第48章 2006 CHINA’S

2006 CHINA’S INDUSTRIAL DEVELOPMENT REPORT

2006 CHINA’S INDUSTRIAL DEVELOPMENT REPORT——Philosophy of Science Development and Transformation of Economic Growth Mode

（Executive Summary）

The industrialization starting from the way of extensive growth is a common phenomenon if we look at the history of economic development from most countries in the world。However“cut-throat”competition and governments directly participating local games are the two remarkable features for the last over 20 years of China’s economic development。The most successful progress in the philosophy field during the period 10th to 11th Five-Year Plan is China understood that only readjusting the general means of control and policymaking is a far way to realize the fundamental change of the economic growth mode。China must introspect deeply the ideology of development and guide social and economic development with the philosophy

of science development。Therefore，whether China is able to realize the transformation of economic growth mode，it depends on fostering the ideology of science development in order to change of social value，ideologies of competition and business civilization。Industrialization with over 1 billion people participating in China consumed an extremely large amount of resource and made a great impact on environment is a most difficult problem for human。It is obvious，only transforming growth mode and taking sustainable development with resource-saving and well-protected environment that might push forward industrialization，China will be able to realize economic and social modernization。Therefore，whether China is able to change the growth mode depends on obtaining the innovation of theory，technology，institution and management under the guidance of science development philosophy。

Chapter 1

Industrial Growth Pattern

Now the traditional Chinese industrial growth pattern is faced with serious constraints in terms of profit margins，intellectual property，international market，resource environment，core technology and restriction of the social responsibility。Meanwhile，the general demand based on a scientific view of development，including building the“four kinds of societies”，realizing the“five major transformations”，setting up an innovation-oriented country，also pose a great challenge to the traditional industrial growth pattern。So to establish a new kind of industrial growth pattern driven by innovation is both a great demand to break those constraints and a choice to deal with the great challenge。The following measures shall be urgently taken so as to accelerate the transformation of the industrial growth pattern mainly in the these aspects，respectively，the construction of the financing system for technological innovation，the recreation of the financial policies for technological innovation，the restructuring of the initiative policies for human capital property right and the intensification of the construction of the corporate self-accumulating capability，the perfection of the foreign trade policies，the implementation of the government procurement policy and the reform of the scientific and technological management system。

Chapter 2

Industrial Structural Adjustment and Upgrading

During the 10th Five-Year Plan period，China’s industrial structure developed and changed with the basic features of the fast growth of resource-intensive heavy and chemical industries in China。The macro-control policy possessed an inhibitory effect on the blind expansion of the fixed assets investment scale but there appeared to be problems concerning the comparative excessive production capacity in some industries，but it was a new contradiction that also affected the coordinated development of the national economy。Solving this contradiction，it is necessary to bring the fixed assets investment scale under control，consolidate the market competitiveness，perfect the techno-economic norms and eliminate

outmoded production capacity。During the 10th Five-Year Plan period，the product sales income of the hi-tech industry reached an annual growth rate of 29%。In the export turnover of hi-tech products，the foreign invested enterprises accounted for 93.23%，which indicates that China’s hi-tech industry development was mainly attributable to the capital and technological injection of the multinational corporations。During the 11th Five-Year Plan period，as required by the new type path of a new road to industrialization，the orientation and tasks of China’s industrial structural adjustment is to adhere to the market-oriented and enterprises-centered principle，to consolidate the self-innovation capability as a key，continue to bring into full play the competitiveness of the labor-intensive industry，adjust and optimize the product structure，enterprise organizational structure and industrial allocation，upgrade the overall technological level and comprehensive competitiveness and promote the fundamental change of the development from large-scale enterprises to powerhouse。

Chapter 3

Industrial Investment and Macroeconomic Regulation

In recent years，China gained rapid growth in industrial investment with a remarkable recovery in the proportion of the overall scale of investment in fixed assets for the whole society and the remarkable shift towards manufacturing industry and the west regions。Although the autonomous increase capacity of industrial investment has initially taken shape，yet the excessive growth of investment brought a lot of problems，obviously highlighting the consolidation of the industrial extensive growth mechanism and the lower investment efficiency。Particularly，the former structural contradictions became even more serious；the bottleneck between resources and environment seriously restricted the economic development；

irrational investment and low-level expansion of investment triggered off a new round of production capacity surplus；the economic returns for the whole industry fell down on a large scale and the financial risks and pressure greatly increased；“development zone fever”proliferated the duplicated construction and waste of resources。So the strategy to maintain the steady growth of the industrial investment and raise the investment efficiency shall be oriented towards the further reform of the investment system and the enhancement of the marketlization of investment；it is urgent to adjust industrial investment structure and consolidate the intensive growth capacity，to optimize the industrial organizational strncture and upgrade the scale economy benefits，to strengthening regional coordination and cooperation and promote the spatial agglomeration of production capacity。In dealing with the duplicated construction and exorbitant competition the excessive industrial investment，the central government should take effective measures and lay stress on economic structural adjustment，transformation of the growth mode and sustainable development as the development objectives by reinforcing the orientation of the industrial policy，reforming the resource price formation mechanism，regulating the competitive order and restricting the local government’s investment impulse，so as to further strengthen and improve the macroeconomic regulation。

Chapter 4

Retrospect and Prospect：Relationship and Impact of Demand＆Supply of Energy

During the 10th Five-Year Plan period，China’s energy demand and supply relationship became tense，on one hand，affecting the normal operation of the national economy；on the other hand’greatly stimulating the energy production and energy construction。The main reasons for the tense relation during the 10th Five-Year Plan period between the demand and supply of energy resources lie in the economic overheat。The accelerated development of the heavy and chemical industries，and the excessive control of the demand and supply relationship in the past，insufficiency and inefficiency in enhancing the energy-efficiency and conservation of energy，all of which are the very reasons leading to the escalation of the energy consumption in China，

so energy consumption is much higher than the economic growth。The relation between supply and demand in energy is the vital foundation for the formulation of the energy policy，and also is the key point and orientation that might affect the central government’s energy strategy。The insufficient supply of energy in China promoted the central government to transform its energy strategy from the aspiration of the self-equilibrium as the core to the utilization of the domestic and overseas energy resources in its strategy；the excessive consumption of energy not only created ecological environment problems and energy security problems but also impel China’s energy policy to transform from the encouragement of the supply and demand equilibrium to energy conservation and environment protection。The 11th Five-Year Plan further made it clear that the guiding principle of the development of China’s energy industry，based on the domestic demand，construct a steady，economical and clean energy supply and demand system。

The fundamental way out for survival and development for China’energy is to raise efficiency so as to iron out the demand and supply contradiction。It is highly important to raise the energy through the concerted development of agriculture，industry and service；it is necessary to raise the energy utilization rate，reduce the environment pollution as a vital standard of the structural adjustment；enhancing energy utilization rate by ingenious innovation shall be highly accentuated as the important approach and means；it is also imperative to bring into full play the role in the positive adjustment of energy production and consumption played by price and taxation so as to perfect the price system of energy。

Chapter 5

Land Use for Industrial Purpose and Relevant Land Use Policies

Land is one of the primary production factors in the industrial production activities，so under the condition of the clearly established land ownership，ground rental and land price will be the most fundamental tool in adjusting the allocation of land resources for all the relevant purposes。However，the use of most of the land in practice is subject to the influence of the public policy，so it is rather beneficial to eke out the problems appearing in the market by means of the appropriate planning and restriction instituted by the public procedures and give full play to the market mechanism and the reasonable allocation of land。Since the reform and opening up and with the rapid advancement of the urbanization，it is evident that the urban construction land use takes the trend of the escalating expansion，thus bringing the relevant problems of waste of land resources；industry is still saddled with some problems in the urban areas：

firstly，as the land acquired by enterprises is lower priced with lower demand for environment protection，which leads to the redundant development of industrial investment in all places；secondly，there still exists the huge interest mechanism for the local government in requisition-land and reservation-land transfer，which instigates the local government to positively maneuver the land transactions in the disguise of purchase of land for the real purpose of selling the land for higher gains；thirdly，the government at all levels lack the function of public management of the land resources。It is necessary to take a basket of solutions to smoothen out the multifaceted problem of lower utilization of land for the industrial purpose。Essentially，it should base China’s land management on the basic guideline of the marketlization of the land resources and the governments shall phase out of land expropriation and the land trading market with its priority shifted towards the formulation of land planning and execution of the relevant laws and regulations。In the short run，the governments should be devoted to pushing forward the following policies：firstly，correctly dealing with the relation between efficiency of land use and the environment protection；secondly，deepening the reform of the land use system and giving boost to the market allocation of land resources；thirdly，taking root in tapping the potentiality for 1and resources and optimizing and revitalizing the stock land；fourthly，intensifying the role of planning of the land and optimizing the allocation and the structure of land use。

Chapter 6

Ingenious Technological Innovation in Industry

During the 10th Five-Year Plan period，China constantly improved its capability in enhancing its independent innovation of its industry，mainly characterized by：steady input of scientific funds in technological innovation and personnel input；ever-increasing growth of the output of technological innovation（in terms of numbers of patents and published theses）and the establishment of a large batch of independent innovation-oriented basic platforms and key projects，which have thus far constituted the main body of the technological innovations in our country。As far as the raised funds for scientific and technological innovation，R＆D expenditure and R＆D personnel expenditure are concerned，enterprises account for more than 60%of the national total expenditure。Yet from the perspective of efficiency of the independent technological innovation in industry，the total amount in transfer of scientific and technological achievements gained a strong momentum during the 10th Five-Year Plan period，and moreover，the average turnover of the single technological contracts increased considerably，

which clearly illustrates that the technological content of the independent innovation in China is on constant rise。In respect of the industrialization of the scientific and technological achievements，China Torch Program，Spark Program and programs for the popularization of the key scientific and technological achievements produced favorable returns。At present，the gap between China and foreign1 countries is greatly narrowed in terms of the independent technological innovation in industry and international level。However there is still obvious gap in some other aspects，mainly because of China’s lack of strength in R＆D input and lack of capability in adaptation and assimilation of foreign scientific and technological achievements and insufficient supply of skill-oriented talents。In the coming five years，there will be a favorable opportunity available to China’s independent technological innovation in industry。As we know，the overall awareness of the independent innovation in the whole society is greatly raised；the powerful national strength paves the economic foundations of the enhancement of independent technological innovation；

China has accumulated a large contingent of talents and practical technology；and it is easier for China to acquire the new technology under the context of its reform and opening-up；the immense internal market demand expands wider space for the technological innovation。But all taken into account，China still entails more injection of state financial support for the basic research。Integrated innovation and the enhancement of the national scientific and technological quality，and besides，importance shall be made to the vocational education with greater efforts。

Chapter 7

Industrial Consumer Goods Market in China

During the 10th Five-Year Plan period，our country’s industrial consumer goods market maintained an overall momentum characterized by sufficient supply but flat demand，which，however，does not indicate that the national industrial goods consumption has reached its saturation point。Yet on the very contrary，adversely affected by segmentation of urban-rural dualistic economic structure and obvious regional economic disparity，there appear remarkable consumption disequilibrium。That is to say，at the present consumption stage where the industrial goods are still taking the lion’s share in the market，but some people’s industrial goods consumption is contained to some extent。During the 11th Five-Year Plan period，the industrial consumption goods will enjoy a wider market space。

If we follow the scientific development outlook and strive vigorously for the objectives of building a well-off society in an all-round way，it is rather imperative to expand domestic demand and explore for more market opportunity as the dynamic engine to fuel the sustainable economic growth。The key of implementation of the macro strategy and policy measures to strongly stimulate the consumption growth lies in the increase of the disposable income of the middle and low income groups and strengthen the consumption capacity of the low income people，particularly the farmers while the national income is continuously enhanced，thus transforming the huge potential demand into the effective and realistic demand。Due to the restraint of the resource environment and the demand of the social development stage，it is an extremely urgent task at present that the“scientific concept of consumption”with the main connotations of“greenness”and“civilization”be positively advocated。

Chapter 8

Industrial Management System and Enterprise Reform

During the 10th Five-Year Plan period，China’s industrial management system and enterprise reform yielded significant results。Yet during the 11th Five-Year Plan period，China’s industrial management system and enterprise reform shall focus on transferring the function of the government，improving the state-owned assets supervision system，deepening the further reform of the monopoly industries and public utilities，adjusting the allocation and structure of the state-owned economy，pushing forward the construction of the legalization of the industry associations，accelerating the structural adjustment of the corporate organizations and transforming the large-sized state-owned enterprises into stock entities。The basic ideas for further promoting the industrial management system and enterprise reform should follow the this trend：transforming the governmental functions so as to streamline all kinds of relations，

thus genuinely establishing the leading status of the enterprises in market competition，market investment and technological innovation；vigorously improving the government’macro-regulation so as to create the favorable external environment for the development of the enterprises；establishing and improving the state-owned assets supervision and management system so as to bring the operators of the state-owned enterprises，the state-owned assets and major policy decisions into the systematic supervision and control；adjusting the corporate organizational structure so as to establish the structural scale rationality of the large，medium and small enterprises and giving impetus to the development of the corporate agglomerations and large-sized corporate groups so as to establish the orderly competitive patterns for the sustained，stable and coordinated development for large，medium and small enterprises；giving full scope to and regulating the industry association so as for the enterprises at large to conduct all kinds of basic social services。

Chapter 9

The Competition Order and the Optimization of the Competitive Environment

Market economy system is not just characterized by competition，but also by fairness and effectiveness of the competition。During the 10th Five-Year Plan period，with China’s economy being integrated into global economic system and its forgoing ahead with its marketlization at high speed，China has strengthened and enriched competitive orders，laws and regulations under the circumstances of competition market，and has made advancements in such fields as removing some restrictions on the market access，reforming the supervisory system，vertical organization restructuring，introducing the non-state-owned capital，establishing the franchise system，etc。As a result，

the local protectionism was restrained to some extent，the good effects of market competition in promoting innovation，economic growth and social development，has drawn close attention from people of all walks of life。However，China’s competitive order and competitive environment are still confronted with some knotty problems，such as，the local protection and administrative monopoly，monopolistic mergers and acquisitions，protection of intellectual property and intellectual property abuse and corporate self-discipline restrictive pricing，all of which shall be immediately straightened out。During the 11th Five-Year Plan period，China shall positively take advantage of the promulgation of“Anti-Monopoly Law of the People’s Republic of China”and the revision of“Law of the People’s Republic of China for Countering Unfair Competition”，and resolutely change the long existing tendency of attaching great importance to the industry policy while giving insufficient attention to competitive policies，by taking competitive policy as one of the fundamental policies of the socialist market economic system and guarding against and bringing to justice any kind of restrictive competitive behaviors that undermines efficiency and fairness。

Chapter 10

Employment and Guaranteeing the Rights and Interests of the Laborers

China’s present employment situations can boil down to the following features，respectively，the comparative surplus of laborers，the increasingly conspicuous employment structural contradictions，and the ever-increasing absorption of laborers by enterprises of the non-public sectors and small-sized enterprises and the transfer of redundant laborers from the rural areas to the urban areas as a vital source of migrant workers。So in this situation，the general laborers are at a disadvantage while bargaining over wages，working conditions in seeking employment in cities。Furthermore，there still remains much to be desired when the goveinmnent exercises the legal enforcement to regulate the labor relationship，particularly lacking in strength in restraining the enterprises from illegal doings and safeguarding the legal rights of the laborers；some local governments fail to guarantee that the labor legal system shall be effectively maintained and effectively observed，and there even appear such numerous cases of violation of the labor legal rights at the sacrifice of the interests of the general laborers；

insufficient personnel and lack of funds on the part of the labor and social supervisory departments and that in simplistic working manner；as far as the laborers at large are concerned，there has not been any trade unions available that stand up for the collective interests of the general laborers and the existing trade unions lack in independence，so there appears phenomena which typically reflect the serious infringement upon the legal rights of the laborers。Therefore，to iron out this problem，we shall vigorously improve and upgrade the legal system and give impetus to strengthening the labor supervision and protection so as to improve the efficiency of labor supervision and protection and modify the solution mechanism of the labor disputes and give full play to the trade union’s role of safeguarding the legal rights of the laborers，lay emphasis on the professional training of the laborers and ensure that the correct orientation is maintained in public opinion。

Chapter 11

The Concerted Development of Producer Service Industry and Manufacturing Industry

Viewed from the experience of the developed countries，the producer service industry is strongly interrelated to the manufacturing industry in terms of development。On the one hand，the producer service industry，to a large extent，depends on the development of the manufacturing industry；on the other hand，the rapid development of the manufacturing industry cannot be devoid of the support of the high-end producer service industry。This article briefly summarizes the development status of the modern logistics，financing service industry and information service industry。Furthermore，by analyzing the input and output table of the industrial affiliation status of the producer service industry and the manufacturing industry，it can be easily seen that the affiliation affinity between the producer service industry and the manufacturing industry in terms of development is still at the lower level。

From the point of view of the requirements of the economic growth，it is urgent to boost the concerted development of the producer service industry and the manufacturing industry。The basic approaches to promote the concerted development of the producer service industry and manufacturing industry mainly include：on the one hand，through further deepening the relation of corporate division and optimization of the manufacturing structure so as to upgrade the development quality of the manufacturing industry；on the other hand，effective measures should be taken to speed up the development of the producer service industry by perfecting the basic conditions，promoting the system innovation and ascertaining the development key points and further intensifying the reform and opening up。

Chapter 12

Environment Protection and Industrial Development

During the 10th Five-Year Plan period，the completed industrial pollution prevention targets are better than that of the urban pollution prevention，but there are some targets not well fulfilled。The quantity of the industrial sewage discharge continuously increased，but the discharge quality of the poisonous pollutants from the discharged wastes took a downturn on a continuous basis，reaching the industrial swage treatment target as set forth in the 10th five-Year Plan。Compared with the water pollution situation，China’s waste gas treatment situation was even more serious。Sulfur dioxide discharge quantity target was not complied with。The discharge quantity of the waste solid gas dropped markedly，but the quantity of disposal of the dangerous substances from the solid waste was rather low and the comprehensive utilization rate didn’t comply with the predicted targets；the serious environment problem caused by the trans-regional flow of the resources remained unsolved。Our country’s 11th Five-Year Plan clearly specifies that the aggravating trend of the biological environment shall be basically curbed，the total quantities of the main pollutants and wastes shall decrease by 10%，

and the greenhouse gas emission shall be effectively controlled within the environment protection target。To realize this target and avoid the reappearance of the similar situation during the 10th Five-Year Plan period when some targets were not complied with，the following measures shall be effectively taken：conducting biological tax reform and establishing the builder beneficiary system；establishing the compensation system and introducing the overall compensation mechanism in draining area compensation；establishing regional biological compen-sation funds；effectively utilizing the market mechanism to promote the implementation of the bio-logical compensation policy；applying the emissions right tradable system and raising the efficien-cy of controlling pollution；strictly controlling the new pollution and vigorously promoting clean production by means of technological innovation。

Chapter 13

Development of Foreign Trade＆Change of the External Environment

During the 10th Five-Year Plan period，China’s foreign trade gained the momentum in rapid growth，with obvious features demonstrated in the following aspects：improvement of the export structure，larger percentage of exports in electromechanical products and hi-tech products and the enhancement of the import and export market structure and the diversification of the main-body structure in foreign trade。The expansion of the export dimension enables China to continuously raise its status in the system of the international division of labor，yet it also sustains the shock of the change in the pattern of the international trade。With the intensifying competition from the international market，there appears a series of unprecedented changes in the external environment impairing China’s economic development，presenting a concentrated expression of the following features：price fluctuations of the energy and raw materials in the international market；

the prevalence of the new trade protectionism and frequent recurrence of trade disputes；the interest conflicts between countries caused by the appreciation of the RMB exchange rate and the trade frictions，which poses a new challenge to the sustainable development of China’s economic and trade intercourse with foreign countries。To adapt to the changes of the international environment and the domestic situation，China will，under the premise of continuous expansion of its reform and opening up and on the basis of the scientific development outlook，conduct the strategic adjustment to promote its foreign economic and trade development：accelerating independent innovation and transform the foreign trade growth manners；further completing the exchange rate formation mechanism and steadily advancing the process of the convertibility of the RMB；positively guiding the domestic enterprises to participate in overseas investment；establishing and perfecting the risk management system so as to push forward China’s opening up to the outside world；extensively conducting international cooperation activities and creating a favorable external environment to facilitate China’s economic and trade development

Chapter 14

Excavating Industry

During the 10th Five-Year Plan period，the development trend of China’s excavating industry tallies deeply with the orientation of the heavy and chemical industries with rapid growth rate。China’s excavating industry maintained the steady development in terms of its industrial structure during the 10th Five-Year Plan period and the corporate efficiency was increased to some extent。And during the same period，the industry was confronted with problems like insufficiency of the upstream and downstream integration，lower capacity of the comprehensive utilization of the resources，lower level of industrial concentration and frequent occurrence of the safety incidents，etc。During the 11th Five-Year Plan period，the upstream and downstream integration and the corporate vertical association of China’s excavating industry will be greatly intensified and more and more mega-sized corporate conglomerates will be cultivated。

Starting from 1999 the heavy and chemical industries developed at a higher speed than that of the light industry and in recent years the former continuously widens the gap with the latter in terms of development speed，which was even continuously intensified during the 10th Five-Year Plan period，say，in 2004 the growth rate of the heavy industry was 3.5%more than the light industry。As the comparative growth rate of the heavy industry was faster than the light industry，the proportion of the heavy industry was continuously increased during the 10th Five-Year Plan period，respectively increased by 59.1%in 2000 and up to 67.6%in 2004，hitting the record of 66.6%in 1960.With the rapid development of the heavy and chemical industries，China’s excavating industry will usher in a favorable growth。

Chapter 15

Iron and Steel Industry

During the 10th Five-Year Plan period，China made substantial headway in its iron and steel industry development：its industrial scale continuously expanded；its product structure was remarkably improved；the iron and steel industry demonstrated remarkable achievements，respectively in improvement of utilization efficiency of resources，particularly utilization efficiency of energy，technological equipment level and technological level and the overall economic benefit level；the industrial organizational structure and regional allocation of the iron and steel industry were oriented towards the rational development and the industrial international competitiveness was remarkably enhanced。However，compared either with the requirements of the scientific development perspective and the neo-industrialization road，or with the developed countries，China’s iron and steel industry is still confronted with a series of outstanding contradictions and problems，such as，extensive economy growth mode，overstrained environment pressure，exorbitant expansion of its industrial production capacity，

danger of excessive industrial production capacities。In order to address the above contradictions and problems and meet with the requirements of the ever-increasing market demands for the iron and steel industry by our national economic development during the 11th Five-Year Plan period，it is urgent to transform the growth mode of the iron and steel industry，to enhance the independent innovation capability of the iron and steel industry，and most impotently to transfer the extensive development mode with emphasis on quantity onto the road of long-time and sustainable development characterized by the intensive development track with emphasis on energy-efficiency，enhancement of resources utilization rate，reduction of pollution，diversification of products and upgrading quality and accentuation on economic efficiency and premium put on the development of the recycling economy。

Chapter 16

Review and Prospect of China’s Textile Industry Development

The textile industry has always been an important industry in our national economy，playing an indispensable role in creating more employment opportunity，market prosperity and balance of payments equilibrium。During the 10th Five-Year Plan period，our country’s textile industry underwent even more tests from the changes in the domestic and overseas economic environments，but the whole industry maintained steady and rapid growth momentum。The fixed asset investment expanded rapidly，so did the production capacity and turnover and the marked growth of foreign exchange earnings from export。However，in the mean while，the contradictions of the textile industrial structure were not fundamentally solved and the overall technological equipment level was comparatively backward。The product innovation capacity was weak and added value was low and the construction of ecological environmental protection was also backward。During the 11th Five-Year Plan period，

China’s textile industry will face tremendous change in the domestic and overseas environments and the domestic demand growth will become the motive power to fuel the development of our country’s textile industry。Besides，the resource environment will exert further restriction to the textile industry’s development。The competition in the world textile product trade will be fiercer，and there will come the post-quota period during which there will in turn appear more trade conflicts and the more non-tariff barriers。In order to adapt to the changes of the business operation environments at home and abroad，it is highly suggested that the central government will take effective measures to accelerate the adjustment of the textile industrial structure，encourage the textile enterprises to push forward the recycling economy，promote the marketlization of cotton and the coordinated development of the chemical fiber raw materials，guarantee the sufficient supply of the main resources，strengthen the industrial self-discipline and give impetus to the textile enterprises to implement the“going-out”strategy so as to mitigate operational risks。

Chapter 17

Chemical Industry

During the 10th Five-Year Plan period，China’s chemical industry ushered in its rapid development，with its economic aggregates considerably increased，with its product structures further optimized，the export and import scale further expanded，tremendous breakthrough being made in technological innovation and economic efficiency continuously improved。However，China’s chemical industry still faces the problems like insufficient independent innovative capability，lower product grade and added value，small scale of enterprises and lower utilization efficiency of energy，and also faced austere pressure from the restriction of environmental capacity and scarcity of resources。It is predicted that during the 11th Five-Year Plan period，China’s chemical industrial will maintain the rapid momentum in development。Nevertheless，under the pressure of the tight supply of resources，particularly energy，

and the price hikes，the industry will suffer from the downturn in profit growth。During the 11th Five-Year Plan period，China’s chemical industry will continue to gain its rapid growth，but the industry must follow the guideline of the scientific development philosophy，adjust its industrial structure，optimize its industrial allocation，enhance the independent innovation capability，vigorously develop the recycling economy，make great breakthrough in a large batch of influential and key technologies，raise the industrial technological level and product grades，reduce consumption in energy and resources，emission of pollutants and wastes，and realize the sustainable and sound development of China’s chemical industry。

Chapter 18

Petrochemical Industry

During the 10th Five-Year Plan period，in spite of the grave restraints of resources and the great pressure of the continuous hike of the oil price，China’s petrochemical industry remained the industry with the fastest growth rate，the most efficient economic returns and the most remarkable technological progress in China’s industrial development history。In the fiver years from 2001 to 2005，China’s petrochemical industry over-fulfilled all the targets as set forth in the 10th Five-Year Plan on an all-round way。With 2005 compared with 2000，the petrochemical industry gained a 48.9%increase in terms of its assets with the annual growth rate of 8.3%；the sales income increased by 151.6%and the average annual growth rate reached 20.3%；the profit growth climbed up to 187.2%with the average annual growth rate of 23.5%。

Compared with the whole industry and the national economic development，petrochemical industry ranks as one of the industries in China that boasts the fastest growth speed and the best quality。The outstanding achievement is obtained directly as a result of the economic restructuring。Meanwhile it should be acknowledged that it is the result owing to the new historical pattern of the industry openness brought about by China’s accession into WTO。However，the future development of the petrochemical industry will be challenged by severe restraints of resources and environment。Crude oil price keeps on a high position will further aggravate the risks in investment in the petrochemical industry and the more and more rigorous environment protection standards will pose new challenge tot the petrochemical industry。Besides，the technological advancement of the international petrochemical industry is noticeably accelerated，so the competition in the international market is growing fiercer。So the future development of the petrochemical industry shall be guided by the scientific development philosophy with a view to fundamentally transforming the industrial growth pattern and taking the road of the intensive integration of refineries and petrochemical plants，characterized by high technology，development of the zone economy and scale-up development，positively rely on the scientific progress，optimizing the technological process，lowering the consumption of the raw materials，elevating the quality of the products and enhancing the international competitiveness of the petrochemical industry。

Chapter 19

Engineering Industry

The 10th Five-Year Plan period represents one of the most favorable development periods for China’s engineering industry。Through several years’rapid development，China’s engineering industry grew by leaps and bounds and attained a new height。The whole industry complied with most of the requirements as set forth in the overall objectives of the 10th Five-Year Plan in advance in 2004.The industrial scale was rapidly expanded；economic benefits were continuously enhanced，the output value of new products increased in a continuous way；product structure was further upgraded；the total import and export volume gained an ever-increasing growth and the trade deficit was sharply minimized。During the 10th Five-Year Plan period，the fast growth of China’s engineering industry benefited mainly from the surging demands fueled by the state macroeconomic policies，yet it still followed the extensive growth mode。Because of the insufficient technological capability，China’s engineering industry are still faced with the structural problems that have long existed and dampened its smooth development of the industry，such as，its product structure with medium and small-grade products as the core，

lower economic benefits，lack of international competitive force，lack of the mutual cooperation and coordination between enterprises in socialized coordinating relationship，all of which were not fundamentally solved yet，and with the further expansion of China’s reform and opening up and the deepening of its participation of the international division of labor，China’s engineering industry will face the danger of being locked in and being hard pressed by the low-end industrial chain。So upgrading the independent innovation capability and technological integration capability is the only approach for China’s engineering industry to transform its growth mode。It is imperative to make breakthrough in respect of the critically common and key technology；emphasis shall be placed on the development of crucially important technological equipment，thus promoting the enhancement of the overall independent innovation capability；promoting the formation of the cornerstone enterprises in the industry as the carrier of the independent innovation of the engineering industry。Therefore，the government，

intermediary agencies and enterprises shall pool their efforts to bring their respective potentials into full play，and place the government’s roles and functions in promoting the development of the engineering industry in place。Efforts shall be made to tap the multi-level functions and roles of the intermediary agency organization in formulating the industry’s long-range plans，organizing and coordinating service and improving the industry’s technological standards，etc。，setting up and amplifying the corporate mechanism conducive to the technological innovation。

Chapter 20

Automobile Industry

During the 10th Five-Year Plan period，China’s automobile industry took up the challenges from China’s entry into the WTO but with great success，hitting an all-time high in terms of its development。Now China’s automobile industry has ranked in the third place in the world automobile industry。The scale of China’s automobile market has leapt into the front ranks of the world。China’s automobile industry realized the historical transformation with more export than import and its opening up to the outside world gained continuous momentum。However，during the 10th Five-Year Plan period，China’s automobile industry was faced with more and more serious problems：resource（particularly energy）and environment restriction；slow adjustment of industrial organizational structure；irrational product structure；insufficient independent innovation capability，all of which set restriction to the development of China’s automobile industry。During the 11th Five-Year Plan period，only when China’s automobile industry follows the guideline of the scientific development philosophy，takes the road of sustainable development and sets great store by the i ndependent innovation capability as the strategic core can China’s automobile industry complete the transfomation from the auto industrial country to auto industrial powerhouse。

Chapter 21

Electronic Information Industry

During the 10th Five-Year Plan period，China’s electronic information industry gained a strong momentum in growth and topped all other industries in terms of the industrial scale and export scale。The electronic information industry makes an ever-increasing contribution to the national economy。Up to now，three electronic information industrial clusters with marked characteristics have been established in the Pearl River Delta，the Yangtze River Delta and the Circum-Bohai Sea Region。Compared with the end of the 9th Five-Year Plan period，the scale and strength of the top 100 enterprises in China’s electronic information industry have been greatly enhanced。However，under the backdrop of fast growth，there are some problems not to be overlooked，which will affect the long-term development of China’s electronic information industry。The remarkable problems are typically manifested its industrial growth

characterized by quantity-centered expansion and inferiority of growth quality；though the corporate innovative awareness and capability have been greatly enhanced，yet the overall R＆D investment is still low，the independent innovation capability is still poor and the dependence of foreign investment to boost its industrial growth is further strengthened。The fundamental solution of these problems depends on the transformation of the growth mode of the electronic information industry：transforming from the foreign-oriented processing development mode to the independent R＆D development mode based on the domestic demands。During the 11th Five-Year Plan period，whether the growth mode of the electronic information industry will have a marked change depends on the overall adjustment of the relevant policies。However，the adjustment of these policies must give full account of the three restrictions impairing the current development of the electronic information industry，respectively，environment，talented personnel and habitually policy-entrenched thought。

Chapter 22

Pharmaceutical Industry

In the past 26 years from the initial reform and opening up，China has formed the comparatively consummate pharmaceutical industry system and pharmaceutical circulation network and has developed itself into a pharmaceutical powerhouse in the world。It has formed various systems in the industry of the production of chemical raw material medicines，chemical medicine dose，Chinese traditional medicine and biopharmaceutical，and gradually developed into the orientation of scientification and standardization。Particularly during the 10th Five-Year Plan period，emphasis on the development of chemical raw material medicines，modern biological technology，modernization of the traditional Chinese medicine and the acceleration of the restructuring of the pharmaceutical circulation system give a boost to the corporate structural adjustment and the product technology renewal，thus China’s pharmaceutical industry maintains its development at a faster speed and scores remarkable results。The pharmaceutical industry realizes the average annual growth rate of 17.49%in terms of its the total output value，cultivating a

large batch of large-scale enterprises with the international competitive force and accumulating a large contingent of scientific and technological talents and management talents in the pharmaceutical industry。During the 11th Five-Year Plan period，it is necessary that the pharmaceutical industry conscientiously implements the scientific development philosophy，persistently taking the new-type industrial road，transforming the economic growth pattern and energetically promoting the technological progress，increasing the capital injection into the phannaceutical research and development，adjusting and optimizing the structure of the pharmaceutical industry，upgrading the independent innovation capability so as to develop biological engineering medicines supported by the modern bioengineering technology，multiple series of medicines based on the chemical raw material medicines，series of medicines based on chemical medicine dose and modern medicines based on the modernization of the traditional Chinese medicines，and realize the sustained development of the pharmaceutical industry。

Chapter 23

Home Electrical Appliances Industry

During the 10th Five-Year Plan period，China’s home electrical appliances industry maintained acontinuous steady development，scoring satisfactory results and it has turned out to be the largest base of the home electrical appliances industry in the whole world，constantly consolidating the further expansion of the advantageous industries in merger and acquisition and further improving the internationalization of the domestic enterprises。However，the internal and external environment where China’s home electrical appliances industry survives changes considerably，producing many adverse impact on its future development：due to the price hike of the raw materials，the appreciation of RMB，the downturn of the sales profit and the lower of the system of refunding taxes on exported goods，which slices off the profits of the whole industry；the home-made brands lack the competitiveness in the high-profit

high-end market；the chronic reliance upon the product export to fuel the growth of the home electrical appliances added the export cost to the industry which was confronted with higher and higher non-tariff barriers，etc。All of these requires China’s home electrical appliance industry to seek new approaches for its further growth，respectively by taking the following measures：enhancing the self-innovation capacity will be the strategic bearing point for the sustainable development of China’s home electrical appliances；participating in international operation will be a logical choice；implementing the brand internationalization strategy will be a vital move to elevate the position of China’s industrial chain。Furthermore，the government shall have to take a series of guiding policies to transform the economic growth pattern of the enterprises。

Chapter 24

Light Industry

During the 10th Five-Year Plan period，China’light industry experienced fast growth and China became the largest light industrial product manufacturer and exporter，yet as the industry is now at the stage of extensive growth，so many problems have cropped up。The development of light industry during the 11th Five-Year Plan period is to realize the strategic transformation from extensive growth mode to intensive growth mode。The practical approach to realize the intensive growth of the light industry lies in the scientific progress with independent innovation as the core and structural adjustment and informationization。The technical key points for independent innovation in light industry

are mainly reflected in two aspects：one，the light industrial equipment industry that is technically weak but crucially concerned with the existence of the whole industry；two，the key manufacturing technology that will play an important and leading role in the intensive growth of the light industry。Then the key industries of the structural adjustment is concentrated in two categories，respectively，papennaking and food industries that show great promise for the future and fast demand growth；and the relevant industries，such as，home electrical appliances，ceramics and plastics，etc。The specific measures taken to tackle all these problems include：firstly，striving to make breakthrough in positive adaptation and assimilation of foreign scientific and technological achievements，re-innovation and integrated innovation；the relevant state departments and the light industry associations shall determine the key technological projects in which great breakthrough shall be made and these projects shall be granted with more state financial and technological input；

great efforts shall be made to steer the limited capital and technological strength towards the key projects that focus on the application and modification of imported equipment and technology and integrated innovation by relying on the large-scale key and major enterprises and superior enterprises rather than the duplicated introduction or import of equipment from foreign countries；secondly，speeding up the construction of the innovation service system of the medium and small-sized enterprises；thirdly，efforts shall be made to cultivate the innovation-oriented and technological talents；fourthly，strengthening the formulation of the industrial regulations and rules and the supporting structural adjustment policies，controlling the aggregates and optimizing the industrial structure。Through the implementation of these vigorous policies and measures，it is expected that great breakthrough shall be made in the structural adjustment of the key light industrial equipment industries oriented towards independent innovation，thus promoting the further improvement of production concentration in home electrical appliances，paper-making and food industries and forming the corporate groups with the annual sales revenue of several RMB 10 billion and RMB 100 billion and about five internationally famous brands。

Chapter 25

Construction Materials Industry

Everything taken into consideration，China’s construction materials industry gained rapid growth during the 10th Five-Year Plan period and particularly gained comparatively faster growth in the overall output，production capacity and export volume and furthermore，the technological level and technological structure of the industry were considerably improved。However，after 2004，production capability surplus gradually aggravated due to the sluggish market demand growth and the business operation returns of the building material enterprises took a down turn on a large scale under the pressure of the falling price and the escalation of the production cost。In 2005 the industry slumped into a low ebb。The growth and fluctuation of the industry during the 10th Five-Year Plan period，more or less，reflected that this industry didn’t completely break away from the road of the extensive growth characterized by quantity-centered expansion。In the future，the serious problems in China’s construction material industry will not be ironed out and obviously dissolved，which are particularly demonstrated in the following aspects：the comparatively backward technologies will still hold sway in a large percentage；the industrial concentration will be still low；it is impossible to bring the structural adjustment into a satisfactory completion；resources will be extremely consumed and the environmental pollution will go from bad to worse；there is still a far cry from the foreign counties in terms of energy consumption and emission indexes。

Therefore，speeding up the transformation of the economic growth mode and the promotion of the industrial structural adjustment will be a major subject baffling the industry for quite a long period。During the 11th Five-Year Plan period，China’s construction material industry will lay great emphasis on energy conservation and resource efficiency，protection of biological environment and enhancement of the product grades and quality；it will also take full advantage of the industrial production capacity surplus to energetically push forward the structural adjustment and industrial upgrading。The specific measures taken to tackle these problelms include：setting up raw material base and improving the comprehensive utilization rate of the mineral resources；vigorously speeding up the structural adjustment and setting store by low consumption，low pollution，high quality and high efficiency；recycling the industrial waste residue and promoting the recycling economic improvement in the industry；carrying out the clean production，development and utilization of environment-friendly building materials；perfecting the quality in utilizing foreign investment to boost the building material industry and optimizing the export structure of the building material products。

Chapter 26

Regional Industrial Development Trend and Policy Orientation

During the 10th Five-Year Plan period，the national industry gained a strong momentum in growth，which is characterized by obvious acceleration of the industrialization，steady improvement of the industrial economic efficiency and the ever-increasing impetus given to the regional growth by the industry。With the continuous promotion of the reform and opening up and the acceleration of the economic globalization，in recent years，China’s regional industrial development and industrial allocation take on some novel trends，including the obvious trend of concentration of the industrial allocation，the continuous growth of the industrial park expansion，the rapid development of the regional characteristic industries and the fast upgrading of the regional industrial structure。However，it is evident that there are still a lot of problems impeding the development of China’s regional industry。

The gap of the regional industrial development is continuously widened；the contradictions between industrial concentration and coordinating development is sharply aggravated；the regional endogenous development lacks the necessary driving force；the problems related to the sustainable development of the regional industry have come to prominence and the exorbitant tax burdens imposed upon the regional industry are quite irrational。Therefore，during the 11th Five-Year Plan period，it is an urgent task to rapidly formulate the industry-related efficient land utilization policy and reasonably orient the rationalized industrial agglomeration and transfer，consolidate the supervision and control over the space of the industrial development，energetically develop the regional characteristic superior industries so as to promote the optimization of the industrial allocation and the coordinated development of the regional industries in all places。

Chapter 27

The Sustainable Development of the Industry in East China

In recent five years，the industry in east China has gained a strong momentum of rapid development with the remarkable pro-heavy industry orientation，but the profit growth and contribution of the industry dropped considerably。The striking problems are mainly include the continuous price hike of the energy and resources，the decline of the eco-environment carrying capacity，short supply of land and the scarcity of the high-caliber talents，and at the same time it demonstrates that the development of the region must cast off the traditional extensive development mode featured with high input and high consumption。So during the new development period，the region shall be encouraged to take the initiative to develop itself with its core targeted towards setting a typical example to lead the whole country in pursuit of development on the scientific development road。East China shall take the lead to upgrade its independent innovation capability，positively cultivate a large batch of independent intellectual property rights，core technologies and famous brands and enhance the industry quality and sharpen the competitive edge；

also the region shall take the lead in realizing the optimization of the industrial structure and the transformation of the development mode；the region shall take the lead in scoring the substantive results in developing the recycling economy and practicing economy on energy consumption and water and land resources；and the region shall take the lead in perfecting the socialist market economic system and enhancing its level and quality of opening up to the outside world；it shall also take the lead in developing and reforming itself so as to set a good example and assist the mid-west regions for the rapid development and promote the mutual prosperity and common wealth。The Yangtze River Delta region，the Pearl River Delta region and Beijing-Tianjin-Hebei Degion shall gear up their development orientations for sustainable development according to their respective characteristics so as to promote the integration process of the region。

Chapter 28

The Tasks and Measures for Revitalizing the Old Industrial Bases in Northeast China

The northeast is China’s important heavy industry base。The northeast area is endowed with rich natural resources and profound industrial foundation，particularly taking an irreplaceable position energy，raw material industries，whole set heavy equipment manufacturing，auto，railway locomotive，shipping and airplane and other transportation equipment manufacturing，machine tool manufacturing and national defense and science and technology and other sectors。So the task of revitalizing the old industrial bases in northeast China is to build the northeast China into the supply bases of modern energy raw materials，the manufacturing base of the advanced machinery equipment and weapon and equipment manufacturing and the production base of the modern agriculture。The main approaches to revitalize the old industrial bases in northeast China are mainly manifested in the following aspects：as the state-owned enterprises mainly focus on the capital-intensive industry and the technology-intensive fields，the privately-owned enterprises can hardly catch up with the state-owned enterprises in a short period of time。

Therefore，it is imperative to deepen the corporate restructuring and revitalize of the large-sized state-owned key enterprises and intensifying the confidence of revitalizing the state-owned large-sized enterprises；through the adjustment of the corporate organizational structure and the separation of the functions of the enterprise-run society from the enterprises，fundamentally changing the“large and all inclusive”situations and establishing the national defense technological industry system with emphasis on the civil and military combination and the transferring the military technologies into civil purpose；carrying out the necessary financial support policy and adjust the corporate taxation burden，strengthening the corporate self-accumulating capacity and accelerating the technical transformation of the traditional industries。The government shall set great store by the industrial transformation of the resource exhausted cities and mining areas and making the greatest efforts to realize the sustainable development of the old industrial bases in northeast China。

Chapter 29

Rising and Industrialization Strategy in Central China

During the 10th Five-Year Plan period，the industry in central China scored growth to some extent and the relevant provinces in central China formed their respective industries and industrial products with market competitive force。However，while the coastal areas develop by leaps and bounds，the economic aggregate of the region dropped considerably compared with the national economic aggregate。The industrial growth speed in all provinces in region varies to some extent，which constitutes a very important factor that differentiate the GDP of the provinces involved in this region。There are some striking problems in the capital-intensive heavy and chemical industry structure in the region：on the one hand，the industrial growth is easily subject to the impact of the market environment and the regulation and control policy，the striking contradiction between the industrial growth and the employment，the great shocking impact of the industrial growth on the environment，insufficiency of the industrial and technological innovation capability，etc。On the other hand，there is much surplus rural labor in urgent need of being reasonably transferred in region。On the basis of the policy orientation-“Developing China’s Central Region”，“Three Bases and One Hub”decided by the central govemment，the people of the region should adhere to the three combinations：

the combination of system restructuring and reform and opening up；the combination of dependence of the comparative advantages and the cultivation of the competitive advantages；the combination of enhancement of their respective self-motivational capability and the moderate support from the central government。On top of that，central China shall also take the initiative to push forward the three strategies：optimizing industrial structure and regional structure；sharpening their competitive force so as to integrate themselves with the central region and the coastal regions and promoting the industrial development of the complementary integration；guiding the flow of the capital and the labor force and promoting the rational allocation of the resources。On that basis，the policy and measures should be reasonably based on the enhancement of the region’s industrial competitiveness and promotion of the rational flow and transfer of the surplus labor force so as to upgrade the efficiency in implementing the regional policy of the central government。

Chapter 30

The Industrialization of West China and the Development of its Special Industries

During the 10th Five-Year Plan period，the economic development in the west region underwent a critical transition from the infrastructural construction and biological protection at the key points at the initial stage of the west development strategy to accelerate the industrial development as the key point。The region made headway in the progress of its industrialization，specifically manifested in the following aspects：the industrial development has gained the favorable momentum of rapid development，further consolidating its position as the state energy and raw material base，and the industry is focusing on the advantageous industrial with sound progress，however，its investment structure is still irrational；its special industries have not fully taken shape with striking internal differences in regional development。During the 11th Five-Year Plan period，the industry in the region should maintain its advantageous position in energy，

raw material industries and strengthen the development momentum of the equipment manufacturing industry；paying adequate attention to the development of the chemical industry；energetically developing the agricultural product processing industry；giving priority to the hi-tech industries with the regional advantages with financial and technological support。In order to realize the above objectives，the region should take the following positive measures：（1）taking measures adaptable to local conditions，and the detailed development schedules shall be formulated according to the regional difference of factors；（2）guiding the transfer of the investment to equipment manufacturing industry；（3）giving full scope to the functions of the military enterprise；（4）the combination of the government guidance and the market mechanism；（5）guiding foreign investments into manufacturing industry；（6）absorbing investment of transnational corporate；（7）taking scientific development philosophy as guidance，strengthening environment protection。

Chapter 31

The Development Trend of the Industrial Clusters and the Selection of the Strategy

The 10th Five-Year Plan period is a special period during which China’s industrial clusters developed most rapidly。Nevertheless，the industrial clusters of all trades in China are still at the different development stages。Though most of China’s industrial clusters are developed autonomously，yet the role played by the local governments in the development of the industrial clusters should not be overlooked；the industrial clusters in China are mainly composed of the privately-owned economy，thus forming the“large industrial clusters composed of small enterprises”；the industrial clusters mainly depended on the countryside and the small towns，thus creating the“large market with small commodities”；

anyway the industrial clusters develop from imitation to innovation and form the international competitive advantages。Viewed from the current development trends，China’s industrial clusters are still confronted with problems in the following aspects：firstly，it is still at the primary stage of development；secondly，the technological innovation capability is strikingly insufficient；thirdly，all kinds of agency institutions and supporting service system are still to be greatly substantiated；fourthly，the cluster culture with the local characteristics has not taken shape yet；fifthly，more and more restrictive factors from the external environment；sixthly，there still exists misconception about the construction of the industrial parks。Through more than 20 years’development，the role played by the industrial clusters in the local economic development has drawn the attention to the government department with high regard。Many local governments have successively formulated their respective regional development strategies based on the industrial clusters。So during the 11th Five-Year Plan period，with the change of China’s domestic and overseas economic development environment，the development of its industrial clusters will be faced with various opportunities and challenges as well。In the coming five years，China’s industrial clusters will be confronted with the new strategic selection and the industrial clusters will enter into a new stage。

Chapter 32

Retrospect and Prospect of the Corporate Development Environment in China

Against the backdrop of a series of Chinese phenomena which emerge a major international concern，such as，“China’s lift-off”，“China mode”and“Chinese experience”，an undisputed fact is that the development environment for China’s enterprises has been steadily improved。Only with the constant improvement of the corporate development environment can China gain the impetus to boost the economic growth and reduce poverty。This chapter adopts AHP（Analysis Hierarchy Process）to construct the appraisal system of China’s corporate development environment and calculates BDEI and presents the facts about the changes in China’s corporate development environment。At the same time，through the analysis of the development environment change of China’s enterprises，it is easy to find that China’s enterprises will face unfavorable environmental factors，such as，in respect of economic environmental factors，

there might appear the fluctuation of the market demand，credibility deficiency and resource restriction，but in respect of technological environmental factors，our concern will be drawn to these problems，such as，scientific and technological input，the combination between production，teaching and research and the independent innovation environment of the enterprises，etc；in respect of the human resources environment factors，upgrading the quality of human resources，adjustment of the human resources structure and effective utilization of the potential of the human resources will exert a pivotal impact upon the sustainable development of China’s enterprises；in respect of the financial environmental factors，the financing structural problem has always posed a great obstacle to the development of China’s enterprises；in respect of the international environmental factors，the international trade conflicts are on the rise day by day，and so on and so forth。Based on the extensive analysis of the historical and present situations of all kinds of environments and by looking into the future environment changes，the current author puts forward the corresponding policy proposals which will help to create a sound and favorable environment for the smooth development of China’s enterprises。

Chapter 33

The Status Quo and Development Trend of the State-owned Enterprises in China

Through more than 20 years’persistent efforts，significant advances have been made in the reform of China’s state-owned enterprises coupled with the tremendous achievements for the development of China’s state-owned enterprise。If we view the reform of the state-owned enterprises based on the initial intention-ironing out the lower efficiency of the state-owned enterprises and reviving the state-owned enterprises，ensuring the maintenance and appreciation of the state-owned assets value，thus further expanding the strength of the state-owned economy，by the end of the 10th Five-Year Plan period，the basic objectives of the reform of China’s state-owned enterprises have initially accomplished in terms of the overall scale of the state-owned enterprises，performance and economic controllability。However，there are still many serious problems baffling the state-owned enterprises in China，particularly in the presence of the environments of the continuous promotion of the domestic industrialization and marketlization，international infomationization and globalization。These serious problems not only involve problems that shall be“overcome”

in the process of the step-by-step reform，such as，reform of the state-owned asset management system，the strategic reorganization of the state-owned enterprises and the reform of the large-scale monopolistic enterprises，but also involve the strategic problems related to the future development of the state-owned enterprises that shall not be got around but must be tackled，such as，the orientation of the future reform and development of the state-owned enterprises，the enhancement of the independent innovation capability and the cultivation of the core competitiveness of the state-owned enterprises，the market orientation and development strategy against the background of the global competition。So during the 11th Five-Year Plan period，in dealing with the problems concerning the further development of the state-owned enterprises，the central government shall make greater effort to push forward the reform of property rights，the mechanism reform and the independent technological innovation，and take the strategic reorganization and internationalized strategy。

Chapter 34

The Status Quo and Development Trend of the

Non-goverument-owned Enterprises in China

During the 10th Five-Year Plan period，China’s non-government-owned enterprises developed favorably with brilliant achievements，manifested in the continuous expansion of the overall scale and the further enhancement of the position in the national economy；and the overall corporate quality was further improved with better economic returns；the capability in earning foreign exchange through export considerably raised with new achievements made in the foreign trade-oriented development；also employment and tax income increased by a large margin with social effects obviously achieved。However，at present，the non-government-owned enterprises are still confronted with a lot of problems：imbalance in development between regions，lower technological level，poor management capability，improper protection of the labor rights of the employees，serious waste and consumption of resources and serious environment pollution，

fragile corporate credit，harsh financing environment and so much hindrance to the export。During the 11th Five-Year Plan period，China’s non-government-owned enterprises，under the guideline of the scientific and technological outlook，will gain strong momentum in sustainable development，non-government-owned enterprises will enter into many other industrial fields and their industrial structure will be further optimized；the non-government-owned enterprises in all areas shall develop in a coordinating way；while expanding the domestic market，the enterprises shall energetically implement the“going-out”strategy。In order to further push forward the privately-owned enterprises to develop in a sound and healthy way，the following measures shall be positively taken during the 11th Five-Year Plan period：further improving the external environment for the enterprises to develop；efforts shall be made to increase the R＆D input and sharpening the corporate independent innovation capability；more attention shall be paid to internal management and improve the corporate management level；vigorously strengthening the corporate social responsibility awareness and rebuilding the market economic ethics；deepening the reform of the financial system so as to provide the non-government-owned enterprise with more financial support；greatly promoting the development of the social agency service system and promoting the development of the non-government-owned enterprises。

Chapter 35

Independent Innovation of Corporate and Brand Strategy

With the deepening of the industrialization，the industrial structural upgrading and the maturity and opening of the market，particularly the borderless tendency of the market competition brought about by the economic globalization，the intensive corporate growth pattern does not tally with the new requirements of the changes of the economic development phase and it is difficult for the enterprises to sustain in such a pattern。During the 10th Five-Year Plan period，China’s manufacturing enterprises began to pay attention to the transformation of the operation strategy and some of the leading enterprises took the initiative to push forward the construction of the independent innovation capability，vigorously implementing a series of strategies characterized by the independent intellectual property rights，brands and talents，etc。，achieving pivotal breakthrough in some fields and energetically fueling the industrial development。However，the insufficiency of the innovation capability and brand construction is still a greater barrier plaguing the enterprises in China，specifically manifested in the following aspects：the enterprises follow the intensive growth pattern，mainly marked by the expansion of production capacity；the enterprises manufacture products which can’t claim reliable brands for their products and lack the core technology，thus leading to the sufficient competitiveness；though the production cost is lower，the social cost is rather high；the dependence upon foreign trade is high yet the degree of self-sufficiency

of the key technology is rather low；and the R＆D investment is rather limited to satisfy the basic demand and technological adaptation and assimilation of foreign scientific and technological achievements still lack the necessary strength，etc。The traditional growth pattern is subject to the restriction of the economic development stage and is featured with the characteristics of the rapid economic growth gradually improved with the maturity of the market of the middle period of

the industrialization。So under such a situation the implementation of the corporate innovation and the brand strategy has become a logical choice for the following reasons：firstly，it is imperative to perfect the corporate system and overcome the systematic obstacle standing in the way of corporate innovation and brand strategy；secondly，the large-sized enterprises shall make the greatest efforts to act as the leading innovator favorably endowed with international competitiveness；thirdly，the medium and small-sized enterprises shall take all kinds of measures to push forward the innovation in the special processes of the industrial chain；fourthly，the medium and small-sized enterprises shall create the innovation-oriented new cultural atmosphere where“innovation is highly motivated with tolerance of initial failures in innovation”；fifthly，it is imperative to strengthen the cultivation of the scientific and technical personnel in the enterprises and establish and perfect the incentive mechanism for the talented personnel；sixthly，the integrated innovation will be prioritized by the enterprises；seventhly，selecting the new technological innovation pattern by effectively combining the technological innovation and the importation of foreign technology。

Chapter 36

The Current Situations of the Corporate Human Resources and

the Development Strategy

China’s corporate human resources gained tremendous growth during the 10th Five-Year Plan period and the total available human resources doubled with the quality of the human resources greatly improved。Yet from the view of point of the aggregate of human resources，it is still insufficient and the structure is irrational with poor quality and lower investment。And there are still a lot of problems in relation to the development of the human resources，mainly manifested in：irrational use of the talented personnel，so it is imperative to reasonably allocate and use the talents；the incentive mechanism lags behind，so competitive salaries shall be offered to the talented personnel who should also be motivated in career pursuit and participation initiative；the enterprises lack qualified entrepreneurs who are to be positively cultivated；the corporate talents are on a constant flow so it is necessary to formulate the

relevant measures to regulate the talent flow；the corporate employees lack the ideals and aspirations，so it is important to strengthen the construction of the corporate culture；the enterprises lack the complete human resources development system，so it is imperative to formulate schedules and strengthen the training of the talented personnel with emphasis on the development of individuality of the human resources。Overall，it is necessary to promote the transformation of the labor and service management to human resources management。And at the same time，it is important to lay stress on following the people-oriented scientific development philosophy，proceeding from the basic features of the human resources and accentuating the science of the human resources development，implementing the strategic human resources management，cultivating the corporate competitive advantages；and the state should boost the development and management of the human resources from the angle of policy，laws and regulations and systems so as to create a favorable environment for the corporate human resource development。

Chapter 37

The Status Quo of the Corporate Financing and Relevant Problems

A sound corporate financing environment and optimized corporate financing structure constitute a vital part of the specific implementation of the scientific development outlook。With the development of the direct financing market with the stock market as the main channel，there appear diversified financing channels for enterprises。Yet viewed from the overall situations，China’s enterprises mainly depend on the external financing mode with bank loans as the main channel and moreover，in recent years，the tendency of long-term current liabilities is continuously intensified。Viewed from the financing structure，enterprises with different types show their respective features in financing。There appear the favorable situations for the state-owned enterprises to get the debt financing，for listed companies to get equity financing，medium and small-sized enterprises to get financing through the informal

channels and the domestic advantageous enterprises to get the overseas financing。The factors that cause the special financing options for the enterprises in China mainly include，the direct financing market is small in scale and the marketlization degree is still low；the impact of the corporate governance and market efficiency，single capital market，insufficient corporate bond market and the difference of the corporate systems，etc。During the 11th Five-Year Plan period，the construction and development of the multi-level capital market system will provide the enterprises with direct financing opportunities，which will expand the direct and indirect financing channels for hi-tech enterprises and privately owned enterprises。After the financing market is in full circulation，the listed companies will be endowed with more selections of financing modes，so by then the domestic enterprise will accelerate their pace for overseas financing。Efforts shall be made to orient the domestic enterprises to perfect their financing structure，improve their corporate governance structure。Additionally，the enterprises should take their initiatives to develop the multi-level capital market and the government shall make the vigorous efforts to conduct the supervision and establish the tax and financial system greatly conducive to the corporate inner accumulation and positively perfect the corporate financing environment。

Chapter 38

Analysis on the Problems of Overseas Direct InvestmentOperated

by Domestic Enterprises

With the constant deepening of the China’s participation into the economic globalization，our domestic enterprises have more chances to directly invest for establishment of plants abroad，so it is the prevailing trend for the domestic enterprises to engage in internationalized business operations。During the 10th Five-Year Plan period，our domestic enterprises stepped up their pace to conduct overseas direct investment abroad and realized the leap-forward development。Nevertheless，our domestic enterprises are latecomers，getting off to a late start for the overseas direct investment，yet viewed from the overall situation，they have their marked properties as generally exhibited in the pre-stage internationalized business operations by the developing countries，particularly in smaller scale in overseas direct investment than the average level of the developing countries in the world，so its overall strength in the internationalized business operations is comparatively weak；lack of technological advantages and poor innovation capability；many enterprises make the most of their preferential price and cheap labor force to create their corporate competitive advantages；lack of the necessary experience in overseas direct investment and cross-border business operations；and the parent corporations can’t exercise the effective control

over the overseas subsidiaries；the ineffective subsequent supervision over overseas direct investment leaves a lot to be desired。In order to promote the further development of overseas direct investment by the domestic enterprises，during the 11th Five-Year Plan period，the domestic enterprises shall necessarily maintain their direct investment to the developing countries，make further efforts to strengthen their investment to the developed countries and expand the overall scale of overseas direct investment；medium and small-sized enterprises，non-government-owned enterprises shall be encouraged to conduct overseas direct investment；efforts shall be made to strengthen the scientific and technological input and R＆D and enhance the corporate technological innovation capability under the guideline of scientific and technological philosophy；emphasis shall be placed on the construction of the product brands，raising the product competitiveness and vigorously cultivating China’s multinational corporations；attention shall also be paid to implement the localized strategy and to bring the local enterprises in line with the overseas investment projects；efforts shall be made to exert the effective management and control over the overseas subsidiaries；further strengthening the macro-management and guidance and perfecting the relevant policies and the legal system so as to create the favorable conditions for the domestic enterprises to positively participate in overseas direct investment。

Chapter 39

The Problems and Countermeasures for China’s Listed Companies

With the initial development during the 8th Five-Year Plan period and the rapid expansion during the 9th Five-Year Plan period，the listed companies swirled into the development stage of the structural adjustment during the 10th Five-Year Plan period，during which China’s economy maintained sustainable and rapid development，however，the listed companies didn’t score the achievements compatible to the growth pace of the national economy。The listed companies get remarkably expanded in their average scale and the composition of the listed companies becomes diversified，yet badly affected by the comparatively sluggish market performance of the domestic securities market，

the quantity growth trend of the listed companies is slowing down and the financing amounts and total market values and the circulating market values of the listed companies take a downturn。Yet compared with the economic aggregate，it is still a striking problem that the scale of the listed companies is still small and moreover，the operation quality of the listed companies is rather low，which curbs the further expansion of the scale of the listed companies。During the 11th Five-Year Plan period，China’s listed companies will enter into a critical period during which they will undergo the profound restructuring and the all-round development。With the in-depth development of the split-share reform and the gradual solution of the series of problems related to the construction of the basic systems which restrict the development of the capital market，the normal financing function of the capital market will be revitalized on an all-round way and the function of the capital market to optimize the allocation of the social capital will be greatly consolidated，so in the new development stage，the excellent listed companies that are credited with high quality market operation and with high investment values will be endowed with more favorable development conditions for the broader innovation availability。