Industry in China


The industrial sector comprised 36.5% of the gross domestic product of the People's Republic of China in 2024. China is the world's leading manufacturer of chemical fertilizers, cement and steel. Prior to 1978, most output was produced by state-owned enterprises. As a result of the economic reforms that followed, there was a significant increase in production by enterprises sponsored by local governments, especially townships and villages, and, increasingly, by private entrepreneurs and foreign investors, but by 1990 the state sector accounted for about 70 percent of output. By 2002 the share in gross industrial output by state-owned and state-holding industries had decreased with the state-run enterprises themselves accounting for 46 percent of China's industrial output. In November, 2012 the State Council mandated a "social risk assessment" for all major industrial projects. This requirement followed mass public protests in some locations for planned projects or expansions.

History

China ranks first worldwide in industrial output. Major industries include mining and ore processing; iron and steel; aluminium; coal; machinery; armaments; textiles and apparel; petroleum; cement; chemical; fertilizers; food processing; automobiles and other transportation equipment including rail cars and locomotives, ships, and aircraft; consumer products including footwear, toys, and electronics; telecommunications and information technology. China has become a preferred destination for the relocation of global manufacturing facilities. Its strength as an export platform has contributed to incomes and employment in China. The state-owned sector still accounts for about 40% of GDP. In recent years, authorities have been giving greater attention to the management of state assets—both in the financial market as well as among state-owned-enterprises—and progress has been noteworthy.

1949–1978: State-led industrial development

Following the establishment of the People's Republic of China in 1949, the government implemented a Soviet-style centrally planned economy, prioritizing heavy industries such as steel, coal, and machinery. The First Five-Year Plan, with technical and financial support from the Soviet Union, led to significant industrial growth and the formation of a basic national industrial framework. During this period, 156 major industrial projects were launched, including large-scale enterprises in military production, metallurgy, chemicals, machinery, and energy. These efforts aimed to build a relatively complete industrial base and modern national defense system, significantly raising China's industrial capacity and technological level to one comparable with that of advanced countries in the 1940s. However, the system was characterized by high input reliance, low efficiency, and imbalanced output structures, including chronic overproduction in some sectors.
Since the founding of the People's Republic, industrial development has been given considerable attention. Article 35 of the 1949 Common Program adopted by the Chinese People's Political Consultative Conference emphasized the development of heavy industry, such as mining, iron and steel, power, machinery, electrical industry, and the chemical industry "in order to build a foundation for the industrialization of the nation."
Between 1958 and 1962, the Great Leap Forward aimed to accelerate industrialization through rural collectivization and mass mobilization. This campaign caused severe disruptions to both agriculture and industry, and is widely associated with a major famine that resulted in tens of millions of deaths. The subsequent Cultural Revolution further destabilized the industrial sector, as many technical experts and administrators were purged, leading to administrative paralysis and production inefficiencies.
Despite these setbacks, China had, by 1978, developed a foundational industrial base dominated by state-owned enterprises in sectors such as chemicals, metallurgy, and machinery. Industrial growth during the 1957–1978 period averaged approximately 8.8 percent annually, though growth rates fluctuated considerably from year to year. According to scholars, persistent inefficiencies within the command economy model contributed to the eventual launch of economic reforms at the end of the 1970s.
During the Third Five-Year Plan period, the Chinese government embarked on the Third Front campaign to develop industrial and military facilities in the country's interior in preparation for defending against the risk of invasion by the Soviet Union or the United States. Through its distribution of infrastructure, industry, and human capital around the country, the Third Front created favorable conditions for subsequent market development and private enterprise.

1978–Present: Industrial reform, growth, and modernization

Since the launch of economic reforms in 1978, China's industrial sector has undergone profound structural transformation. The shift from a centrally planned economy to a market-oriented system led to the diversification of ownership forms, the expansion of manufacturing, and the gradual rise of China as a global industrial power.

Reform and ownership transformation

In the early reform years, the state began loosening direct control over industrial enterprises. The state-owned enterprise system, which dominated China's industrial landscape in the pre-reform era, was gradually restructured. From the mid-1980s onward, policies encouraged managerial autonomy, profit retention, and performance-based contracts. During the 1990s, large-scale SOE reforms led to widespread privatization and the emergence of shareholding systems. Many small and medium-sized SOEs were closed or merged, while key large enterprises were corporatized and listed on stock markets, both domestically and abroad.
At the same time, non-state industrial sectors expanded rapidly.Township and village enterprises emerged as a dynamic force in rural industrialization during the 1980s and early 1990s. Private enterprises were gradually legalized and expanded into manufacturing, textiles, electronics, and other light industries. By the early 2000s, non-state enterprises accounted for the majority of industrial output value.

Export-oriented manufacturing and WTO integration

China's accession to the World Trade Organization in 2001 further accelerated its industrial development. China's industrial base became increasingly export-oriented, with labor-intensive manufacturing—such as garments, electronics, and toys—playing a central role.Foreign direct investment, particularly in coastal provinces, introduced advanced technologies and management practices. Joint ventures and wholly foreign-owned enterprises flourished in sectors like automotive, consumer electronics, and telecommunications.
Between 2001 and 2010, China became known as the "world's factory," producing a growing share of global manufactured goods. By 2010, it had overtaken the United States to become the world's largest manufacturing nation by value added.
Following its 2001 entry into the World Trade Organization, China quickly developed a reputation as the "world's factory" through its manufacturing exports. The complexity of its exports increased over time, and as of 2019 it accounts for approximately 25% of all high tech goods produced globally.
Since 2010, China has had the world's largest construction market.

Industrial upgrading and innovation

In the 2010s, Chinese policymakers prioritized shifting from low-end manufacturing to higher-value-added, innovation-driven industries. The “Made in China 2025” initiative, launched in 2015, aimed to upgrade ten key industrial sectors, including robotics, aerospace, advanced rail equipment, new energy vehicles, and medical devices. The goal was to enhance domestic technological capabilities and reduce dependence on imported components and equipment. Research and development spending increased significantly, with industrial firms becoming major contributors. The proportion of Chinese manufactured goods at the higher end of the value chain grew after the early 2000s and accelerated further after 2020. As of the early 2020s, China ranked among the top global countries in manufacturing output for high-tech industries, such as solar panels, 5G equipment, and electric vehicles. Government policies supported strategic emerging industries through subsidies, tax incentives, and industrial parks.
State-owned enterprises continued to dominate in strategic sectors such as energy, telecommunications, and heavy industry, while the private sector and foreign-invested firms played leading roles in consumer goods, light industry, and technology manufacturing.
Beginning in 2010 and continuing through at least 2023, China has produced more industrial goods per year than any other country. It is also the world's largest user of industrial robots.

Data

In 2018-2019, 37.6% of industrial assets were privately owned.
According to the National Bureau of Statistics of China, the proportion of the output value of the secondary industry in the China's GDP and the proportion of the number of employees in the total number of employees are shown in the following table:
yearProportion of secondary industry output value in GDP Industrial output as a percentage of GDP Share of secondary industry in total employment
195220.717.67.4
196044.339.015.9
197040.236.610.2
198048.043.818.2
198542.638.220.8
199041.036.521.4
199546.540.623.0
200045.139.722.5
200144.339.122.3
200243.938.721.4
200345.039.721.6
200445.240.122.5
200546.441.123.8
200646.941.425.2
200746.240.726.8
200846.240.627.2
200945.239.027.8
201045.739.428.7
201145.839.429.6
201244.738.230.5
201343.436.830.3
201442.335.630.2
201540.033.429.7
201638.832.229.2
201739.132.528.6
201839.032.228.2
201937.830.928.1
202036.930.128.7
202138.131.529.1