Current Status and Future Challenges of Intelligent Manufacturing in China
发布时间：
2022-03-13
Strengthening the foundation of the real economy, fostering a new development paradigm, and building a Digital China all play crucial roles. At this historic juncture—where a new round of technological revolution and industrial transformation converges with China’s accelerated shift in its economic development model—we must unswervingly prioritize intelligent manufacturing as our main focus, drive technological transformation and upgrading across industries, bring about fundamental changes in manufacturing business models and enterprise forms, support the achievement of carbon peak and carbon neutrality, and propel China’s manufacturing sector toward the mid- to high-end segments of the global value chain.
This paper argues that intelligent manufacturing differs in many ways from traditional manufacturing and represents a comprehensive transformation and upgrade of every link in the traditional manufacturing value chain. In recent years, China has established more than ten advanced manufacturing clusters. Among these, the development of the industrial internet, industrial robotics, high-end CNC machine tools, and the semiconductor industry is closely tied to digitalization, resulting in rapid growth; however, this rapid advancement has also brought to light a series of challenges inherent in the fast-paced evolution of intelligent manufacturing.
How to Promote the High-Quality Development of Intelligent Manufacturing
1. Establish a more robust in-service education system to accelerate the development of talent in intelligent manufacturing; and develop human resource management practices that are tailored to the characteristics of the internet era, ensuring that talent can be effectively attracted, retained, and utilized.
2. Strengthen interagency coordination for joint prevention and control, formulate more detailed and differentiated policies tailored to specific circumstances, further clarify the accountability framework across all sectors and stages, and establish a comprehensive institutional framework to promote the development of intelligent manufacturing.
3. Further deepen the reform of the scientific research system, strengthen collaboration between research institutions and the intelligent manufacturing industry, and drive breakthroughs in technological bottlenecks in key areas by enhancing the national system’s capacity for independent innovation.
4. Strengthen the status of enterprises as market entities and stimulate their intrinsic motivation to advance smart manufacturing; further refine competition and exit mechanisms in relevant sectors, and comprehensively develop a market system that fosters the growth of the smart manufacturing industry.
Basic Concepts of Intelligent Manufacturing
Regarding the definition of smart manufacturing (Smart Manufacturing/Intelligent Manufacturing), there are currently some differences in how it is articulated across various countries. This paper adopts the definition provided by China’s Ministry of Industry and Information Technology: “Smart manufacturing is a new production paradigm that is based on the deep integration of next-generation information and communication technologies with advanced manufacturing technologies, permeating all stages of manufacturing activities—including design, production, management, and service—and featuring capabilities such as self-perception, self-learning, self-decision-making, self-execution, and self-adaptation.” This definition represents the Chinese government’s authoritative understanding of smart manufacturing.
In 1989, the Japanese industrial sector first introduced the concept of “intelligent manufacturing” when it proposed the Intelligent Manufacturing System; in 1992, the United States launched the Critical Technology policy, aimed at upgrading traditional industries and fostering emerging sectors, with a focus on information technology, new manufacturing processes, and intelligent manufacturing technologies. Based on existing literature, the United States and Japan can be regarded as pioneers in the field of intelligent manufacturing. By 2013, Germany officially unveiled “Industry 4.0” at the Hannover Messe, a strategy designed to enhance the competitiveness of German industry, thereby bringing intelligent manufacturing—now recognized as a national strategy—into the global spotlight. According to the literature on Germany’s Industry 4.0, the core of this strategy lies in intelligent manufacturing technologies and smart production models, which seek to integrate products, machines, resources, and people through two types of networks—the Internet of Things and the Internet of Services—thereby constructing cyber-physical systems (CPS). This integration aims to digitize the entire product lifecycle and the full manufacturing process, achieve end-to-end integration based on information and communication technologies, and ultimately establish a highly flexible, personalized, digital, and networked production model for goods and services. In light of the definition of intelligent manufacturing provided by China’s Ministry of Industry and Information Technology, it is evident that intelligent manufacturing constitutes the core of Industry 4.0. Due to space constraints, this paper focuses solely on content related to intelligent manufacturing and does not undertake a more comprehensive examination of Industry 4.0 as a whole.
As shown in Table 1, intelligent manufacturing differs markedly from traditional manufacturing. These differences are primarily manifested in four key areas. First, manufacturing design is more customer-centric, leveraging technological tools that integrate virtual and physical realms to enable real-time, dynamic interaction between customer needs and design, thereby shortening the design cycle. Second, the manufacturing process is more flexible and intelligent, with increasingly personalized production organization, online and real-time inspection, networked human–machine interaction, and diversified forming and machining methods. Third, manufacturing management relies more heavily on information systems, such as greater use of computer-based information management technologies, more human–machine interactive command-and-control models, and comprehensive data exchange and collaborative management across upstream and downstream enterprises and even the entire industrial value chain. Fourth, intelligent manufacturing offers product services that span the entire product lifecycle, truly achieving closed-loop management from manufacturing to end-of-life. This significantly enhances a product’s ability to adapt to market demands and better satisfies customers’ personalized needs.
China’s foundation for and supporting capabilities in smart manufacturing have been significantly strengthened.
China’s smart manufacturing is developing rapidly, with a clearly defined development strategy. On December 8, 2016, the Ministry of Industry and Information Technology and the Ministry of Finance jointly issued the “Smart Manufacturing Development Plan (2016–2020)” (hereinafter referred to as the “Plan”). According to the Plan, prior to 2025, China will implement a two-step strategy to advance the development of smart manufacturing. The first step, by 2020, is to significantly strengthen the foundational infrastructure and supporting capabilities for smart manufacturing, achieve basic digitalization in key areas of traditional manufacturing, and make substantial progress in the intelligent transformation of priority industries that have the necessary conditions and foundations. The second step, by 2025, is to essentially establish a support system for smart manufacturing and to preliminarily complete the intelligent transformation of key industries.
The Plan sets forth four specific objectives to be achieved by 2020:
Objective 1: Breakthroughs have been achieved in intelligent manufacturing technologies and equipment. A number of key intelligent manufacturing technologies and equipment have been developed, demonstrating strong competitiveness and achieving a domestic market penetration rate of over 50%. A number of critical, common intelligent manufacturing technologies have also been breakthroughs. The domestic market penetration rate for core enabling software has exceeded 30%.
Objective 2: The foundation for development has been significantly strengthened. The standards system for intelligent manufacturing has been substantially refined, with more than 200 intelligent manufacturing standards formulated or revised, and a preliminary industrial internet and information security assurance system tailored for the manufacturing sector has been established.
Goal 3: A preliminary smart manufacturing ecosystem has taken shape. More than 40 system solution providers with main business revenues exceeding RMB 1 billion and strong competitiveness have been cultivated, and a robust talent pool for smart manufacturing has been essentially established.
Goal Four: Significant progress has been made in key areas of development. Among enterprises in priority sectors of the manufacturing industry, the penetration rate of digital R&D and design tools has exceeded 70%, the CNC adoption rate for critical processes has surpassed 50%, and the deployment of digital workshops and smart factories has reached over 20%. As a result, operational costs, product development cycles, and the defect rate of products have all declined substantially.
From a macro perspective, manufacturing is the primary battleground for the digital economy. In recent years, manufacturing firms have steadily strengthened their digital infrastructure, with continuous increases in the digitization rate of production equipment and the connectivity rate of digitally enabled equipment. According to the “New Drivers of High-Quality Development: 2020 China Digital Economy Development Report” published by the Foresight Industry Research Institute, in 2019 the digitization rates of production equipment, the CNC adoption rate in key processes, and the connectivity rate of digitally enabled equipment among industrial enterprises above designated size reached 47.1%, 49.5%, and 41.0%, respectively, while the penetration rate of digital R&D and design tools in industrial enterprises hit 69.3%. These digitization metrics directly reflect the pace of China’s transformation and upgrading toward intelligent manufacturing.
China has already established a series of advanced manufacturing industry clusters. According to research by the CCID Research Institute on the spatial distribution of China’s advanced manufacturing clusters, a comprehensive spatial pattern has emerged, characterized by “one belt, three cores, and two supports.” The core region around the Bohai Rim encompasses Beijing, Tianjin, Hebei, Liaoning, and Shandong, serving as a major national hub for R&D, design, and manufacturing in advanced manufacturing. Specifically, Beijing focuses on high-tech R&D in advanced manufacturing; Tianjin specializes in the aerospace industry; Shandong leads in intelligent manufacturing equipment and marine engineering equipment; and Liaoning emphasizes intelligent manufacturing and rail transit. The Yangtze River Delta core region is centered on Shanghai, with Jiangsu and Zhejiang as its two wings, and excels particularly in aircraft manufacturing, marine engineering, and intelligent manufacturing equipment, thereby establishing a relatively complete R&D–design–manufacturing value chain. In the Pearl River Delta core region, advanced manufacturing is concentrated in Guangzhou, Shenzhen, Zhuhai, and Jiangmen, with clusters primarily focused on specialized vessels, rail transit, aircraft manufacturing, CNC system technology, and robotics. The central support region comprises Hunan, Shanxi, Jiangxi, and Hubei, where the aviation equipment and rail transit equipment industries are notably strong. The western support region is centered on Sichuan and Shaanxi, encompassing Shaanxi, Sichuan, and Chongqing, and has developed sizable industrial clusters in rail transit and aerospace.
Development Status of Key Sectors in China’s Manufacturing Industry:
Take the industrial internet, industrial robots, high-end CNC machine tools, and the semiconductor industry as examples.
(1) The integration of next-generation information technology with intelligent manufacturing: the industrial internet is developing rapidly.
The industrial internet is developing at a rapid pace. The deep integration of next-generation information technologies with manufacturing serves as a key driver for upgrading the manufacturing sector, with the industrial internet playing a central role in this integration process. The industrial internet is closely aligned with the development of intelligent manufacturing in China. In 2018 and 2019, the value added of China’s industrial internet industry reached RMB 1.42 trillion and RMB 2.13 trillion, respectively, representing real year-on-year growth of 55.7% and 47.3%. These figures accounted for 1.5% and 2.2% of GDP, respectively, and contributed 6.7% and 9.9% to economic growth. Moreover, in 2018 and 2019, the industrial internet spurred the creation of 1.35 million and 2.06 million new jobs across society, respectively. Taken together, these data demonstrate that the development of China’s industrial internet has already generated a new engine of growth.
There are three major pain points in the development of the industrial internet. China’s industrial internet is still in its early stages of development. The standard architecture is yet to be fully established, business models remain immature, and bottlenecks and shortcomings persist in areas such as technology, talent, and security. Consequently, the promotion and application of the industrial internet are both challenging and complex, necessitating patience and a steady, incremental approach. Specifically, three major issues exist:
First is the issue of data flow and integration. This is primarily reflected in three key areas. First, there is the issue of information silos arising from the lack of interoperability among devices. For instance, a single production line often involves numerous different underlying communication and data-interaction protocols across various types of equipment, making it highly challenging to achieve efficient data flow and integration among these devices. Second, at the current stage of AI development, leveraging the big data generated by industrial production to enable intelligent, automated decision-making remains difficult. Finally, the limited general-purpose applicability of proprietary software for Industrial Internet devices also constitutes a significant bottleneck in the ongoing development of the Industrial Internet.
Second, insufficient consideration was given to cost and safety issues. On the one hand, there are cost considerations. For instance, industrial Internet security entails expenses related to specialized personnel, data centers, and cloud computing. On the other hand, there are significant security challenges, such as the risks of data breaches and cyberattacks in the industrial Internet.
Third, the monetization model for the industrial internet still requires further exploration. The industrial internet sector is characterized by a large number of industry standards that span various manufacturing sub-sectors, resulting in a high degree of specialization and making it difficult to identify universal monetization and growth models.
The 14th Meeting of the Central Commission for Comprehensively Deepening Reform, held on June 30, 2020, set forth clear requirements for the development of the industrial internet. The meeting emphasized the need to accelerate the integrated development of next-generation information technology and manufacturing, aligning with the trends of the new round of scientific and technological revolution and industrial transformation. With supply-side structural reform as the central task and intelligent manufacturing as the primary focus, the meeting called for speeding up innovation in the industrial internet, bringing about fundamental transformations in manufacturing production methods and enterprise models, strengthening the foundational support for integrated development, improving relevant laws and regulations, and elevating the level of digitalization, networking, and intelligence in the manufacturing sector. Accordingly, starting in 2020 and over the coming period, the industrial internet will be the most critical national strategy for advancing intelligent manufacturing.
(2) China’s industrial robotics sector is developing rapidly.
In terms of policy, China’s support for industrial robotics is both long-term and sustained. In 1959, Americans George Devol and Joseph Engelberger jointly developed the first industrial robot, marking the entry of robotics technology into manufacturing. China began research on industrial robots in 1972, only about a decade behind the United States. In 1982, the Shenyang Institute of Automation of the Chinese Academy of Sciences developed China’s first industrial robot. During the 1980s, the development of industrial robots in China primarily focused on the R&D of robotic arms for industrial assembly lines used in processes such as painting and welding. Following the launch of the National High-Tech Research and Development Program (the “863 Program”), China began to provide strong support for the advancement of industrial robotics technology. During the Tenth Five-Year Plan period (2001–2005), China initiated the development of robots for hazardous tasks, counterterrorism ordnance-disposal robots, humanoid robots, and biomimetic robots. The Eleventh Five-Year Plan period (2006–2010) saw a heightened focus on key technologies related to intelligent control and human–robot interaction. By the Twelfth Five-Year Plan period (2011–2015), “intelligent manufacturing” was formally and comprehensively elevated to a national strategic priority. In 2016, the “Robot Industry Development Plan (2016–2020)” was issued, further refining the robotics industry ecosystem, expanding industry scale, strengthening technological innovation capacity, enhancing core-component production capabilities, and improving application integration capabilities.
Technically, China’s robotics technology has advanced rapidly; however, the localization rate of key components for industrial robots still has considerable room for improvement. From 2011 to 2020, the number of patent applications related to robotics in China increased sharply, with an average annual filing volume of 17,009.2 and an average annual growth rate of 39.53%, peaking at 79.67% in 2016. The highest annual filing volume was recorded in 2018, totaling 37,853 applications. This rapid growth in China’s robotics patent portfolio reflects the swift development of domestic robotics technology since 2011. Nevertheless, the low localization rate of critical components for industrial robots continues to constrain the growth of China’s industrial robotics industry. According to data from LeadLeo Research Institute, the localization rates for industrial robot mechanical bodies, reducers, controllers, and servo systems stand at 30%, 10%, 13%, and 15%, respectively. Moreover, in the cost structure of industrial robot production, these three core components—servo systems, controllers, and reducers—account for more than 70% of total costs. Due to high technological barriers and limited domestic manufacturing capabilities, these core components are largely imported, driving up their share of overall costs. For instance, Chinese industrial robot manufacturers, when procuring reducers in small quantities, struggle to achieve economies of scale, leaving them at a disadvantage in negotiations with international suppliers. As a result, the procurement price of the same reducer model can be twice as high for Chinese firms as that paid by internationally renowned companies.
On the demand side, Supported by national policies and the accelerated upgrade of intelligent manufacturing, the industrial robotics market has continued to grow rapidly. According to the “2019 China Robotics Industry Development Report” released by the Chinese Institute of Electronics in August 2019, the demand for intelligent transformation and upgrading in China’s manufacturing sector is becoming increasingly prominent, driving robust demand for industrial robots. As a result, the Chinese industrial robotics market remains on a positive trajectory, accounting for approximately one-third of the global market share and making China the world’s largest market for industrial robot applications. Furthermore, according to statistics from the International Federation of Robotics (IFR), China’s industrial robot density reached 97 units per 10,000 employees in 2017, surpassing the global average, and is projected to exceed 130 units per 10,000 employees by 2021, aligning with the average level in developed countries. As shown in Figure 1, in the long term, manufacturing firms will continue to exhibit substantial demand for industrial robots, and the downward trend in robot prices is expected to persist. Under the combined influence of increasing volumes and declining prices, sales of industrial robot bodies are growing steadily, with projections indicating that they will reach RMB 26.58 billion by 2023. In addition, as certain Western countries intensify their containment strategies against China, the rapid development of China’s industrial robotics industry is simultaneously accelerating the domestic substitution of key components such as servo motors, reducers, and controllers. The localization of core industrial robot components will also become a major trend in future development.
(3) High-end CNC machine tools remain a weak link in China.
High-end CNC machine tools are closely linked to the development of China’s industrial robotics sector; however, China’s high-end CNC machine tool industry remains relatively underdeveloped, which constitutes a significant bottleneck hindering the advancement of China’s intelligent manufacturing. According to available data, in 2019 among the world’s top ten CNC machine tool manufacturers, Yamazaki Mazak of Japan topped the list with revenue of US$5.28 billion, followed by Trumpf of Germany at US$4.24 billion, and DMG MORI, a German–Japanese joint venture, in third place with US$3.82 billion. The remaining positions were occupied by MAAG, TAIWAN, Okuma, Makino, GROB, Haas, and EMAG. Not a single one of these ten leading high-end machine tool companies is Chinese.
China has a substantial demand for imported machine tools. According to data released by the General Administration of Customs, from 2015 to 2019 China imported a total of 29,914 CNC machine tools, with total import value reaching RMB 97.8 billion. Moreover, China remains heavily reliant on imports for high-end machine tools and core components; as of 2021, domestically produced high-end CNC machine tool systems accounted for less than 30% of the market. Currently, the machining accuracy of domestically manufactured precision machine tools only reaches the sub-micron level, lagging behind the internationally advanced standard by one to two orders of magnitude. Consequently, amid persistent supply–demand imbalances, the task of achieving self-reliance and domestic substitution in the high-end machine tool sector remains formidable.
Specifically, China’s high-end CNC machine tools face four major challenges. First, the precision CNC systems for high-end machines are predominantly sourced from Japan and Germany, while domestically produced CNC systems are mainly used in mid- and low-end machines; thus, there remains a significant gap in the domestic supply of advanced, precision CNC systems for high-end machine tools. Second, spindles are primarily imported from Germany, Switzerland, the United Kingdom, and other countries; although Chinese manufacturers have established some production capacity, the underlying technology still requires continuous refinement and upgrading. Third, ball screws are largely imported from Japan, and while China has developed a considerable body of related technologies, their overall technical level needs further improvement. Fourth, cutting tools are mainly sourced from Sweden, the United States, Japan, and other countries; domestically produced tool materials lag behind, resulting in shorter tool life and reduced stability, with average tool life only about one-third to one-half that of internationally advanced levels.
(4) Progress in Semiconductor Development
The semiconductor market is the largest globally, yet domestic supply capacity is limited. China’s semiconductor industry has grown at a remarkably rapid pace, with its influence steadily expanding. According to data from the Statista global statistics database, as of 2012, China’s share of global semiconductor demand surpassed 50% for the first time, accounting for 52.5% of total worldwide demand. Furthermore, according to the “2021 Global Semiconductor Market Development Trends White Paper” released by CCID Consulting on June 1, 2021: “From a regional perspective, China has been the world’s largest semiconductor consumer market for many consecutive years. In 2020, China’s market share reached a peak of 34.4%, while the United States, Europe, Japan, and other regions accounted for 21.7%, 8.5%, 8.3%, and 27.1%, respectively.”
However, at the same time, China’s self-sufficiency in semiconductors remains severely inadequate. According to publicly available data from the China Semiconductor Industry Association (CSIA), in 2016 China’s imports of integrated circuits totaled US$227.1 billion, while its crude oil imports that year amounted to 381.01 million metric tons, valued at US$116.469 billion—meaning that integrated-circuit imports far exceeded oil imports. Domestic semiconductor production has consistently failed to meet China’s internal demand for semiconductors. According to October 2020 data from Daxue Consulting, a well-known French–based market research firm, “Since 2005, China has been the largest semiconductor market; yet in 2018, domestic production satisfied just over 15% of China’s total semiconductor consumption.” Bloomberg reports that in 2020 China’s chip imports surged to nearly US$380 billion, accounting for about 18% of the country’s total import value. By the first half of 2021, the supply gap in China’s domestic semiconductor sector had still not narrowed. According to data from the General Administration of Customs, from January to May 2021 China imported 260.35 billion integrated circuits, a year-on-year increase of 30%. Thus, as of the first half of 2021, China’s domestic semiconductor supply capacity remained limited.
While certain segments of China’s semiconductor industry have already achieved international competitiveness, the country still lacks the capability to produce high-end chips. The entire production and manufacturing process of the semiconductor industry can be divided into three stages: distributed design, fabrication, and packaging and testing. On March 1, 2021, the State Council Information Office held a press conference on the development of industry and information technology. In response to questions from reporters, Tian Yulong, a member of the Party Leadership Group, Chief Engineer, and Spokesperson of the Ministry of Industry and Information Technology, stated: “During the 13th Five-Year Plan period, China’s integrated circuit industry achieved remarkably impressive overall growth, with continuous expansion in scale. According to estimates, in 2020 China’s integrated circuit sales revenue reached RMB 884.8 billion, with an average annual growth rate of 20%—three times the global average growth rate for the same period. Moreover, significant breakthroughs were made in technological innovation, with substantial improvements in manufacturing processes, packaging technologies, and key equipment and materials.”
In the semiconductor manufacturing sector, domestically developed, independently innovated substitution is accelerating across the board. According to a June 2020 report by Guosheng Securities, China’s domestic semiconductor manufacturing industry has essentially completed the transition from zero to full-scale production capacity. For example, AMEC’s dielectric etching equipment has already entered the 5nm process node; NovoVation’s silicon etching tools have been adopted for mass production on SMIC’s 28nm production lines; Mattson Technology holds the second-largest global market share in the photoresist stripping equipment segment; Shengmei Semiconductor’s single-wafer cleaning systems are now in mass production on the fabs of SK Hynix, CXMT, and SMIC; Shenyang Tuojing’s PECVD equipment has been deployed in mass production on SMIC’s and HLMC’s 28nm lines; in 2018, its ALD system passed customer validation for the 14nm process; and Jingce Electronics and Shanghai Ruili have broken foreign monopolies in the metrology field. However, overall, China currently lacks stable, large-scale production capabilities for high-end chips at 7nm and below. The current challenges faced by Huawei are largely rooted in this very gap, meaning that China still has a long way to go before achieving mass production of advanced-node chips.
China’s wafer production capacity has expanded rapidly, resulting in a relatively complete semiconductor industry chain; however, the industrial structure remains imbalanced. China has made substantial progress in semiconductor manufacturing materials—specifically, wafer fabrication. As of December 2020, mainland China’s wafer production capacity accounted for 15.3% of global capacity, surpassing North America (which held 12.6% of global capacity) to become the world’s fourth-largest wafer-manufacturing region. The top three regions are Taiwan, China (21.4%), South Korea (20.4%), and Japan (15.8%).
The rapid development of semiconductor materials manufacturing plays a crucial role in upgrading China’s entire semiconductor industry chain. For example, HiSilicon Semiconductor is the leading IC design company in China, with sales reaching RMB 26 billion in 2016, making it the largest fabless chip design firm in the country. HiSilicon’s business spans chips and solutions for consumer electronics, communications, optical devices, and other fields, with its flagship products including the Kirin series of processors. On October 22, 2020, Huawei unveiled the Kirin 9000 chip at the global online launch event for the HUAWEI Mate 40 series; this chip was manufactured using a 5-nanometer process. According to reports, the Kirin 9000 outperforms competing chips such as the Snapdragon 865 and Apple’s A14 in multiple key performance metrics. However, the fabrication and production of the Kirin chip still rely on overseas foundries, meaning that its supply remains subject to international factors such as U.S. export controls on semiconductors. As a result, China’s semiconductor industry structure still suffers from uneven development, making it difficult to achieve complete self-sufficiency.
Currently, the trend toward segmentation within the global semiconductor industry chain is highly pronounced. Compared with the earlier IDM model, in which design, manufacturing, and packaging & testing were all integrated within a single company, these three stages have now evolved into relatively independent, specialized business segments. The ongoing process of division of labor across the global semiconductor value chain is also driving the globalization of that same value chain, with 1996 serving as a pivotal turning point. Prior to that year, China’s semiconductor industry was constrained by both international and domestic political factors, resulting in a complete disconnect from the “Moore’s Law”–driven pace of global semiconductor development. However, since 1996, thanks to a series of strategic initiatives such as the “908” and “909” projects, coupled with the comprehensive, industry-wide supporting developments that have taken place since the turn of the 21st century, China’s semiconductor ecosystem has made substantial progress. Today, China has risen to become the world’s second-largest player in the wafer foundry sector. Looking at the trajectory of technological advancement in China’s semiconductor industry, the gap in manufacturing processes has narrowed from more than three generations behind to just one or two generations.
At the same time, we must also recognize that, despite the “908” and “909” projects and the vigorous support from the state over the past decade or so, China’s integrated circuit industry still lags significantly behind in chip manufacturing. It is imperative to acknowledge that the overall industrial structure remains severely imbalanced: design firms are few and relatively weak, and although several global semiconductor giants have established fabs in China, the focus has largely been on packaging and testing. Moreover, due to restrictions imposed by foreign policies, domestic manufacturing processes continue to trail those of overseas counterparts. As for manufacturing equipment, China is almost entirely dependent on imports. These challenges persist and require thorough analysis and a deeper exploration of their underlying causes.
Challenges Facing the Development of Intelligent Manufacturing in China and Policy Recommendations
There is a severe shortage of talent in the smart manufacturing industry, necessitating accelerated efforts to cultivate relevant professionals. China’s smart manufacturing sector faces significant challenges, including a substantial talent gap, inadequate training mechanisms, and the considerable difficulty for existing manufacturing personnel in transitioning to meet the demands of smart manufacturing.
First, there is a significant overall talent gap. The “Guidance on the Development Plan for Manufacturing Talent,” jointly issued by China’s Ministry of Education, Ministry of Human Resources and Social Security, and Ministry of Industry and Information Technology, projects that by 2025 the talent gap in high-end CNC machine tools and robotics will reach 4.5 million, and that the demand for such talent will continue to grow as intelligent manufacturing deepens.
Second, labor mobility is high, and the demographic dividend has been shrinking since the Lewis turning point. Not only is there a significant talent gap, but labor turnover in the manufacturing sector is also very high. According to a research report by CICC, following the crossing of the Lewis turning point, the bargaining power of employers in the manufacturing labor market has declined. For example, some textile firms have reported that since 2012 they have struggled to recruit entry-level workers and retain college graduates within China. In addition, certain auto-parts manufacturers aim to retain skilled workers; however, since the onset of the COVID-19 pandemic, some workers from Sichuan and Chongqing have chosen not to return, while industrial relocation over the past few years has prompted many workers in central and western regions to seek employment closer to home.
Third, the new jobs created by the transformation and upgrading of intelligent manufacturing require new types of technical talent; however, the existing workforce may not be able to transition quickly enough to meet the demands of these new roles. Take the industrial internet as an example: research by the China Academy of Industrial Internet shows that new occupations related to the industrial internet are emerging continuously. Among the 29 new occupations announced by the state in 2019 and 2020, 13 were linked to the industrial internet—such as big data engineering technicians and cloud computing engineering technicians—accounting for 44.8% of all newly added occupations. To excel in these new roles requires a high level of up-to-date knowledge; therefore, engineering and technical personnel from traditional manufacturing sectors will need time to develop the skills necessary to meet the demands of these emerging positions.
All of the above are challenges that are difficult to avoid in the process of upgrading the structure of the intelligent industry. To address these issues, two approaches can be taken. First, we need to establish a more robust system of on-the-job education and enhance the recognition and value of such programs. Manufacturing is a key employment sector, and the transformation and upgrading of its workforce are essential prerequisites for advancing toward intelligent manufacturing. Given the significant talent gap, “learning by doing” among working professionals represents a pragmatic pathway for cultivating the skilled workforce required for the digitalization and intelligence of manufacturing. At the same time, employers must dispel their biases and discrimination against on-the-job learning, move away from an overemphasis on academic credentials, and instead recruit talent based on the actual needs of the manufacturing sector and individuals’ competencies.
On the other hand, the manufacturing sector is facing challenges in talent management posed by Generation Z. “Generation Z” is a popular term in the United States and Europe, referring to those born between 1995 and 2009; they are also known as the digital or internet generation, collectively describing a cohort profoundly shaped by technologies such as the internet, instant messaging, text messaging, MP3 players, smartphones, and tablets. In response to these changing times, traditional human resource practices in manufacturing must evolve to ensure that younger workers remain engaged and motivated, and that their career prospects continue to improve with each passing year.
Security issues in the industrial internet must be given high priority, and the accountability framework should be further refined and clarified. As the “lifeblood” of intelligent manufacturing, the security of the Industrial Internet is directly linked to the overall security of intelligent manufacturing. The Industrial Internet and manufacturing systems are highly integrated, a characteristic that makes intelligent manufacturing systems more vulnerable to cyber threats. In July 2019, ten departments, including the Ministry of Industry and Information Technology, jointly issued the Guiding Opinions on Strengthening Security Work for the Industrial Internet (hereinafter referred to as the “Guiding Opinions”), which set forth two overarching objectives: first, by the end of 2020, a preliminary industrial internet security assurance system will be established; second, by 2025, institutional mechanisms will be sound and well-developed, technological capabilities will be significantly enhanced, a sizable security industry will have emerged, and a relatively complete and reliable industrial internet security assurance system will be essentially in place.
At present, the industrial internet in China faces rather serious threats. From January to June 2020, the National Industrial Internet Security Situation Awareness and Risk Early Warning Platform continuously monitored the security of 136 major internet platforms, more than 100,000 industrial enterprises, and over 9 million networked devices, detecting a cumulative total of 13.563 million malicious cyber activities involving 2,039 enterprises. According to available data, as of June 2020, although the overall security posture of China’s industrial internet remained stable and no major security incidents were reported, attacks targeting fundamental industrial internet equipment and systems have been on the rise, with both the scope and depth of such attacks expanding. Consequently, the industrial internet is poised to face severe security challenges in the future.
Industrial Internet security challenges are bound to evolve continuously as smart manufacturing upgrades and advances; therefore, establishing robust prevention mechanisms and institutional frameworks is of paramount importance. The Guiding Opinions specifically emphasize that by the end of 2020: “In terms of systems and mechanisms, we will establish industrial Internet security management systems covering supervision and inspection, information sharing and notification, and emergency response; we will put in place a corporate accountability system for security; we will formulate at least 20 urgently needed industrial Internet security standards covering equipment, platforms, data, and other areas; and we will explore the development of an industrial Internet security assessment framework.” This clearly demonstrates that China’s relevant authorities, including the Ministry of Industry and Information Technology, have a thorough understanding of the complexity of industrial Internet security issues and the critical importance of cross-departmental collaboration and joint prevention and control. Moreover, refining the responsibility matrix across all sectors and stages of the industrial Internet is the primary task for fostering multi-agency cooperation in prevention and control. Consequently, while strengthening the development of relevant standards, it is equally essential to further specify the duties and responsibilities within the corresponding security frameworks and ensure that preventive measures are assigned to specific competent authorities.
Achieving domestic substitution for semiconductors, high-end CNC machine tools, core components of industrial robots, and other critical technologies requires China to enhance its capacity for independent innovation. It is recommended to further deepen reform of the scientific research system, strengthen collaboration between research institutions and industry, and leverage the nation’s systemic capacity for independent innovation to break through technological bottlenecks in key areas. Semiconductors, high-end CNC machine tools, and core components for industrial robots are closely interconnected in terms of their technological trajectories. For instance, all three sectors share similar or overlapping technology stacks in areas such as sensors, control systems, and various intelligent chip modules. Raising the domestic substitution rate in these fields cannot be achieved through isolated technological breakthroughs alone. Instead, breakthroughs in domestic substitution for semiconductors, high-end CNC machine tools, and core components for industrial robots must be underpinned by enhanced national systemic innovation capacity—a process that will unfold over the long term. At the national level, current support for these key sectors primarily relies on relevant ministries and local industrial policies, but there is a notable lack of a unified central strategy. It is therefore recommended to focus on bolstering the nation’s overall systemic innovation capacity, clearly assigning specific responsibilities at the central level, and coordinating efforts to advance independent innovation across the semiconductor, high-end CNC machine tool, and industrial-robot-core-components domains. Through centralized coordination and ongoing institutional reforms, we can establish a national system for independent innovation that is well-suited to addressing the “chokepoint” challenges currently faced in these sectors, build institutionalized capabilities for innovative breakthroughs, and propel China’s smart manufacturing to a new stage of development.
To accelerate the upgrading and development of intelligent manufacturing, it is necessary to further invigorate private enterprises and improve the relevant market competition and exit mechanisms. On the one hand, as China’s enterprises embark on the transformation and upgrading toward intelligent manufacturing, while state-owned enterprises continue to grow stronger and larger, the momentum driving the development of private-sector manufacturers must not be overlooked. Since 2018, China has gained a deeper understanding of the impact of administrative policies on private firms, particularly the adverse effects of policy rigidity on their viability, a concern that calls for sustained vigilance. Moreover, China’s drive toward intelligent manufacturing must also leave room for the development of small and micro private enterprises, guiding and facilitating their integration into or formation of industrial value chains.
On the other hand, most of China’s manufacturing sectors are no longer infant industries; therefore, measures such as trade protection and competition, policy support, and market exit mechanisms must be advanced in parallel. Take the semiconductor industry as an example: China’s demand for semiconductor chips now ranks first globally. While there is still a considerable gap between China and international leaders in chip manufacturing, China has already developed strong competitiveness in global competition across the entire value chain—ranging from wafer materials production and packaging & testing to electronic product manufacturing. Drawing on the experience of the U.S. semiconductor industry, it is indeed necessary to provide industrial-policy support during the early stages of industry development. However, as the industry matures, the focus should gradually shift from purely industrial-policy-driven promotion to a more integrated approach that combines industrial policy with trade policy, appropriately introducing competitive mechanisms, phasing out outdated capacity, and creating better conditions for innovation among competitive firms. Consequently, China’s semiconductor industry will ultimately have to contend with global competition from the United States and other developed countries, and prolonged competition and rivalry will become the norm.
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