Yang Ligao and Li Yushuang: Leverage the Advantages of an Ultra-Large Scale Market to Enhance the Resilience of Industrial and Supply Chains
Enhancing the resilience of industrial and supply chains is a vital guarantee for safeguarding national economic security and promoting high-quality development. In recent years, the competitiveness of China’s industrial and supply chains has continuously strengthened, and its international standing has steadily risen. However, influenced by adverse factors such as the undercurrents of anti-globalization, geopolitical conflicts, and technological blockades, the situation where China’s key core technologies are “subject to the control of others” [1] has not fundamentally changed; the vulnerability and risk levels of our industrial and supply chains persist. General Secretary Xi Jinping has pointed out: “Our country possesses the world’s most complete industrial system and an internal demand market with the greatest potential. We must effectively enhance the resilience and security levels of our industrial and supply chains, taking urgent action to shore up weaknesses and forge long-term strengths.” [2] This important discourse has pointed the way and provided a framework for China to leverage its ultra-large-scale market advantages and comprehensively enhance the resilience of its industrial and supply chains.
The role of ultra-large-scale market advantages in enhancing the resilience of industrial and supply chains is primarily reflected in three aspects. First, the technological innovation effect of these advantages can advance high-level self-reliance and self-strengthening in science and technology, thereby promoting “chain supplementation” (补链). A larger market scale means higher expected returns for high-level technological innovation, which incentivizes innovation subjects to increase R&D investment and accelerate the realization of independent control over key core technologies, resolving "chokepoint" (卡脖子) [3] problems in industrial and supply chains. A larger market scale also means richer application scenarios and more sufficient opportunities for trial and error for high-level technological innovation; this not only helps amortize R&D costs to form a cost advantage but also reduces the risks faced by innovation. Furthermore, a larger market scale strengthens the ability to attract global innovation resources into the domestic market, enhancing the coupling effect between domestic and international innovation resources and advancing high-level technological innovation.
Second, the economies of scale effect of ultra-large-scale market advantages can strengthen the core competitiveness of industrial and supply chains, promoting “chain strengthening” (强链). Economies of scale are ubiquitous in the modern economy. An ultra-large-scale market helps fully utilize these effects to improve production efficiency, reduce production costs, and reinforce the core competitiveness of industrial and supply chains. Under the influence of economies of scale, such a market also drives industrial cluster development, enhances coordination within industrial and supply chains, and improves the efficiency of matching supply and demand. This further consolidates the leading position of China’s dominant industries and enhances chain resilience.
Third, the industrial system completeness effect of ultra-large-scale market advantages can bolster the stability of industrial and supply chains, supporting “chain stabilization” (稳链). The larger the market scale, the more conducive it is to accommodating a complete industrial system. Relying on its own ultra-large-scale market, China has become the only country in the world to possess all industrial categories listed in the United Nations International Standard Industrial Classification. A complete industrial system is the prerequisite for possessing strong risk-resistance and industrial adjustment capacities; it serves as an internal stabilizer for industrial and supply chains, enabling domestic industries to implement emergency measures during special periods, rapidly mobilize and integrate various factor resources, and ensure the normal operation of industrial and supply chains to the greatest extent possible.
Currently, China’s ultra-large-scale market advantages have played a prominent supporting role in enhancing industrial and supply chain resilience. However, to exert this advantage more fully, further supporting measures are indispensable.
First, further expand domestic demand. We must improve the income distribution system, expand the proportion of the middle-income group, and increase the income of low-income groups to accelerate the formation of an olive-shaped social structure and expand the scale of the consumer market. We should actively develop service consumption, speed up the cultivation of new types of consumption, and vigorously advocate for green and healthy consumption to promote the optimization and upgrading of consumption structures. We must drive the quality and efficiency of government investment projects and, through government investment and policy guidance, stimulate the investment vitality of private enterprises to effectively increase the scale of total social investment and strengthen economies of scale. We must resolutely prevent and eliminate redundant construction and low-level investment, establish and improve mechanisms for industrial investment information release and policy interpretation, increase investment in projects that "shore up weaknesses" and in major national engineering projects, further optimize the investment structure, consolidate ultra-large-scale market advantages, and promote high-level technological innovation.
Second, advance the construction of a modern circulation system. We should improve circulation infrastructure—including highways, railways, bridges, ports, and airports—construct a national backbone logistics facility network, and create a “corridors + hubs + network” logistics operation system to expand coverage and improve efficiency. We must advance the construction of “Four Good Rural Roads” [4], smooth out urban-rural transportation networks, and build a three-tier express logistics network covering counties, townships, and villages to thoroughly solve the “last mile” problem in rural logistics and further activate the rural market. We should accelerate the intelligent upgrading of transportation infrastructure, strengthen the application of intelligent transport equipment, promote the digitalization of logistics facilities, and improve the interconnection of logistics information to reduce circulation costs and improve efficiency.
Third, accelerate the construction of a national unified large market. We must strictly implement the “One National List” (全国一张清单) management model [5], break down regional fragmentation, and enhance the economies of scale brought by ultra-large-scale market advantages. We should deepen the market-oriented reform of factors of production, minimize improper administrative interference in factor pricing, and comprehensively improve factor allocation efficiency. It is necessary to establish and improve a modern property rights system with clear ownership, well-defined rights and responsibilities, strict protection, and smooth transfers; we must also strengthen the protection of intellectual property and data factor rights to better leverage the decisive role of the market in allocating new types of factors, thereby stimulating innovation and technological progress. Finally, we must create a market-oriented, law-based, and internationalized business environment, improve the system for market entry and operation, deepen reforms like “separating permits from business licenses” (证照分离) and “reducing certificates after licensing,” and promote the “one-stop” reform for enterprise startup to stimulate the vitality of all types of market entities, consolidate market advantages, and enhance the diversity and completeness of the industrial system.
(This article is a periodic result of the National Social Science Fund of China Major Project “Research on the Mechanism and Policy of Ultra-Large-Scale Market Advantages Enhancing Industrial and Supply Chain Resilience” (23AJL012).)
(The authors are, respectively: Dean and Professor of the Institute for High-Quality Industrial Development, Changsha University of Science and Technology; Professor of the School of Economics, Jiaxing University.)
Source: Guangming Daily (Chinese Social Sciences Today) February 25, 2025 Web Editor: Hui Hui