Industrial sector needs to fully tap domestic market

Editor's note: Industries across the world are undergoing major changes due to geopolitical shifts and technological advancements. Xu Zhaoyuan, deputy head of the Department of Industrial Economy under the Development Research Center of the State Council, spoke to China Economic Times on China's ability to navigate these changes and the steps needed to further improve its industrial sector. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

Amid the reshaping of the global industrial landscape, China's industrial system has several competitive advantages. The massive scale of China's manufacturing sector delivers enormous output volumes, which reduce R&D spending and equipment depreciation costs for every unit of output. The large production scale also leads to higher efficiency.

In 2025, China overtook Germany and Japan to secure 10th position in the World Intellectual Property Organization's Global Innovation Index. It was the first time the country was in the top 10 in the GII, and marked China's transition from a technology follower to a frontier innovator. More importantly, China's innovations are no longer confined to laboratories. They are deeply aligned with industrial demands. Scientific discoveries are swiftly turning into engineering practices.

China's comprehensive industrial system provides robust industrial support to emerging sectors in the country, shortening the lead time from prototype development to mass production and facilitating cross-sector integration.

The country's population of more than 1.4 billion and a large middle-income group generate tremendous market demand, acting as catalysts for technological progress. Products such as new energy vehicles, 5G terminals and smart home appliances receive massive real-time user feedback in China's market, driving algorithm iteration and design refinement.

China has built a 5G network and a large-scale industrial internet system. This infrastructural advantage enables AI, big data analytics and digital technologies to be deeply integrated into production management.

In the next 25 years, China should fully tap into its superlarge market. It should develop a unified national market, improve systems to better promote fair competition and strengthen quality standards and the protection of intellectual property. These measures will drive enterprises to improve the quality of their products, build stronger brands and move up the value chain.

The country needs to cultivate not only major enterprises with core technologies that are capable of integrating resources globally, but also a multitude of small and medium-sized enterprises that demonstrate competitiveness in niche sectors.

China's industries serve as a "stabilizer" for the global supply chain. The country will continue to provide the world with products and services featuring advanced technology, reliable quality and reasonable prices. Additionally, China supports domestic enterprises in making more direct investment overseas, especially in green and low-carbon sectors.