China still has a long way to go before becoming a world manufacturing centre, according to one of the senior economic officials overseeing macro-economic matters.

In recent years, foreign media and some domestic media groups have published a number of stories saying China has become or is becoming a world manufacturing powerhouse.

But yesterday at the end of the China Economic Growth Forum 2003, Ma Jiantang, deputy secretary-general of the State-owned Assets Supervision and Administration Commission, said: "This is inaccurate when looking at the country's overall economic volume, the size and the capability of the manufacturing industry."

Chinese workers check Buick car engines at the plant of Shanghai GM plant, a joint venture between U.S. auto giant General Motors and China's number two auto maker Shanghai Automotive Industry Corp, October 16, 2003. [Reuters]

A country's gross domestic product (GDP) has to account for more than 10 per cent of the world's total before it can be considered a world centre, he said.

In addition, its manufacturing output has to account for more than 15 per cent of the world's total and its manufacturing industry has to account for more than 10 per cent of the global total.

Also, the technical level of some sectors within the manufacturing industry has to lead the rest of the world.

In 2002, China's GDP reached US$1.27 trillion, ranking sixth in the world.

However, it only accounted for about 3.7 per cent of the world's total, Ma said.

Lu Zheng, a senior economist with the Chinese Academy of Social Sciences, said at present it is nothing more than optimism to say China is a world manufacturing base.

But he said the country wants to make more of a contribution to the world's economic development and provide more cheap, quality goods for all.

However, a number of problems including trade protectionism still exist.

"A real international manufacturing base should have a great say in aspects such as world market supply and demand, and the development trends of the world market," Lu said.

China's exports stood at US$325.6 billion last year, accounting for 39 per cent of that handled by the United States in 2000 and 5.1 per cent of the world's total.

Despite not having significant international clout in manufacturing, the majority of China's industrial products are used to meet domestic demand.

China produced 200 million tons of steel last year, accounting for 20 per cent of the world's total.

But the country has imported more than 30 million tons so far this year due to booming demand.

The fact that Chinese companies are only small and their input for research and development (R&D) is minimal also illustrates the country is far from becoming a world manufacturing base, Lu said.

None of the Chinese manufacturing companies are among the list of world's top 500 companies, he said.

Last year, China's spending on R&D was only 120 billion yuan (US$14.5 million), accounting for about 1.2 per cent of the total GDP.

Zhou Muzhi, a senior research fellow at the Japan International Development Centre, said more foreign companies are starting to establish factories in China because it can meet their global supply chain requirements.

The improvement of China's infrastructure and relatively low labour costs can help the companies achieve maximum benefits.

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