Understanding China’s Deindustrialization:Nature,Impact,and Causes

In recent years,China has experienced a trend of "de-industrialization" in which the share of industrial output and employment has continued to decline.When the trend of de-industrialization appeared,China’s per capita GDP was still at a low level and had not yet entered the ranks of high-income countries.A discussion on whether China has experienced premature deindustrialization.This paper first reviews the academic research results on deindustrialization,and investigates and summarizes the phenomenon that China’s industrial employment and output share have continued to decline in recent years,which is a typical fact of China’s deindustrialization.In order to further characterize the characteristics of China’s deindustrialization and make a scientific judgment on the nature of China’s deindustrialization,this paper draws on the decomposition model of the employment change of the sector in Fiona(2008)to analyze the employment and output shares during China’s deindustrialization from the national and regional levels.The influencing factors of the change are decomposed.After comparing with the decomposition results of Brazil and the United States,it is found that the slower improvement of industrial production efficiency compared with the overall economic productivity is the main feature of China’s deindustrialization process and the main factor affecting China’s output deindustrialization.The rapid decline in the share of industrial output has led to a downward trend in the share of industrial employment,and the deindustrialization of employment and output in China is faster than in developed countries.An analysis of the development status of the secondary industry in China’s provinces,cities and economic regions and the factors that affect the changes in the output and employment share of the secondary industry show that China’s deindustrialization is quite common at the provincial and regional levels,with production in the northeast and central and western regions.Going out to industrialize is even more serious than in the east.The relatively slow growth rate of industrial labor productivity is the main reason for the decline in the output share of the secondary industry in the region,and further leads to the decline in the employment share of the secondary industry.In addition,compared with developed countries,when China’s deindustrialization occurred,the optimal allocation of factors caused by industrialization was not complete,and agricultural employment still accounted for a large proportion of total employment.The production efficiency is not high enough,so China’s de-industrialization does tend to be "comprehensive","premature" and "too fast",which will hinder the optimization and upgrading of China’s inter-industrial and intra-industry structures,inhibit the overall economic growth rate,and is not conducive to Coordinated development of China’s regional economy.This paper argues that the main reasons for the comprehensive and premature deindustrialization are:(1)the arrival of the "First Lewis Turning Point",the loss of the demographic dividend increases the cost of China’s industrial production and changes its comparative advantage in the international market;(2)unreasonable The deviation of industrial policies and local governments in the implementation of policies leads to the rapid development of the service industry,the shortening of the resource allocation chain within the industry,and the rapid changes in the industrial structure and the inefficiency of factor redistribution when adjusting excess capacity;(3)Industrialization and urbanization development The long-term dislocation of urbanization has led to the accelerated development of urbanization in a specific period,and the consumption preferences of new citizens have prompted the rapid expansion of low-end service industries.Based on the above analysis,this paper finally puts forward the following policy suggestions for China’s economic development:(1)Comprehensively improve the production efficiency of factors,promote the optimal allocation of factors between industries and within industries,promote the advanced internal structure and technological innovation of industry and service industries,and promote The integrated development of high-end manufacturing and producer services will cultivate new economic growth points;(2)Promote a new development pattern with domestic circulation as the mainstay and international and domestic dual circulations promoting each other,and optimize the industrial system and industrial layout by smoothing the domestic circulation,to promote coordinated regional development and common prosperity of the people,enhance long-term growth potential,and at the same time expand product markets through smooth international circulation,learn advanced experience,enhance industrial competitiveness,and promote domestic industrial transformation and upgrading.