China to fuse software and steel with US$14tr sector to fix weak links in world’s factory

China is embarking on a sweeping overhaul of its industrial architecture, aiming to fuse software and steel as part of a 100-trillion-yuan (US$14.7 trillion) undertaking to modernise its service sector while pushing manufacturing into the future.

The State Council’s blueprint, unveiled on Tuesday, said the valuation target for the service sector was achievable by 2030 as advanced manufacturing increasingly becomes fused with specialised technical support.

Analysts say Beijing’s plan will help cultivate world-class Chinese brands while shoring up the nation’s industrial backbone against the risk of premature deindustrialisation.

The cabinet’s latest guideline cast the spotlight on “producer services” – such as specialised logistics, information technology and advanced research – to ensure the world’s manufacturing powerhouse does not hollow out as its labour market shifts towards services.

The new blueprint outlines a dual-track approach: pushing producer services towards specialisation and the high end of the value chain, while ensuring that consumer-facing lifestyle services become more diverse and convenient.

“One of the biggest highlights of the guideline is the shift in focus from lifestyle services to producer services, marking a significant upgrade in strategic positioning for the latter,” said Zhu Keli, founding director of the China Institute of New Economy.

Unlike the familiar consumer services such as catering or retail, producer services facilitate the production activities of market entities. This critical category encompasses wholesale, logistics, information technology, financial services, and scientific research.

The guideline calls for “deeper integration between modern services and advanced manufacturing”, including a focus on such pilot programmes in key sectors. The cabinet also urged manufacturing enterprises to transform from mere hardware suppliers into solution providers offering “product-plus-service” models.

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