The manufacturing industry remains a vital pillar of China’s economy and a cornerstone of the global supply chain. In 2023, the sector accounted for 26.2 percent of China’s GDP and approximately 30 percent of global manufacturing added value, underscoring its significant influence both domestically and internationally.
Key strengths include a vast and skilled workforce, efficient supply chains, advanced infrastructure, and robust government support through policies and incentives. Despite a gradual shift toward high-tech and service-oriented sectors, manufacturing continues to drive economic growth, employment, and innovation in China.
Key Indicators of the Manufacturing Industry
Manufacturing GDP Although the sector’s share of GDP has declined over time, it remains a significant driver of economic growth. In the first three quarters of 2024, manufacturing GDP reached RMB 32.09 trillion (US$4.49 trillion), representing a 10.6 percent year-on-year (YoY) increase and accounting for 39.0 percent of total GDP.
Quarter | Manufacturing GDP (RMB trillion) | Percent of Total GDP (%) |
Q3 2024 | 12.48 | 37.20 |
Q2 2024 | 8.65 | 26.99 |
Q1 2024 | 8.01 | 27.04 |
Q4 2023 | 8.85 | 25.45 |
Manufacturing Value This growth reflects changes in production volume. Except for August, growth remained above 5 percent in 2024.
Month | Year-on-Year Growth (%) |
Oct 2024 | 5.3 |
Sep 2024 | 5.4 |
Aug 2024 | 4.5 |
Jul 2024 | 5.3 |
Jun 2024 | 5.5 |
Manufacturing PMI The Purchasing Managers’ Index (PMI) measures economic health in the manufacturing sector. A PMI above 50 percent indicates expansion, while below 50 percent signals contraction.
Month | PMI (%) |
Oct 2024 | 50.1 |
Sep 2024 | 49.8 |
Aug 2024 | 49.1 |
Manufacturing Exports
China’s manufacturing exports accounted for over 90 percent of total exports in 2023, reflecting its dominance in global trade.
Month | Export Value (RMB billion) | Year-on-Year Growth (%) |
Oct 2024 | 1.34 | 3.7 |
Sep 2024 | 1.41 | 3.4 |
Aug 2024 | 1.30 | 6.4 |
Fixed Asset Investment (FAI)
Investment in manufacturing provides insights into long-term growth confidence. FAI in the sector grew steadily in 2024.
Month | Growth (%) |
Oct 2024 | 9.3 |
Sep 2024 | 12.3 |
Aug 2024 | 9.1 |
Foreign Direct Investment (FDI)
Manufacturing attracted 27.7 percent of total FDI in the first ten months of 2024, showcasing international confidence in the sector.
Month | FDI Utilised (RMB billion) |
Oct 2024 | 13.08 |
Sep 2024 | 15.14 |
Aug 2024 | 9.62 |
Costs and Factors of Production
Labour Costs Wages in the manufacturing sector have risen steadily, with public sector salaries averaging RMB 103,932 (US$14,568) in 2023, while private sector salaries averaged RMB 71,762 (US$10,059).
Year | Private (RMB) | Public (RMB) | Growth Rate (%) |
2023 | 71,762 | 103,932 | 6.5 - 6.6 |
Minimum Wages
Shanghai has the highest monthly minimum wage at RMB 2,690 (US$370), while Jilin and Xinjiang have the lowest at RMB 1,540 (US$215.9).
Manufacturing Industry Clusters
China hosts over 2,000 manufacturing clusters, concentrated mainly in the eastern and central provinces. These clusters enhance supply chain efficiency and competitiveness in specialised industries such as electronics, textiles, and automotive manufacturing.
Preferential Policies and Tax Incentives
Incentive | Details | Conditions | Effective Period |
VAT Credit Refund Policy | Refunds VAT for eligible manufacturing activities. | VAT sales must account for over 50% of total sales. | 2022 onwards |
CIT Rate for High-Tech Companies | 15% CIT rate for high-tech manufacturing firms. | Companies must operate in "National Key Supported High-tech Fields." | Indefinite |
R&D Pre-Tax Deduction | 200% pre-tax deduction for R&D expenses. | Applies to eligible R&D activities. | Indefinite |
These incentives, alongside reduced fees for small businesses and high-tech firms, aim to sustain growth and innovation in the manufacturing sector.
China’s manufacturing industry remains a critical driver of domestic and global economic activity. With continued investment, policy support, and technological advancements, the sector is poised to maintain its competitive edge while adapting to evolving global trends and challenges.
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