Smart Manufacturing in China is booming. Photo: iStock
Industrial profits in China have taken a hit in October. Photo: iStock

Finding a “smart” solution to a complex problem is not the answer to the escalating trade conflict between the United States and China. After all, this economic Cold War is not just about the ballooning US deficit.

In September, it hit a record US$34.13 billion for a single month and a staggering $225.79 billion for the first three quarters of the year compared to $196 billion during the same period in 2017.

But while it is still an explosive issue, the real ticking time bomb is Beijing’s economic model based on sumptuous subsidies to the massive state-owned enterprise sector and the high-tech “Made in China 2025” program.

Part of this is the country’s booming “smart manufacturing” industry, which “has entered a period of high-speed growth,” a recent study stated.

“[The country’s] industrial enterprises have enhanced their digital capabilities [and] in financial terms, smart manufacturing has substantially improved the contribution to profits,” the 2018 China Smart Manufacturing Report released by Deloitte, one the “Big Four” global accountants, added.

By 2020, the market is expected to exceed 220 billion yuan ($32 billion) another influential smart manufacturing report released by the state-run China Center for Information Industry Development, or CIID, highlighted.

Last year, the sector grew more than 18% and was worth 106 billion yuan, while more than 130,000 industrial robots were built in 2017, which was a jump of 68% compared to the previous year.

This, in turn, accounted for one-third of the global market.

“China’s economy is moving from high-speed development to high-quality growth,” Xin Guobin, the vice-minister at the Ministry of Industry and Information Technology, said last week during the World Intelligent Manufacturing Summit at the Nanjing International Expo Center in Jiangsu province.

Government funding has played a key role in setting up “smart clusters” in the Yangtze River Delta, Bohai Bay Rim and Pearl River Delta. So far, China has built “208 digital workshops and smart factories,” according to the CIID report.

“China has to maintain its strategic vigilance. The US has fundamentally changed its strategy toward China and defined the latter as a rival,” Sun Lipeng, an assistant research fellow with the Institute of American Studies at the China Institutes of Contemporary International Relations in Beijing, said.

“The series of trade moves show that the US wants both economic interests and superiority of technology to curb China’s rise,” he added.

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