China will be unable to protect is core interests and promote international cooperation without a strong manufacturing sector.
For China's manufacturing sector to climb to the higher end of the global value chain, the key is to unleash the power of innovation and achieve industrial transformation and upgrading.
The rapidly developing real economy is a key contributor to China's great national strength. Manufacturing has laid a solid foundation for China's national strength, and is crucial to the country's future firm standing at the center of the world stage.
The global financial crisis has reflected from the opposite perspective the importance of the real economy. The over-expansion of the virtual economy and its disconnection from the real economy is the main cause of the global financial crisis and subsequent prolonged global economic downturn.
Europeans have realized that Germany is able to stand firm in the storm thanks to its strong manufacturing sector.
The U.S. government is also making active efforts to revive manufacturing. Almost all developed countries have shifted their strategic focus back to the real economy.
As a result, China's manufacturing sector is sandwiched between increasing competitive pressure from the midstream and downstream industries of emerging economies in Southeast Asia and other regions as well as from the midstream and upstream industries of developed economies such as the United States, Germany, and Japan.
Despite some negative factors like rising exchange rate of the yuan against U.S. dollar and labor costs, there still are hopes in fierce competition. Some low-end industries moved out of China but they do not break away from China.
