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China's equipment manufacturing industry is currently facing challenges
**Abstract**
What are the steps in the transformation and upgrading of China's equipment manufacturing industry? How can it break free from the cycle of "high production value but low profit"? The challenges faced by China’s manufacturing sector are deep-rooted and complex. Despite being the world's largest manufacturing country, 80% of high-end chips and power generation equipment, 90% of high-speed CNC machines and industrial robots, and nearly 100% of high-speed rail bearings still rely on foreign imports.
"The dragons are all diving into the sea, and they all go to the moon," said Liang, the marketing director of Changzhou Runyuan Warp Knitting Machinery Co., Ltd. who previously worked at Karl Mayer, the world's largest warp knitting machine manufacturer. "Yet, such a powerful Chinese manufacturing industry can't even make a single machine for producing stockings. It's ironic."
According to Liang, the stocking machine is an epitome of China’s equipment manufacturing challenges. Although China now accounts for 85% of global warp knitting machinery, the average export price has risen by 50.7%, while the import price is 3.93 times higher. Many high-speed, intelligent warp knitting machines are still not produced domestically.
"The speed of a stocking machine can reach 4,000 rpm, which requires extremely high steel strength and precision. Even a small deviation can result in machine failure. Our steel quality, heat treatment processes, and other technologies are still several grades behind," he explained.
Basic components, basic materials, and basic processes — known as the “three basics†— form the foundation of the manufacturing industry. Their level directly affects the performance, quality, and reliability of major equipment.
"Although China's large-scale equipment meets national needs, there are serious issues with core technology dependence. The rapid development of high-end equipment is constrained by the lack of supporting 'three basics' products. This is the biggest weakness in the transition from a large to a strong manufacturing nation," said Wang Jun, president of the China Academy of Cars.
The lag in developing the "three basics" means that China relies heavily on imported high-end materials and parts. Data shows that over 50% of manufacturing technology depends on foreign sources, with 80% of high-end chips, 80% of high-quality castings, 90% of high-end CNC machines, and nearly 100% of high-speed rail bearings imported.
"Importing key 'three basics' products leads to a 'shell' situation for mainframe equipment. For example, high-pressure pumps, valves, and motors above 30 MPa for construction machinery are almost entirely imported, with 70% of industry profits swallowed up by these parts," said Qu Xianming, former vice president of the Institute of Mechanical Science.
The underdevelopment of the "three basics" also causes inefficiencies and poor quality in domestic equipment. For instance, 25% of high-end structural materials are still imported, and 45% of materials are capable of being exhibited but not mass-produced. China's single-machine energy consumption is eight times that of developed countries, and annual losses from product quality issues exceed 200 billion yuan.
What's more concerning is the growing cost and supply risks from reliance on imported basic products. Prices are rising, and delivery times are unreliable.
**Where Are We Dragging Our Hind Legs?**
China has long relied on reverse engineering. However, this approach has led to insufficient research in basic theories, common technologies, and process reserves, creating hidden dangers for future industrial upgrades.
"China's industrialization took place in a globalized environment where we didn’t need to do everything ourselves. But now, as we move up the industrial chain, we face restrictions from foreign suppliers," Qu Xianming noted.
The "heavy mainframe, light foundation" mindset also plays a role. Mainframe projects offer visible political achievements, while foundational research takes years to show results. Under current evaluation systems, leaders have little incentive to invest in the "three basics."
Moreover, the lack of support for basic research and common technology hinders progress. Many research institutes now focus on application and commercialization rather than foundational studies.
**Improving the Quality of Industrial Workers**
High-quality workers are essential for improving manufacturing standards. A German machine required precise installation steps that Chinese workers struggled to follow until instructions were fully understood. This highlights the importance of skilled labor.
"German and Japanese products are reliable because of their highly trained workforce, which ensures precision and continuous improvement. Improving worker quality is crucial for China’s manufacturing future," said Sun Xiaoyin, deputy director of the Personnel Department of the China National Textile and Apparel Council.
**Completing the Short Board from "Big to Strong"**
The "three basics" industry is vital for the future of manufacturing. Though smaller in scale, it offers higher profit margins. For example, while overall car profit margins are around 5%, component profit can be as high as 5.9%.
"In aviation, no engines or titanium alloys mean nothing can be built. Similarly, without the 'three basics,' high-end equipment cannot be developed," said Wang Wenhu, general manager of CSR Qishuyan Locomotive Vehicle Technology Research Institute.
To strengthen the foundation, national policy support is needed. While some initiatives like the "Twelfth Five-Year Plan" and the "National Transformation and Upgrade Base Project" exist, more substantial investment and clear regulations are required.
With the recent "Decision" from the Third Plenary Session of the 18th CPC Central Committee, there is hope for better integration of scientific resources and stronger government support. Entrepreneurs call for preferential policies beyond financial subsidies, such as tax breaks and interest-free loans, to accelerate the development of the "three basics."