In the last ten years, China and India have different but equally glorious titles for themselves. Now China is called the "factory of the world," while India is called the "back office of the world." That means the world recognizes the achievements of the two largest developing countries; China is leading in manufacturing and India is outstanding in IT and IT enabled services.

In September 2005, India's National Manufacturing Competitiveness Council (NMCC) released an important document entitled "National Strategy for Manufacturing". Two years back, Capgemini, a global consulting, technology and outsourcing services company published a survey and predicted that "India could challenge the position of China as the manufacturing centre of the world in next three to five years." And today, the theme of the seminar is "Is India ready to become a Manufacturing Power House by 2020?" All of these give a strong signal: India in action.

Both China and India are rising and both have great potentials. I believe that, sooner rather than later, India will be another manufacturing hub after China, and China will be another IT enabled service center after India.

Believing in such a future, now I would like to present a general picture of manufacturing in China and share some of my understandings with the respected audience.

After 30 years' hard efforts, now China has become the world's largest producer of over 200 kinds of products, including steel, various electronic goods, such as TV sets, refrigerators, air conditioners, DVD players and telephones, personal computers, toys, shoes, garments and textiles, etc., etc..

According to a US consulting service company's statistics, China's share of the global manufacturing value added in 1995 was five percent, and that figure increased to 14% in 2007. Now China, along with Japan, is in the number two position, in terms of value added, in the manufacturing of the world, only after the USA.

Because of the rapid development of manufacturing industries, the structure of China's exports has been quite different from what it was before. In 2007, manufactured goods accounted for 95% of the total value of China's export.

There are many factors which led to China's success in manufacturing. The following five are widely recognized:

One, globalization and FDI. China has seized the opportunities thrown up by globalization and has benefited from it. According to the latest statistics of the Asian Development Bank, the total amount of foreign direct investment that China had actually utilized from 1995 to 2007 was $663 billions. This translates into an annualized figure of $50 billion, on an average, in the 13 years.

Two, infrastructure. A huge investment has been made by the Chinese Government in power and transportation sectors. The total installed capacity for power generation in China was 718,220 MW at the end of 2007. By the same time, China built 54,000 km of four-to-six-lane, access-controlled expressways. Both are second only to the USA.

Three, SEZ. The Chinese Government formulated a series of preferential policies for Special Economic Zones in 1980s and 1990s, encouraging those zones to play a leading role.

Four, human capital. China has vast supply of relatively cheap but skilled human capital. And in this aspect Chinese work culture is often mentioned.

Five, land ownership. This aspect might be unique to China's situation. Land ownership belongs to the Sate in urban areas and is in the form of collective ownership in rural areas. So it was relatively easier for the Chinese Government to allocate and acquire land for the purposes of industrial and infrastructure development.

After 30 years' hard efforts, now we can say that China has completed the initial phase and entered into the second stage of industrialization.

I think China's experiences have once again proved a few basic points of macroeconomics.

One, industrialization is a necessary and inevitable condition for a large developing economy to grow up and emerge as a developed one. It is true that in developed economies, usually the share of the service sector in the economy is much larger than that of industry. But the same pattern of GDP structure of developing economies may not carry the same meaning. A few years ago there was a debate in China on whether we could bypass the stage of industrialization and concentrate on service growth. Some argued that, that pattern might be a new model of growth for a developing economy. But the prevailing views were that the development of modern services can only be based on the growth of modern industries, and, for a large economy like China, we need not only industrialization in terms of light industry, but also a next stage of industrialization which would provide a big push for heavy and chemical industries, especially industrial equipment industries.

Two, for a large developing economy, employment growth comes, in a substantial measure, from industrialization. In the last three decades, more than 12 million new jobs were created every year in China thanks to the rapid growth of manufacturing. It was an annual increase of 2.3% on an average. During this period China's population growth rate was 1.1% per annum.

Three, industrialization accelerates urbanization in a big way. China has witnessed a historical immigration from rural areas to cities in the last 30 years, and the number of cities in China has been increased from 193 in 1978 to 655 now. China had 19 cities with a population from one million to two millions in the late 1970s. Now the number of the cities with the same scale of population is 83 in China.

However, I have to say that everything has two sides. Although China has made a great achievement in manufacturing the picture is not all that rosy as yet. Nowadays, Chinese industrialists and economists are paying their attention to the following shortcomings and problems of China's manufacturing:

One, generally speaking, a large part of China's manufacturing industries is still labor intensive and is in low value-added segments;

Two, China is now able to manufacture numerous high-tech products but has not mastered core technologies in many sectors and has to import key components;

Three, China lacks globally well-known brands;

Four, the development of China's manufacturing has so far relied too much on overseas demand.

Many Chinese people are of the view that the country China is called the "factory of the world" by many others, but actually it is still a "workshop". To be a real manufacturing center of the world, China has a long way to go. We must not be pleased too much about the "Made in China" tag. We should set a higher target and try our best for "Created in China" label for the country.