2008 CHINA’S 2008 CHINA’S INDUSTRIAL DEVELOPMENT REPORT——China’s Industrial Reform and Opening for the Last 30 Years
Industrial reform in China really reflects rich contents and hard experiences of exploration in respect of the road of socialism with Chinese characteristics and economic system reform so far，major achievements of reform and problems to be further solved。During industrial reform in the first stage，a thought revolution was started，which laid a good foundation for market economy development：to get away from poverty，people have to depend on themselves。The whole society began to recognize：the action that individuals and enterprises strive for income，profit and wealth is not only a proper and rational individual behavior，but also a reasonable behavior helpful to the society。This profound thought revolution played a decisive role in the transformation from planned economy to market economy。During industrial reform in the second stage，some bold attacks were launched on every aspect of planned economy and socialist market economy was
identified as the target of system reform。In this process，China industry set up the courage，confidence and resolution to walk towards a more open market economy system。China can claim to the world eventually：we are unafraid of market competition and look forward to its coming；we don’t oppose market economy and can speak to all nations in the world loudly：let market competition be fiercer！China industry has prepared to meet the trend of economic globalization。During industrial reform in the third stage，the principal problems waiting to be solved has changed from the transformation from planned economy to market economy to the further transformation from planned economy to market economy and a lot of common system and policy problems that the effective operation of market economy worldwide faces。From then on，industrial reform in China is not only the business of China，but also the business of the whole world。
Chapter 1
The Industrialization Process during the Thirty Years of China’s Reform and Opening
Since the reform and opening，China has successfully advanced the industrialization process rapidly to realize a qualitative leap of development period from the initial industrialization period to the middle industrialization period during the two periods，namely，the period of structural readjustment and synchronous development of light industry and heavy industry，and the period of rapid development of heavy chemical industry and great promotion of industrial structure。The successful experience on China’s industrialization for the last thirty years can be summarized as following：build harmonious and stable development environment，maintain continuity of the industrialization process，follow the evolution rules of industrial structure，promote advancement of the industrialization process，adhere to the development policy of both internal and external sources，set up complete drive mechanism of industrialization，
respect the creativity of local governments to development economy，and research on correct regional industrialization models。In the future，China needs to solve the following problems in order to promote china’s industrialization process：the problems that the technical sources of the industrialization over rely on foreign countries，poor capacity of industrial technology to innovate independently，alleviate the contradiction between restriction of resource environment and rapid advance of industrialization，high pressure of transferring surplus labor in rural area，more serious situations of employment，bad compatibility of industrial structure，unreasonable industrial structure，unbalanced regional economy development，expanding gap of economic development between the east and the west area，great external pressure confronted by promoting China’s industrial division status in the world under the condition of enlarging the opening。
Chapter 2
Status of Chinese Industry in That of the World
The period of the thirty years since the reform is one of high growth of Chinese industry，and is one of the highest speeds in the world。After thirty years of high speed development，the status of Chinese industry in that of the world has been promoted continuously，China has become a large country of industry and manufacturing，and it has ranked top in the world in aspect of output of major commercial product，attraction of foreign investment，and export of product。From the whole，the status of Chinese industry in the world is mainly shown in the total quantity，and its advantage is mostly the advantage of low price and low manufacturing cost，but there is still large gap in development quality comparing with developed countries。Chinese manufacturing industry is located in the low end of value chain，and faces more and more pressure of environment，resource and trade brush。Chinese industry should promote its status in the global labor division system by undertaking new industrialization road，developing cycling economy with great effort，increasing independent innovation capacity，and promoting growth quality。
Chapter 3
Change of Chinese Industrial Management System
The reform of Chinese industrial management system transferred from complete planned management system to the system of resource allocation by market for the last thirty years，starting from the system of delegating powers and transferring profit to lower levels，the contract system in which each unit is responsible for its own surplus or deficit in fiscal matters，the system of each administrative level having its own source of revenue and expenditure at the very beginning，to the policy of switching from profit deliveries to the state to tax payments and the system of contracted responsibility，then to the administrative structural reform and function transformation of the government，and later to the legal environment
established in comply with international regulations under promotion of opened environment after entrance of WTO。In the new system of industrial management，the principal status of enterprises in the market has been established，the function of the government to manage economy has been transformed，the system and mechanism of price has been regulated，and a state-owned assets management system has been set up to meet with market economy operation。The major problems existing at present are：making full use of market mechanism，position and function of industrial association，encouragement and restriction mechanism of enterprise operators，and management on resource ownership。The industrial management mechanism in the future should reinforce efficiency of resource ownership，promote efficiency of organization，enhance the role of industrial associations，and build up an environment for fair competition under direction of the idea of scientific development。
Chapter 4
Readjustment of Industrial Development Strategy and Policy（2008.5）
Since the Third Session of the Eleventh Central Committee of the Party，china’s industry continues to develop rapidly，output of major industrial products increases multiply，industrial structure is upgraded gradually，and industrial economic benefit is promoted continuously。With development of productivity and change of economic environment inside and outside the country，China’s industrial development strategy and policy were readjusted and completed accordingly。At the beginning of 1980s，in order to solve the problem of serious imbalance of economic structure，China applied the policy of readjustment，regulation，reform and promotion to make the proportions of industry and agriculture，and heavy industry and light industry become balanced。In mid of 1980s，township enterprises became all the rage，the operation responsibility system was spread in all state-owned industrial enterprises，and the industrial economy scaled a new height。Meanwhile，there also emerged problems such as serious lagging behind of basic industries including energy and raw materials，and over quick rising of price of production materials。From 1988 to 1990
China carried out improvement and rectification。In 1992，Deng Xiaoping’s speech in the South China and the Fourteenth Central Committee of the Party made clear the reform direction for building up socialist market economy，and the social and economic development entered into a new stage。Considering the problem of overheated economy and financial disorder，China conducted macro control policy to regulate financial order and curb overheated economy，and effectively eliminated serious inflation。In 1997，a financial crisis broke out in some countries and regions in Asia，which produced bad effect to China’s economic growth and import and export trade。The government undertook the policy of expanding domestic demand，adhered to the policy that RMB did not fall into devaluation，and eliminated the pressure on China’s economy by Asian Financial Crisis。Till 2000，the over-fulfilled the strategic aim of China’s economic development promoted at the Twelfth Central Committee of the Party in 1982.While entering the new century，the Party Central Committee summarized the experience on social and economic development since the reform and opening，and promoted the policy of taking a road of new industrialization and transformation of economic development under direction of the idea of scientific development to ensure sustained，adjusted and rapid development of economic society according to the new contradictions and problems in China’s social and economic development。
Chapter 5
Industrial Growth and Relation of Market Supply and Demand
The history of China’s industrial growth in the thirty years of reform and opening is basically a process of continuous change and interaction of relation of supply and demand of industrial products。From aspect of relation of supply and demand，China’s industrial growth undertook the following four stages generally：the first stage is the period of consumer goods shortage from the end of 1970s to late of 1980s；the second is the period of relative surplus of consumer goods and more serious contradiction of supply and demand of basic products in the beginning and mid of 1990s；the third is the period of deficiency of effective demand in the country in the Ninth Five-Year-Plan；and the fourth is the period of short supply of energy and raw materials and import growth of basic products since the beginning of the 21st century。By analyzing examples，this essay studies the relations among consumer demand，investment demand and GDP
growth，and influence on relation of market supply and demand of industrial products by change of demand structure，real-estate investment，international trade，informationization，change of private cost in manufacturing industry，and regulation and control on product quality safety。In order to promote sustainable growth of our industry and sustainable and healthy development of industrial product market，the author advices the government to enhance policy regulation and control in four aspects below：the first is to take measures to expand domestic consumer demand to make consumption the dominating power to drive China’s industry and national economy to increase；the second is to optimize investment structure and strictly control problems of land occupation and environment caused by investment；the third is to enhance management on industrial product export and promote domestic sales of commodities originally produced for exports；and the fourth is to focus on further reform of economic system and promote health operation of industrial economy。
Chapter 6
Readjustment，Optimization and Upgrade of Industrial Structure
The reform and opening，readjustment and upgrade of China’s industrial structure undertook three periods for the last thirty years，namely，the readjustment period of proportion of light and heavy industry from 1979 to 1984，the readjustment period of proportion of process industry and basic industry from 1985 to 1997，and the heavy chemical industry period since 1998.On basis of carefully analyzing macro-economic background，structure readjustment tasks，change of major policies，and results of structure readjustment，the author collected and summarized the basic experience on promoting industrial structure readjustment and upgrade in four aspects，specifically，to comply with the objective rules of economic development and change economic development strategy at proper time；to maximize basic regulation function of market mechanism and make full use of foreign investment positively and effectively；to keep good economic
operation environment with best effort；and to handle relations among government，enterprise and market correctly，and pay attention to comprehensive application of economic，legal and administrative methods。The aims of further promoting industrial structure readjustment and upgrade are：the first，speed up development of electromechanical industry，especially equipment manufacture，and further promote processing industries with feature of high increase rate of productivity in heavy chemical industry；and the second，raise productivity level in all departments of heavy chemical industry so as to realize industry upgrade。For this purpose，China must deepen system reform，advance mechanism innovation，enhance macro regulation and control，regulate local government behavior，handle relations of technology import and independent technology development correctly，increase capacity of independent innovation，speed up organization and structure readjustment of enterprises，support local enterprises to become large and powerful，and promote coordinated development of heavy chemical industry and productive service industry。
Chapter 7
Technology Progress and Independent Innovation
Since the reform and opening，China’s industrial technology has experienced such a development process：the coming of the spring of science make it definite that science and technology are productivity；conducting technology transformation by technology import；promoting technology progress by system reform，technology transformation brought by direct foreign investment；and emphasis on independent technology innovation。The reform of system of mechanism of technology progress and the implementation of all policies greatly speeded up technology progress。Investment in technology progress increased continuously，and the technology progress produced obvious effect。From aspect of investment on technology progress，the number of contract for technology import and the total amount of input increased year by year，investment in science and technology expenditure and number of scientists and technicians kept increasing，investment in R＆D that reflects independent technology innovation increased even more quickly，the total amount of investment in upgrade and transformation in fixed asset investment increased year by year，but its proportion
began to decrease and in recent years，it is increasing again，and equipment level of technology was greatly improved。From aspect of output of technology progress，proportion of sales revenue of new products was promoted，power consumption per unit of GDP decreased continuously，the number of patent and the total amount of money for transferring scientific and technical achievements that reflect output of independent innovation increased year by year，some key national projects have been carried out，and status of hi-tech industries was promoted continuously in manufacturing industries and national economy。At present，existing problems in technology progress and independent innovation in China are：low strength of R＆D in manufacturing industries and hi-tech industries；driving mechanism of independent innovation has not formed completely，and the capacity to digest and absorb need to be promoted。
Chapter 8
Industrial Capital and Investment in Fixed Asset
Since 1978，the system of industrial investment in China has completed four periods of exploration and reform，and initially formed a development pattern of multiple investment principals，multiple capital resources，various investment methods and marketization of project construction。The power for increase of industrial investment principals is greatly provoked and activated，and the market regulation system of industrial capital resources has basically formed。The above are mainly expressed in the following aspects：fiscal transformation makes government investment retreat from competitive areas gradually；direct foreign investment has become an important power to promote industrial growth；the capacity of
industrial investment to increase on its own determination is keeping strengthened；and the rapidly increasing capital market provides powerful support to increase of industrial investment。Since entrance of the new century，the increase of industrial investment in China has been speeding up obviously，and its proportion in fixed asset investment of the whole society has begun to rise again。However，problems such as surplus productivity，decrease of investment efficiency，and more restriction of resource and environment begin to emerge because traditional extensive increase mechanism has not been changed basically。The resolution to eliminate over reliance of industrial growth on capital，resource，and environment and to promote investment efficiency is to further reform of investment system，make full use of basic functions of market system in resource allocation，advance reform of resource price，perfect price driving mechanism，optimize industrial investment structure，strengthen sustainable development capacity，and enhance directive function of industrial policies in macro control。
Chapter 9
Supply and Demand of Industrial Labor and Labor System
The increase of China’s industrial sectors for labor demand becomes shrinking with change of industrial structure and development mode for the last thirty years of conducting the policy of reform and opening，while supply of labor keeps increasing，in result of more supply of labor than demand。At the same time，the labor market begins to be sub divided by influence of technical advance。In the present situation of more supply than demand generally，the sub market of hi-tech labor is short of supply。This shows higher demand for qualification of labor by industrial sectors，and also means transformation of labor influence on industrial output from advantages of cost and quantity to advantage of qualification。During the thirty years，the labor system in China has changed radically。Employment has transformed from planned economy to market-oriented employment system，and basically formed an employment system that meets employment demand of different groups，productivity and social equity。Meanwhile，related labor system such as payroll system，employment system and insurance have been set up to meet with socialist market economic system，and this has made important foundation for social stability。
Chapter 10
Opening to the Outside World and Promotion of International Competitiveness of Chinese Industry
Reviewing the process of the opening to the outside world，the policy of opening up has not satisfied the objective demand of China’s economic development，but also complied with the rules and trends of economic development in the world。As a long-term basic state policy，it promoted reform and completion of regulation system of foreign trade and economy，infused energy and power into economic growth，speed up the combination of China’s economy with global economy，and generally promoted the international competitiveness and international industrial division status of the industry in the world。At present，China has formed a new pattern of opening to the outside world of comprehensive directions，multiple levels，wide area，and key points。Facing new changes of development environment inside and outside the country，China should，on basis of adhering to the opening strategy of mutual benefit and win-win，manage domestic development and opening up，coordinate the strategic aims of enlarging opening up，speeding up industrial upgrade，and protecting industrial security，continuously explore new ideas and new models for opening up，widen areas for opening up，actively advance innovation of foreign investment，overseas investment，and foreign economic cooperation methods，promote overall level of opened economy，set up and complete a more opened industrial system，promote the industry to form sustainable competitive advantages with which China’s industry can participate in international cooperation comprehensively under the condition of economic globalization。
Chapter 11
Influence of Entrance into WTO on Development of Chinese Industry
It is a quantitative and overall development for socialist market economy system in China to enter into the World Trade Organization and join the world system completely。The influence of entrance of WTO on the national economy and industrial development of China is not as serious as it was expected，on the contrary，the competitiveness of Chinese industry is greatly improved。During the six years after the entrance，the national economy of China keeps increasing rapidly，and has made important contribution to the global economy。During this period，the Chinese industrial economy increases dramatically，heavy chemical industry takes outstanding proportion of industrial output value，contribution of industry to GDP increases gradually，and the types of foreign-invested enterprises（joint ventures，co-operative and sole-foreign investment enterprises）account for about 1/3 of the total industrial economy in the country。However，in comparison with the period before the entrance，the following problems need to be paid more attention after the entrance：problems of intellectual property，trade surplus，processing trade，trade brush，social responsibility，lower end locking，resource and environment，energy reduction and carbon emission reduction，“stepping-out”and economic security。
Chapter 12
Restriction of Resource and Environment and Sustainable Industrial Development
Since the reform and opening in 1978，the understanding of status and role of resource and environment in China’s economic development has experienced different phases from no attention to attention and then to higher attention，while，the reform of resource and environment management has also undertaken a pretty long period of exploration。After thirty years of reform，China has formed a comprehensive system of resource and environment management basically。The basic feature of the system is to make full use of economic methods as well as administrative methods。In this point，China once took indirect routes。During the process of transforming to market economy，government departments of all levels revoked a large amount of administrative approval projects，but establishment of a new management system to permit to enter that complies with socialist economic system did not conducted，in result of series new problems。
From the beginning of the Eleventh Five-Year-Plan，China further enhances administrative methods while making full use of economic methods，and the results are very obvious。Reviewing the past thirty years of reform of resource and environment management，it can not be denied that the reform of resource and environment management in China has not only ensured sustainable and rapid industrial development，but also made achievements in protecting resource and environment。But from the aspect of sustainable industrial development，the reform of resource and environment management needs to be furthered。In short term，China should eliminate pressure of resource and environment through structure readjustment and promotion of efficiency of using resources；in medium term，China should solve the export-related problem of two-high and one-resource，i。e。，to solve the problems of dominant and recessive resource outflow in international trade，and to make full use of global resources by implementing the strategy of“stepping-out”；in long term，the task of reform of resource and environment management is to explore new renewable resources to ensure sustainable supply of resource。
Chapter 13
Energy Industry
With further reform of economic system，China’s energy industry begins a series reform of price system，system of market opening and investment and fund-raising，and industrial management system。Reform of price system is the breakthrough point and core of the reform of energy system。Generally，coal has already been priced by market in China，but the prices of electric power and petroleum are still under the direction of the government。The reform of price system greatly promotes development of energy industry，but the reform is not completed，and the system is not perfect。The price system will be a key problem of reform of energy system in the future。The opening of energy market and the multiple investment principals should be carried out synchronously。The coal market in China is opened in much more extent，non state-owned economy entered into the field of coal production much earlier and promoted the capacity to supply coal greatly。But resource collection rate and safe production become more serious。The market of electric power and petroleum is opened in limited extent，and mainly opened to foreign investment and state-owned
capital of non energy departments。The development of non state-owned economy develops very slowly。Because of monopoly and insufficient investment，the power transmission in power industry is very weak。The supply of petroleum increases very slowly。This is properly because of insufficient market competition besides factor of resources。China’s energy management organization in the thirty years of reform and opening has been adjusted for several times，and gradually becomes centralized from scattering and changes from industrial management to macro coordination by the government。The rapid development of China’s energy industry effectively proves the effects and achievements of energy system reform。However，since the reform has not been completed，especially since the price system of energy and market access system have not been regulated，and because the problems of energy safety，energy utilization efficiency and energy environment are becoming more and more serious，it requires to keep on promoting reform of energy industrial system objectively。The key point and direction of China’s energy system reform in the future will be further improvement of energy price system，opening of market access，enhancement of energy environment management，and reinforcement of energy safety mechanism。
Chapter 14
Iron and Steel Industry
Iron and steel industry is one of the industries that are influenced by traditional planned economic system the most。For quite a long period of time before the reform and opening，the industry had applied highly centralized planned management system。From the Third Session of the Eleventh Central Committee of the Party，China undertook series new measures of reform and opening gradually in macro management system，iron and steel product pricing mechanism and circulation mechanism，investment management system and enterprise system，and promoted productivity of iron and steel industry to advance greatly。Compared with that at the beginning of the reform and opening，the production scale of China’s iron and steel industry today has been tremendously enlarged，and the overall technical level of the industry has also been improved dramatically。The capacity of the products to meet social development and the competitiveness of the industry in the world are obviously improved，and the structure adjustment of the iron and steel industry achieves good results initially。However，not only the old problems are not solved，
but also new ones emerge，no matter in aspect of the reform and opening or aspect of development。Among the problems，outstanding problems are：the reform has not been carried out in place，a good and quick development system for the iron and steel industry has not been set up，product structure can not meet the development demand of national economy，the task of saving energy and reducing emission is still very difficult，and there are more and more trade brush。In order to solve the above problems，it requires to further reform of iron and steel industry，regulate mechanism and system of the industry，and at the same time，put more effort and investment in research and development，promote the capacity to innovate independently，and change the development method of the industry。
Chapter 15
Petrochemical Industry
The development of China’s petrochemical industry can be divided into four periods，namely，the initial period from the establishment of the new China to 1978，the second period of ten years from 1978 to 1988 when government functions and enterprise management in the industry were separated，the third period of ten years from 1988 to 1998 when the vertical integration of enterprises in the industry was established；and the fourth period of ten years from 1998 till now when market competition become more and more serious。In aspect of production capacity，China has become a large country of petrochemical production in the world，and its production capacity of major petrochemical products ranks in the front in the world。In 2006，the industry kept on developing rapidly with output of crude oil reaching 184 million tons，output of oil processing 366 million tons，and output of ethylene 9.41 million tons。At present，
the major problems existing in the industry and the applied measures are：the problem of small scale of upstream enterprises and less sufficiently development of middle-size and small enterprises in the middle and down stream in the industry；the direction for industrial organization and structure readjustment is to develop large enterprises in the upstream and middle-size and small enterprises in the downstream，and support the development of middle-size and small enterprises actively by the large enterprises in the upstream；China has not built up a safe and reliable oil supply system and therefore，it should be conducted on basis of sufficient consideration of industrial safety and efficiency to eradicate monopoly in the petrochemical industry；enterprise regional display is decentralized，and so it should be done to actively direct new projects to be established in chemical industry park and promote enterprises outside chemical industry park to move into a park。
Chapter 16
Chemical Industry
The overall situation of China’s chemical industry during the thirty years of reform and opening has been greatly changed and begun to support an area in national economy after reorganization，improvement and structural readjustment in 1980s，management system reform and industrial reorganization in 1990s，and establishing group corporations and bases in the 21st century。The major indications are：the overall scale，technical capacity and management level in the chemical industry are improved obviously，the industry has formed an industrial system with various kinds of products，complete upstream and downstream，large scale and foundation，and the production capacity and output of major chemical products rank the
top in the world。The status and role of the chemical industry in national economy has been promoted greatly，the structure of ownership is changed obviously，the state-owned economy display centralizes in the upstream where scale economy is obvious，non state-owned enterprises surpass state-owned or state-hold enterprises and become the dominant force in the chemical industry，productive forces transfer to areas close to sea，rivers，and districts full of resources，the display of chemical industry is optimized continuously，separation of government functions and enterprise management is accomplished in management system，and comprehensive management is reinforced。After problems of system and mechanism are initially solved，China’s chemical industry is facing new tasks in aspect of improving capacity to independent innovation，promoting industrial structure，perfecting industrial display，solving restriction of resource and environment，and increasing international competitiveness。
Chapter 17
Machine Building Industry
From 1979，China’s machine building industry started from structure reorganization and reform of system of production，supply and sales，gradually furthered and expanded reform to all aspects including industrial management system，enterprise management，and enterprise system，and at the same time，enlarged the area and depth of opening up to the outside world，set up an open operational mechanism for synchronous development of multiple economy based on the market。
The scale of machine building industrial increases rapidly and China becomes a large machine building country in the world。Furthermore，the product structure and technical level are improved continuously，and the international competitiveness is enhanced。Summarizing the development of the industry since the reform and opening，the most important experience is：to put the development of machine building in outstanding and important position in national economy，pay attention to combination of technical introduction and independent innovation，promote enterprise operation level through continuous system reform，attach importance to coordination of specialized division and combination of supply and demand，so as to set up an industrial operation mechanism that can meet market demand all the time，accomplish product structure optimization and industrial chain upgrade continuously，and undertake the important task of equipping China。
At present，China’s machine building industry has not got rid of the increasing method based on large consumption of materials，and change of the method is restricted by many factors。For this purpose，while promoting enterprises to keep on furthering and completing internal operation mechanism，the government needs to make its role in planning，organizing，coordinating and capital support，and set up a macro control system of policy that can be continuously perfected to create a good development environment for enterprises。
Chapter 18
Automobile Industry
Although a rather complete automobile industrial system in China had been formed initially under planned economy system before reform and opening，but under a closed situation，the gap between automobile industry and that of the world kept on expanding，and the automobile enterprises lacked independent development mechanism and energy。From reform and opening，China automobile industry made bold attempt of reform in aspect of management system，enterprise system and mechanism，technical advance and opening to the outside world，and took the leading position in many aspects among all industries in the whole country。Promoted by reform and opening，the industry made great progress in China。In 2007，the output of automobiles in China is 8.8824 million。From 2006，China has become the third largest automobile manufacturing country and the third largest market of automobile sales。From 2005，the automobile industry has realized a historical change that the quantity of product exported is more than that of import。In aspect of independent product development，it also made rapid progress。The automobile industry has grown to be a pillar industry that leads China’s economic development。In the 21st century，the industry must take further reform and opening to meet challenges of energy，resource and environment in order to enter the world and obtain independent development capacity。Only by furthering reform and opening，can China’s automobile industry solve new challenges，accomplish new strategic aims，and become a real large country of automobile industry in the world。
Chapter 19
Telecommunication Industry
China’s telecommunication industry in the thirty years of reform and opening experienced the following stages：the stage of everything being determined by color TV in 1980s，the stage of rapid development dominated by telecommunication and computer in 1990s，and the stage of industrial competitiveness focusing on integrated circuit after 2001.China ranks in the large countries of electronic information products in industrial scale in the world。Although there is still large gap between our enterprises and transnational corporations in the world in technical level and innovation capacity generally，the level of telecommunication industry has been greatly improved，some key techniques have been broken through，
and a group of domestically-invested enterprises with certain innovation capacity and obvious competitive advantages and independent brands have emerged。The key reasons for the success are adherence to regulation of system，opening to the outside world，cooperation and development in the industry，and continuous encouragement policy of independent innovation。At present，the industry begins to enter into a new development period with basic features that competition of technical standards and system innovation become the most important factors that influence development of the industry。Therefore，the market capacity and the stability of market increase are very important to development of telecommunication industry。From this point，the long term steady development of the industry in our country is determined by whether we can better handle the key problems that influence the demand for telecommunication products，namely，the theory of technical neutrality for standard selection，trade brush of telecommunication in the world，and influence by reorganization of telecommunication enterprises on demand for electronic products，totally three problems。
Chapter 20
Light Industry
China’s light industry in the thirty years of reform and opening has made great progress。It not only put an end to the history of shortage of consumer goods basically，but also made output of many light industry products rank the first in the world。At present，China is one of the largest countries of light industry manufacturing and consumption in the world。Reviewing the development of light industry in the past thirty years，the basic experience is to adhere to implement development strategy from concrete situations of the light industry，insist on market-oriented reform，promote change of management system，ownership structure and enterprise operation mechanism，adhere to the policy of reform and opening，
and attach importance to technology import，investment attraction and export increase。During the Eleventh Five-Year-Plan，with development of economic globalization and integration，the light industry will meet new development opportunities and challenges。It must make efforts to develop domestic market and international market，and promote international competitiveness。In developing，it should pay attention to the demand of buyer’s market，and make strategic readjustment to the economic structure of the light industry。It must adapt to integration of global economy，and set up and complete an opened economic system of the light industry。It should expand opening to the outside world with efforts，actively participate in international competition，promote scientific and technical advance，establish and improve technical innovation system of industry and enterprise，carry out the idea of scientific development，take a road of new industrialization，meet the demand of sustainable development，and enhance pollution management in the light industry and comprehensive utilization of resources。
Chapter 21
Textile Industry
Textile industry is a traditional pillar industry in China’s national economy，and also one of important industries that has obvious competitive advantages in the world。It plays an important role in increasing employment and farmers’income，accumulating capital，earning foreign exchange through export，making market flourish，promoting township level，driving related industries，and promoting regional economic development。In the thirty years of reform and opening，the textile industry generally undertook three major development periods，namely，the first period from 1979 to 1990 when state-owned textile enterprises went through a stage of high speed development of expanding in number，seller’s market changed to buyer’s market，and overproduction was obvious；the second period from 1991 to 2000 when a series readjustment policies were executed in the textile industry and the industry began to take a road of intensification development；the third period of great development from 2001 till now when change from a large country of textile to a powerful country of textile is accomplished after entrance of WTO。
Since the 1990s，China has become the largest country of textile production and export in the world，and its export quantity has always ranks the first in the world。After over thirty years of development，the capacity to innovate independently in China’s textile industry has been greatly promoted，a group of technical and famous brands that posses independent intellectual property and produce worldwide influence have emerged，industrial structure was further optimized，the overall level of technical equipment was greatly improved，the initial processing capacity of low efficiency，high energy consumption，high pollution and low level was effectively restricted and eliminated，energy saving，consumption reduction and environment protection were made substantial progress，an industrial competition advantage dominated by quality，innovation and prompt response was built up in a higher level，and an industrial development mode that meets the requirement of taking new industrialization road was completed。
Chapter 22
Household Appliance Industry
China’s household appliance industry in the thirty years of reform and opening has developed as rapidly as many other industries。It basically established a modern enterprise organization system，and initially formed three regional industry groups with clear appearance。The production capacity was rapidly promoted，the output was continuously increased，the kinds of products were increased，new functions continuously appeared，and many enterprises began to realize internationalization。Many products changed from luxurious commodities for those with high income to necessities for those with low income just in a few years，and from entering common people’s house in the country to going out to the world to take part into competition。Related materials show that till the end of 2005 of the end of the Tenth Five-Year-Plan，the total production capacity of China’s household appliance ranks the first in the world。Generally speaking，the industry has grown to be a mature industry initially with certain advantages in the past thirty years，and it will become an advantageous industry with international competitiveness in the future。
However，there are still major problems，specifically，the increasing method of the industry is careless，there is great difference between the industry and that of the leading countries in the world in aspect of overall qualification，especially levels of technology and processing，standards for energy saving and environment protection，profit of manufacturer becomes less and less，sales becomes worse than before，relationship with upstream and downstream enterprises is not harmonious，and economic scale benefit of individual enterprise is much worse than that of large enterprises in the world，and demand of low income families in town and rural area for household appliance is not sufficient。The basic idea to solve the above problems is to seek for driving force and support at consumption and product market。Generally speaking，it is necessary to make definite the strategic position of China’s household appliance industry，and to endeavor to become one of the three centers of household appliance in the world。China should set up definite directions in product function and market development，accomplish breakthrough of key technology，promote centralization of industry in market deepening，form industrial groups with outstanding advantages，realize recycling economic mode of green production，energy saving，renewability and utilization in compliance with relevant international standards，and accomplish good，quick and scientific development in the whole industry to make China become a powerful country of household appliance industry instead of a large one。
Chapter 23
Building Materials Industry
After the Third Session of the Eleventh Central Committee of the Party，the Chinese Party Central Committee and the State Council indicated clearly that China’s building materials industry should be first developed in order to develop national economy and realize the four modernizations。Under this direction，the building materials industry developed very fast for the last thirty years，and formed a complete industrial system including research and development，geological exploration，
equipment manufacture，production and process，after-sales service，and international trade。Output of cement，glass，structural ceramics，and sanitary ceramics has ranked the first in the world for many years，making tremendous contribution to economy development and improvement of people’s living，and becoming a pillar industry in national economy。While accomplishing high speed increase and improving the situation of supply and demand of building materials for the last thirty years，the industry completed a wholly new operation mechanism，strengthened opening to the outside world，changed the nature of just raw materials of building materials，optimized resource allocation in the industry，and achieved comprehensive progress in technology，equipment and product。However，the building materials industry is still large but not powerful in general in comparison with advanced level in the world。In order to become a powerful country of building materials，it should rely closely on technology progress，comply with recycling economic development model，and make the industry save resources and become friendly to environment。This is not only the direction for development in the Eleventh Five-Year-Plan，but also in a long period in the future。
Chapter 24
Pharmaceutical Industry
China’s pharmaceutical industry is an important part of national economy。The industry in the thirty years of reform and opening has undertaken obvious changes in ownership structure，mechanism and system with further reform of market economic system。In ownership structure，it realized transformation from single public economy to multiple economy，in pricing mechanism，transformation from planned price to market regulation on basis of government pricing，and in government management system，the government met with development of domestic market economy and dismantle and combine the former organizations，and the industry experienced a change from unity to distribution of power and then to complete unity。
The industry in the past thirty years has kept high speed economic increase，the production scale and foreign trade were promoted continuously，economic structure was optimized gradually，and the medicine production became one of the most potential industries in China。However，it also shows many problems that influence long term development while in high speed development，for example，unreasonable market structure，low international competitiveness，unreasonable investment in research and development，insufficient technical innovation，lack of medicine with independent intellectual property。In order to keep sustainable and healthy development of the industry，it needs to promote reform of science and technology system for the industry，expand fund-raising channels actively，increase investment in technical research and development，promote capacity to innovate independently，perfect readjustment of industrial structure，improve competitiveness，complete industrial policy，optimize industrial organization structure，gradually improve resource allocation efficiency in the industry，and enhance protection of intellectual property and management。
Chapter 25
Development and Display Change of Local Industry
Local industries in China in the thirty years of reform and opening increased in different level。There are two regions where industries increased rapidly，one is coastal provinces and regions of new industries in the east and south China，and the other is provinces and regions of resources in the middle and west part of China。One region where industries developed slowly is the old industrial base in the Northeast China and the underdeveloped provinces and regions in the middle and west part of China。The other regions where industries developed slowly are municipalities directly under the Central Government，which take services as dominant industries。The industrial development level in China in the past thirty years was mainly determined by promotion of reform and opening of local market。Meanwhile，regional display of industries began to be centralized，i。e。，to gather along coastal area in the east，municipalities，
a few provinces，and all kinds of parks。If taking population into consideration，the industrial display showed a trend of being relatively balanced。The centralization and relative balance are the results that macro policy and regional policy have going after for long period。The major problems existing in regional industrial development and display are misunderstanding of general industrialization in all regions，neglect of bearing capacity of resource and environment，over gathering of manufacturing in coastal municipalities，seriously insufficiency of services，unreasonable display of heavy chemical industry which results in long distant transport of resources，increase of cost of production factors，and more frequent moving of enterprise。The proposed measures for promoting local industrial and scientific development are：to move general manufacturing out of coastal municipalities actively，promote rapid industrial upgrade，complete industrial policies for different classification of industries according to requirements of principal function areas，enhance regional cooperation，and quickly promote formation of system of regional coordination and interaction。
Chapter 26
Development of Special Economic Zone and Development Zone
Since the reform and opening，our country has set up many kinds of economic zone and development zone of different levels with comprehensive opening to the outside world and under promotion by the trend of new technical revolution in the world。The construction and development of economic zone and development zone are very helpful to promoting the display formation of multiple level，multiple channel and multiple direction from coastal areas to inland areas，and play an effective role of window，sample，radiation and leadership in the reform and opening。The economic zone and development zone are not only the leader of regional economic development in our country，but also important bases for upgrade of regional industrial readjustment。At the same time，the construction and development of economic zone and development zone have become an effective way to promote urbanization process in the country。In the beginning of 1990s，a fever of development zone once became very popular all around the country，causing more serious problems of lack of unified plan of economic development zone，similar structure，and redundant construction in low level。After entrance of WTO，how to understand opportunities and challenges faced by development zone，how to speed up change of development zone from favorable policy to independent development，and how to improve international competitiveness become problems to be further studied emergently。In a new international and domestic situation，the development of economic zone and development zone will show a new trend。
Chapter 27
Regional Economic Cooperation and Development of Urban Agglomeration
Since the reform and opening，the regional competition and cooperation in China have been ones under direction of the government basically。The real breakthrough of the cooperation began in the end of 1990s when the Development of the West Regions was conducted。As carrier of regional economy，urban agglomeration plays an important role in regional economic development。From 1980s to the beginning of 1990s，the Zhujiang River Delta and Yangtze River Delta were opened in the first，forming the most developed urban agglomerations in China。Then urban agglomeration in Shandong Peninsula and Jing-Jin-Ji（Beijing，Tianjin and Hebei）urban agglomeration along Bohai Bay added energy to coastal economic development。From the beginning of the 21st century，our country enters into a new period when urban agglomerations in eastern areas develop deeply and inland urban agglomerations become prosperous。In regional economic
cooperation and development of urban agglomeration，China meets problems such as：the role of inland urban agglomerations is not fully played，the gathering degree of industries between inland urban agglomerations and coastal urban agglomerations is quite different，the competitiveness of central cities of inland urban agglomerations is decreased，there is disorderly internal competition，urban agglomerations lack of unified plan。The development direction of regional cooperation and urban agglomeration in China in the future should first enhance the power of inland urban agglomerations。This is the key point for cooperation between the east and the west。The coastal areas should pay more attention to efficiency of industrial development。The inland urban agglomerations should take scientific and technological innovation as insurance，make full use of the basis of equipment manufacturing，and achieve leap development。In addition，
in order to avoid disorderly competition，no matter the coastal or the inland，all should take industry as the principal，and construct organic connection among urban agglomerations。In order to make regional economic cooperation and urban agglomeration develop healthily，China should take the following steps：set up the idea of scientific development，unify regional development，enhance government direction，promote construction of urban agglomeration orderly，take scientific and technological innovation as driving force，develop and strengthen core cities，establish communication and coordination mechanism among cities within urban agglomeration，and pay attention to environment of urban agglomeration。
Chapter 28
China’s Readjustment and Expectation of Regional Policy
From 1978，with the change of regional economic development strategy in China from imbalanced development to coordinated development，the regional policy generally undertook three different periods，namely，the period of imbalanced development in favor of the east from 1979 to 1990，the launching period of regional coordinative development strategy focusing on the middle and western regions from 1991 to 1998，and the overall execution period of regional coordinative development strategy since 1999.In order to promote regional development，China launches the strategies of the Development of the West Regions，the Rejuvenation of the Old Industrial Bases in the Northeast China，and the Rising of the Middle Regions in recent years，and enhances fiscal transfer payment and support to poverty-stricken areas。Under strong support by the government policy，the work of helping the poor has made much progress。Investment in
the middle，west and northeast part of China has increased rapidly，and all regions show very good development situations。Regional coordinative development also achieves success。However，because of comprehensive influence by history，nature，economy，and society，the increase of regional economy in China is still imbalanced，and difference of development in all regions is very great。The task for accomplish regional coordinative development is arduous and the road ahead is long。In long term development，in order to carry out the idea of scientific development and promote coordinative development of town and rural area，we must adhere to implementing the overall strategy of regional development，speed up promoting principal functional area，enhance support policy to key regions，actively promote balance of basic public services and distribution of population and industrial activities。
Chapter 29
Economic and Trade Relations between Inland and Hong Kong and Macao，and between Mainland and Taiwan
The economic development between the inland and Hong Kong and Macao，and that between the Mainland and Taiwan in the thirty years of reform and opening，has made important contribution to common development。Generally，there are also some contradictions and conflicts during the economic cooperation gradually。In fact，there were factors causing the conflicts at the very beginning of the cooperation，such as difference of idea under different background of history and development between the Mainland and Taiwan，and consequently，difference of understanding of concrete rules and regulations and difference of working efficiency。But because the Mainland took the attitude to accept in most cases at
the beginning of the cooperation，the factors to compete with Hong Kong and Macao in economy were not very obvious。However，because of quick promotion of industrialization in the Mainland and a series events such as return of Hong Kong and Macao，and China’s entrance of WTO，the driving foundation for economic cooperation resulted from the advantages of production factor comparison between the inland and Hong Kong and Macao and between the Mainland and Taiwan began to be weakened，and the factors for economic competition began to emerge gradually。The essay mainly describes the economic development relations between the inland and Hong Kong and Macao and between the Mainland and Taiwan in the past thirty years。Reviewing the history and evolution of the economic relations analyzing the features of the economic relations and influence each other，the author pointed out contradictions and conflicts existing in the future economic cooperation and development，and then proposed corresponding measures to promoting further development of the economic relations。
Chapter 30
Establishment of Modern Enterprise System
Before the Third Session of the Eleventh Central Committee of the Party，all shortcomings in the enterprise system of the state-owned enterprises in China had been shown clearly，and after that，all related authorities conducted long term exploration in enterprise system reform，and on basis of continuously overcoming obstacles in theory and practice and continuously summarizing experience，confirmed the aim of setting up modern enterprise system。From 1993 to 1997，based on sufficient preparation，the pilot project of establishment of modern enterprise system was carried out in the whole country intensely and orderly，and achieved initial success。During the Tenth Five-Year-Plan，especially after entrance of the Eleventh，shareholding reform was deepened，the step of establishing modern enterprise system of the state-owned enterprises was obviously speed up，most state-owned enterprises accomplished
multiple shareholding，administration structure of the enterprises became more and more completed，and the establishment of modern enterprise system achieved great success。With advancing of establishment of modern enterprise system，the system and mechanism of many enterprises in China have been changed basically，the administration level is greatly improved，the organization structure becomes more reasonable，the overall qualification and power of the enterprises have been increased dramatically，the competitiveness is strengthened，and a large number of state-owned enterprises is not only in the leading position in the businesses in the country，but also produces great influence in the world。Generally，after thirty years of development，China’s enterprises have realized the transformation from factory system under planned economy system to modern enterprise system。China has initially set up a micro foundation that meets the requirements of socialist market economy system and socialized mass production。
Chapter 31
Change and Trend of Ownership Structure of Industrial Enterprises in China
The reform of ownership of China’s industrial enterprises during the thirty years of reform and opening achieved outstanding success，and the ownership pattern with public economy as the dominant and multiple economies developing together has formed。This author summarized the successful experience on readjustment of ownership structure of industrial enterprises in China as a gradual reform of priorities-4 first and 4 later。At present，the ownership structure of industrial enterprises shows a relative stable level gradually。After entering the current development period，the changes of the ownership structure of industrial enterprises will show two trends in the future：in one aspect，the speed of reform needs to be quicken in areas where readjustment of ownership structure is not sufficient；and in the other，the standard by which people judge whether the ownership structure is optimized will change gradually from focusing on whether the proportion structure in total is changed to attention to the connotation of enterprise system correspond to established ownership structure。Accordingly，it will become an important content of change of ownership structure of industrial enterprises in China to positively create and build up model that can be compatible with socialist market economy system。
Chapter 32
Readjustment of Enterprise Organizational Structure
The traditional organizational structure of enterprise in China is in compliance with the planned economy system，and its feature is an enterprise organization of being large and complete and being small and complete that was formed under the pattern of barriers between central ministries and local governments。In the thirty years of reform and opening，an important content of economic system reform in China is to realize readjustment and change of enterprise organization structure so as to meet the new requirements of continuously improving socialist market economic system。During the process，major measures taken including：develop horizontal economic unity，cultivate enterprise group，promote enterprise acquisition and reorganization，and promote scale structure of large，middle and small size enterprises to be more reasonable。
Till now，with continuous development of economic system reform，organizational structure readjustment of enterprises in China has achieved great success，and the organizational structure of enterprise that meets with the new requirements of socialist market economy system has formed。The major experience of the reform is：to adhere to the idea that market is the core，take enterprise as the principal，to promote gradual readjustment policy，and keep organizational structure readjustment of enterprise，the economic development strategy in different periods in China，and readjustment of ownership structure，industrial structure and regional economy structure synchronous。In the future，the organizational structure readjustment of enterprise will also face some problems that need to be attached importance to。
Chapter 33
Development of Enterprise with Foreign-Investment
China’s enterprises with direct foreign investment undertook three periods，specifically，exploration development，speed-up development and innovation development in the thirty years of reform and opening。From evolution of space distribution，it experienced a process of changing from point to surface and from part to the whole，and finally formed a pattern of total opening in the whole country。From evolution of strategic aim，it went through a process of changing from making up capital shortage to exchanging technology with market，and then to participating international labor division and optimizing resource allocation。From evolution of policy key points it went through a process of attracting investment through favorable policies to attracting investment through system and environment。From evolution of enterprise formation，it completed a process of changing the situation of Chinese and foreign
cooperative enterprises as the principal to the situation of Chinese and foreign joint ventures as the principal，and then to the situation of enterprises with foreign investment as the principal。China has made great achievements in developing enterprises with foreign-investment，mainly including six aspects，making up insufficient capital for economic construction，promoting technology progress and improvement of management level of enterprises，reducing pressure from employment，increasing fiscal revenue，enlarging import and export trade，and pushing reform of socialist market economic system forward。The basic experience on developing enterprises with direct foreign investment in China can be summarized as：catch hold of opportunities，manage according to concrete situations，keep continuous policies，step forward steadily，take our side as the dominant factor，direct actively，pay attention to both quality and quality，and attach importance to innovation。There are also some problems in developing enterprises with direct foreign investment，mainly in four aspects，namely，problems of economic security，environment and resource，unfair competition，and administration on enterprises with direct foreign investment。China can further perfect national policy for enterprises with direct foreign investment in four aspects，protecting continuity of policy，promoting expectation of policy，enhancing direction of policy，and emphasize on innovation of policy。
Chapter 34
Development of Private-Owned Enterprise
Private economy is a newly born economic force since the reform and opening，and is an important part of socialist market economy。The essay divides the development of private-owned enterprises in the past thirty years into five periods，regeneration period（1978～1987），difficult development period（1988～1991），rapid development period（1992～1997），encouragement and direction period（1998～2003），and rational development period（2004～now）。In the thirty years of reform and opening，the achievements of development of private-owned enterprises mainly are：in economic contribution，the total scale expands with geometrical progression and promotes the development of national economy and local economy；in social contribution，employment and tax increase greatly，and it is helpful to social stability and harmonious development；in system contribution，it grew up outside planned economic system，promoting the
formation and improvement of socialist market economic system；and in scientific and technological contribution，the rapid growth of private scientific and technological enterprises promotes the capacity of independent innovation。Since the reform and opening，the basic experience China obtained in developing privately-owned enterprises are：correct theoretical direction and concrete policy direction，respect to people’s initiative spirit，attention to making use of the role of entrepreneurs of private enterprises，prompt resolution to growth policy and market problems，less economic supervision，and enhancement of social supervision。At present，the major problems existing in the development private-owned enterprises are：external conditions need to be further improved，enterprise system needs to be improved，capacity to develop needs to be further promoted，and social responsibility needs to be further enhanced。At last，the writer of this chapter makes forecasts on the development of privately-owned enterprises in eight aspects，and offers proposals for promoting healthy development of private-owned enterprises。
Chapter 35
Evolution of China’s Enterprise Development Strategy since the Reform and Opening
Since the reform and opening，the external competition environment for Chinese enterprises went through a process from the transition period when the planned economy and market economy co-existed to the period when the socialist market economy system was initially established，and then to the period when the socialist market economy system was completed。It can be said that，under guidance of the reform and opening，it is the biggest feature of change of strategic environment for Chinese enterprises to change from planned economic system to socialist market economy system，and from administrative management to market competition，and from no separation of administrative and economic management function in government and enterprise to the situation that enterprises become the principal in market economy。Matching with the change of strategic environment，the strategy also undertook the following periods：defense，
attack and analysis。In the transition period when planned economy and market economy co-existed，Chinese enterprises had to adapt to the external policy environment passively in most cases，and to obtain corresponding rights while policy became less and less restrictive。In the period when the socialist market economy system was initially established，Chinese enterprises took active response to the external environment in most cases and attacked actively when facing more and more obvious market opportunities。In the period when the socialist market economic system was completed，no matter the strategic readjustment of the state-owned enterprises or the strategic transformation of private-owned enterprises，both expressed the feature of strategic analysis orientation。
Chapter 36
Internationalization of Enterprise
Chinese enterprises have taken the road of internationalization。The more and more opening economic environment and continuously increasing economic growth in China and the requirements of self-growth of enterprises drive those Chinese enterprises with great competitive advantages to speed up overseas development，especially，the transnational acquisitions happened frequently in these years have caused world wide attention。The internationalization of Chinese enterprises has experience three phases，namely，trade of window，initial internationalization，and quick internationalization。The process of internationalization of the enterprises reflects the history that the undertaking of reform and opening in China is continuously deepened。Summarizing the obtained achievements concerning“going out to the world”，there are five basic experiences of adherence all the time。The tactics and strategy of internationalized
operation and transnational acquisition is of high level，and the operation process is very complicated。There are many uncertain factors and more risks in it。China must attach great importance to the influence by strategic factors on the internal environment changes of enterprises，analyze systematically，evaluate comprehensively and design a resolution for enterprise internationalization，and carefully study domestic and foreign experience during the process of internationalization。The government should build up a strategic frame for“going out to the world”at a new starting point，break the old restriction in ideology，set up the idea of scientific development，offer more favorable policy concerning participation of international operation for Chinese enterprises in order to make them grasp the golden opportunities in a new transformation of industries and better take part international industrial division，and the strategic frame should combine with the policies that support local enterprise development。
Chapter 37
Modernization of Enterprise Management
China’s enterprise management in the thirty years of reform and opening，has changed greatly with development of economic system reform。The reform and development of enterprise management were mixed together，and undertook a complicated and gradual process。From the end of 1970s to the beginning of 1990s，the major feature of enterprise management reform was enhancing basic works of enterprise management，such as governance of state-owned enterprises and upgrade of enterprises promoted by the government；in 1990s，the major features are：the autonomous rights for enterprise business were enlarged，take economic benefit as core，make efforts to change enterprise business mechanism，and transfer government role from direct to indirect management；in the beginning of the 21st century，the features are：enterprise reorganization and system reform，change of enterprise management from extensive to intensive model，while learning management theory and methods from developed countries，China kept on formulating innovation road that complies with internationally accepted rules and Chinese characteristics。The author of this chapter firstly reviewed the process of enterprise management development since the reform and opening，then summarized the features and achievements of modernization of enterprise management and finally pointed out the difference and key point that modernization of China’s enterprise management will face in the future。