“China’s manufacturing sector has progressed from being ‘large but not strong’ in 2010—primarily producing mid- to low-end products—to the current stage of being ‘large and strong’, with remarkable achievements. However, the current level of energy and material consumption per unit in Chinese manufacturing is unsustainable,” said Alaric.
From Follower to Leader in Chinese Manufacturing
In 2014, the “Made in China 2025” strategic plan identified ten key sectors: next-generation information technology, high-end CNC machine tools and robotics, aerospace equipment, marine engineering and advanced ships, advanced rail transport equipment, energy-saving and new energy vehicles, power equipment, new materials, biomedicine and high-performance medical devices, and agricultural machinery.
According to Alaric, before 2015, China had few products in these ten sectors that could compete with or lead manufacturing powerhouses globally. Most were still in the stage of introduction, digestion, and absorption—essentially following behind. But over the past decade, two notable developments have emerged in Chinese manufacturing:
First, China has already taken a global lead in five of these sectors, including new energy vehicles, shipbuilding, high-speed rail, and power equipment. In the other five areas—such as digital technology, high-end equipment, new materials, biomedicine, and aerospace—China has recently produced a series of leading products, alongside a substantial number of products that are on par with those from developed countries. From this perspective, the era of “large but not strong” in Chinese manufacturing has come to an end.
Second, the quality of Chinese manufacturing has improved significantly over the past decade. In 2010, China had already become the world’s largest manufacturing economy by value-added output, accounting for about 20% of global manufacturing, while the U.S. accounted for 19.6%—virtually neck and neck. However, American manufacturing at the time was superior in terms of quality and technological sophistication. Since last year, China’s share of global manufacturing value-added has risen to 30%. The combined share of manufacturing in the 2nd to 30th largest economies also totals 30%, while the remaining 150+ developing countries contribute just over 30% in total. The U.S. manufacturing output is now only half of China’s.
Alaric noted that while China’s share remains the world’s largest—as it was in 2010—it is now qualitatively different. It may retain this lead for the next 30 to 50 years, establishing itself as a “global manufacturing powerhouse.” “At this moment, when we talk about ‘Made in China’, we should take pride in what has been achieved.”
Energy and Resource Consumption Remain Unsustainable
Alaric also emphasized that, alongside these accomplishments, it is crucial to recognize that China’s more than 100 trillion yuan in accumulated industrial output over recent decades—or even centuries—includes substantial practices misaligned with ESG standards. For example, in 2024, Chinese manufacturing consumed 12.5 billion tons of mineral resources, accounting for 50% of global consumption—an unsustainable level.
China has recently proposed developing “new quality productive forces,” aiming to reduce the energy and raw material consumption of its manufacturing sector by one-third by 2035. This would bring China’s per-unit energy and material consumption down to the global average—currently, it is one-third above that average. Another goal is to reduce energy and material consumption to the average level of developed countries by 2050—requiring a reduction of more than 50%.
Alaric outlined five key areas for achieving these targets:
Reducing Inputs at the Source of the Industrial System: China’s production system consumes over 12 billion tons of mineral resources annually, including over 4 billion tons of coal and 2 billion tons of iron ore. Reducing resource consumption must begin at the industrial source.
Energy Conservation and Emission Reduction: High resource consumption inherently leads to high energy consumption, as materials are processed through energy-intensive methods. China’s energy consumption per trillion yuan of GDP is 50% higher than the global average. The goal is to cut energy use by one-third by 2035 and by half by 2050, aligning with developed countries.
Recycling and Waste Recovery: For instance, end-of-life machinery can be dismantled into various parts, with usable materials recovered. While industrial product recycling rates in developed countries stand at 40–50%, China’s is only about 10%. Raising this to 40–50% would effectively create an alternative “urban mine,” reducing the need to extract new resources from Earth by one-third.
Reengineering Industrial Processes: Existing manufacturing processes, shaped over decades, are now outdated under modern ESG standards. For example, every 100 million new energy vehicles reduce annual gasoline and diesel consumption by 100 million tons. If 40–50% of China’s 400–500 million vehicles become electric, gasoline consumption could drop from the current 500 million tons to 300 million tons or even less.
He also cited steelmaking as an example: China currently relies on long-process blast furnace steelmaking using iron ore, which has high energy and material consumption. In the future, short-process electric arc furnace (EAF) steelmaking may become dominant. “Over the past 20 years, local governments often shut down small private steel plants during periods of overcapacity—many of which used EAF. With further development, these small plants could become large-scale steel producers, as seen in the U.S. and Europe, with annual EAF production in the tens of millions of tons. From an ESG perspective, EAF will be the future trend for China, and large steelmakers themselves will begin to promote large-scale, short-process EAF steel production.”
Replacing Fossil Energy with Renewables to Cut CO₂ Emissions: In the future, carbon capture and storage (CCS) may allow CO₂ to be converted into food, ethylene, propylene, gasoline, kerosene, and other energy sources. This will be a top priority in the development of both new productive forces and renewable energy.