial value added/gross industrial output value.
2. Since 2012, due to the adjustment of statistical indicators, gross industrial output value has been substituted by the overall main business income of the industry.
Data Source: China Statistical Yearbook and Statistics Yearbook on Science and Technology Activities of Industrial Companies issued by China’s National Bureau of Statistics.
By internationally and longitudinally comparing on the labor productivity, value-added ratio and labor remuneration’s percentage of value added of China’s manufacturing industry, it can be seen that China still lags far behind the developed countries in labor productivity, but stays relatively ahead of the emerging developing countries. As for the ratio of industrial value added of the manufacturing industry, there is still a big gap between China and developed or some developing countries. This is caused by the limited technology capabilities of China’s industries, which leads to the over-proportioned industrial material consumption and relatively low value-added ratio. Compared with the advanced industrial countries, China’s manufacturing industry has low labor productivity. However, China’s labor costs are relatively low. Therefore, the proportion of total labor remuneration in the entire value added becomes an important factor in determining the overall level of production efficiency. International comparison shows that the proportion of labor remuneration to value added of China’s manufacturing industry is relatively low, much lower than that in the developed countries such as the US and Germany. This suggests that the overall input-output ratio of labor in China’s manufacturing industry is relatively high and has comparative advantage in global competition. China’s manufacturing labor productivity and proportion of labor remuneration in value added show opposite results. On the one hand, it’s because Chinese manufacturing companies are gradually transforming from labor-intensive to capital-intensive, yielding the preliminary results of transformation. On the other hand, Chinese manufacturing companies are generally low in production and technology capabilities and weak in independent innovation.
From the perspective of historical development trend of production efficiency in China’s manufacturing industry, there has been a big drop of China’s ratio of industry value added in recent years. The labor productivity also dropped year by year. Reasons for such drops are: Firstly, the slowing down of China’s overall economic development in recent years leads to the weak growth in demand; secondly, over-investment and overcapacity leads to the continuously declining factor productivity. The long-term high investment rate causes serious overcapacity and idle resources. As a result, the ROI has been continuously dropping and the capital has been fleeing the real economy. In the long run, only through making technological progress and improving factor efficiency can we stabilize the growth of the industrial economy and enhance the international competitiveness of the manufacturing industry.
1.3.2 Technological innovation capabilities
Study of technological innovation capabilities (TICs) at the industrial level is a systematic work involving many aspects of technological innovation process. There have been a number of studies on the evaluation index of industrial technological innovation in China and other countries. Different evaluation systems have been formed, based on the indicators including technology R&D investment budget, research personnel, research outcomes, technology transfers, new product sales, new product exports and other indicators. This book evaluates the innovation competence of the manufacturing sector using the indicators such as science and technology investment as a percentage of GDP, numbers of patent application filings and the proportion of new & high-tech products in exports.
Table 1-7 A Comparison of science and technology investments between China and other countries
Note: The amounts were converted by the exchange rate in July 2017.
Data Source: World Bank.
As an important indicator for measuring the investment quality, science and technology investment as a percentage of GDP is of great importance to a nation to improve manufacturing technology and production efficiency. The basic indicators for measuring the science and technology investment ratio include R&D budget to GDP ratio, per capita R&D expenditure, etc. Table 1-7 shows that China is still trying to catch up with the developed industrialized nations in the total investment in science and technology. The gap is narrowing year by year. China’s R&D expenditure to GDP ratio has far exceeded that of India, also a developing country, fully reflecting the importance China has attached to technological innovation. However, China’s per capita investment in science and technology is still much lower than that of the developed countries. Compared with the developed countries, China has not even reached 50% in all indicators.
The number of patent application filings is an important indicator to evaluate independent TICs of industries and companies. Table 1-8 benchmarks China’s technological innovation and technology application in 2015 against the international level. The table shows that China is at a relatively high level in technical patent filings by both resident and non-resident applicants. This shows the significant progress China has made in the TICs and technical application level over years of development. However, it is worth noting that, as shown in Diagram 1-9, although the number of patent application filings in China is large, the proportion of overseas patent applications is much lower than that of the developed countries. There is still a disadvantage of “high quantity but low quality”.
Table 1-8 Filed patent application documents in China and other countries in 201 5
| Country | Filed patent application document (piece) | |
| by residents | by non-residents | |
| China | 968,252 | 133,612 |
| US | 288,335 | 301,075 |
| Japan | 258,839 | 59,882 |
| Germany | 47,384 | 19,509 |
| UK | 14,867 | 7,934 |
| France | 14,306 | 1,994 |
| The Republic of Korea | 167,275 | 46,419 |
Data Source: World Bank.
Diagram 1-9 Application for domestic and overseas patents by Chinese residents
Data Source: State Intellectual Property Office of the P. R. China.
The proportion of high-tech industry in the manufacturing industry is an important indicator for measuring the technical level of the manufacturing industry. The development of high-tech industry has significantly driven the development of manufacturing industry. It has become an important means for developed countries to widen the gap between them and developing countries in technical level. It can be seen from Table 1-9 that the proportion of China’s high-tech product exports in its manufactured exports has reached the international
