Mutual promotion and common development! Manufacturing and service industries, Guangdong does not choose "one or the other."

Professor Jiangfan Li, PhD supervisor at the School of Management, Sun Yat-sen University.　Photo provided by the interviewee

The production workshop of Guangdong Fuhua Heavy Industry Manufacturing Co., Ltd.　Photo provided by the interviewee

Recently, Guangdong officially released the “2026 Action Plan for Promoting Coordinated and Integrated Development of Manufacturing Industry and Service Industry in Guangdong Province,” and “two-industry integration”—the deep integration of advanced manufacturing and modern services—quickly became a hot industrial phrase across South Guangdong.

From the top-level design in the government work report to the vigorous industrial practices carried out in cities across the province, a profound transformation aimed at reshaping the industrial landscape and enhancing global competitiveness is unfolding in Guangdong.

When “putting manufacturing first” and “enabling services” resonate at the same frequency, how should we understand this “chemical reaction” concerning Guangdong’s future?

Recently, Jiangfan Li, a professor at the School of Management, Sun Yat-sen University, and a PhD supervisor, visited the “Political Observation Interview Hall” column of Nanfang Metropolis Daily and gave a reporter interview on many current industrial hot topics.

Key words: Transformation

**　　From a “lubricant” to a “propeller” — a critical shift in the role of production services**

Nanfang Metropolis Daily: Currently, Guangdong is vigorously promoting “two-industry integration.” You mentioned in an article that the role of productive services has upgraded from the former “lubricant” to today’s “propeller.” In Guangdong’s real industrial scenarios, how can we directly see this role shift?

Jiangfan Li: This shift is very clear—it signifies a fundamental change in the positioning of productive services within the industrial system. In the mid-20th century, they were more like a “lubricant” that ensured smooth production operations, addressing “pain points.” Now, they have become a “propeller” that drives industrial upgrading and shapes new tracks, defining industrial “height.”

In Guangdong, this shift is clearly visible. At the policy level, it has moved from supporting as a supporting role to strategic leadership. For example, the “Several Measures on Promoting Deep Integration of the Manufacturing Industry and Productive Services,” issued in 2025, clearly proposes quantitative targets for building a modern pilot-test verification platform system by 2027, and cultivating 200 national- and provincial-level industrial design centers, among others—this shows that productive services are assigned a strategic mission to shape competitive advantages along industrial chains.

In terms of practice, this shift is even more vivid. Take Guangzhou as an example: the convention and exhibition industry is no longer just a trading platform, but has become an engine for “promoting production through exhibitions.” In 2025, the Pazhou area held 288 exhibitions in total; among them, 19 exhibitions exceeded 100k square meters, up 18.8% year over year; there were 69 international exhibitions, up 11.3% year over year. The convention and exhibition industry is driving deep integration of upstream and downstream industrial chains, becoming an “accelerator” for technical exchanges, industrial matching, and brand building.

Similarly, in Shenzhen, exploring a technology achievement transformation model of “use first, transform later” has also enabled technology services to move from front-end assessment to back-end empowerment, greatly reducing companies’ costs for trial and error in innovation. In Zhaoqing, the unveiling of the province’s first industrial cluster service station means that attracting investment is shifting from the traditional “policy incentives” model to a “service investment promotion” model with the ecosystem of productive services at its core.

All these cases show that productive services are growing from a mere assistant in the past into an ecosystem organizer for upgrading industrial clusters.

Nanfang Metropolis Daily: The 2026 Guangdong provincial government work report also proposes to advance productive services into specialized directions and toward the high end of the value chain by sector. In your view, what is the biggest difficulty Guangdong faces in moving toward high-end and specialization?

Jiangfan Li: The biggest difficulty lies in how to strengthen the “core layer” of productive services. Productive services can be divided into a core layer, an outer layer, and a related layer based on where they act. The core layer provides services directly applied to the production process—such as product R&D, technology, information, creativity, production management, etc.—which is the “heart” of the entire productive services industry.

At present, although Guangdong’s information transmission, software, and information technology services are growing strongly, with value added increasing by 12.3% year over year in 2025, scientific research and technology services grew by only 4.8%. The capabilities for technological R&D and technology transformation still have room to improve. For example, in industrial software, the localization rate of EDA (electronic design automation) tools is not enough—less than 15%. The market for high-end CAD/CAE systems is basically occupied by overseas giants, which results in manufacturing digital transformation being constrained by external technology blockades.

Many research and development achievements are still “locked away in deep alleys,” with a disconnect from the actual needs of manufacturing enterprises. Data show that the technology transformation rate of Guangdong universities and research institutes is about 15%, while that figure in developed countries is generally above 40%.

So, to break through the difficulties, we must pool efforts to tackle the core layer, accelerate the improvement of the level of digital empowerment and the supply level of key core technologies, so that “soft factors” can truly become a hard support for manufacturing upgrading.

Key words: Cycle

**　　Manufacturing provides “hard factors” for the service industry; the service industry provides “soft factors” for manufacturing**

Nanfang Metropolis Daily: Today, some viewpoints in society believe that “manufacturing and services are mutually exclusive.” Against the backdrop of Guangdong’s emphasis on “the real economy as the foundation, putting manufacturing first,” how should we correctly understand the relationship between the two, and speed up the formation of a virtuous cycle of “when manufacturing is strong, services thrive; when services are excellent, manufacturing becomes strong”?

Jiangfan Li: The view that sets manufacturing and services against each other is one-sided. In terms of output share, the two may show a “rising and falling against each other” phenomenon. But in terms of their functions, they are mutually causal, mutually promoting, and developing together.

Manufacturing provides “hard factors” for the service industry—equipment, tools, facilities—which supports the development of the service industry. The service industry, in turn, provides “soft factors” for manufacturing—R&D, design, management, information—which promotes manufacturing upgrading. The “softening” of production factors—namely, the replacement of tangible factor forms by service-form factors—is a core feature of modern economic development. Therefore, manufacturing and services have an integrated relationship of “you have me in you, and I have you in me.”

To form a virtuous cycle of “when manufacturing is strong, services thrive; when services are excellent, manufacturing becomes strong,” we need to work on two fronts. First, manufacturing should continuously create higher-quality demand for the service industry and promote specialization in services. Second, the service industry should precisely meet the upgrading needs of manufacturing and provide high-quality supply of “soft factors.”

From the perspective of industrial structure, the share of Guangdong’s tertiary industry has risen from 23.6% in 1978 to 58.3% in 2025, while the share of the secondary industry has fallen from 46.6% to 37.7%. This indicates that Guangdong has entered the later stage of industrialization, and further upgrading of manufacturing must rely on deep involvement by productive services. Under the strategy of “putting manufacturing first,” Guangdong needs to attach importance to developing productive services, especially core areas such as R&D and design, technology services, and information technology. Only through deep involvement by productive services can manufacturing shift from “quantity growth” that depends on scale expansion to “quality leap” driven by innovation.

I believe this can not only alleviate manufacturing’s plight of being stuck at the low end in global division-of-labor chains and facing frequent trade frictions, but also fundamentally improve the overall operational efficiency of the entire industrial system and its international competitiveness.

In fact, under today’s advocacy of “two-industry integration,” we should also view industrial integration from a broader perspective. It is not only a story of the secondary industry; it also applies to upgrading within the primary and tertiary industries. For instance, in agricultural production, developing agricultural technology services and smart agriculture solutions can drive the development of modern agriculture. Within the service industry, developing business consulting, financial technology, and other services can enable the service industry to enhance itself.

Nanfang Metropolis Daily: You previously mentioned that AI large models fall within the category of productive services. In the context of “two-industry integration,” what role will these new “soft productive factors” play in process changes for Guangdong’s manufacturing industry?

Jiangfan Li: AI large models are currently the most representative “soft productive factor.” They are reshaping the entire end-to-end process of Guangdong manufacturing in a comprehensive, deep, and multi-dimensional way—from R&D and design, to production and manufacturing, to supply chain management.

In the R&D and design stage, they can use massive data to accelerate product iterations and optimize material formulations. In the production and manufacturing stage, they can empower machine vision inspection, intelligent scheduling, and predictive maintenance—enabling precise, dynamic management. In the supply chain management stage, they can improve the efficiency of coordinated procurement and logistics optimization, enhancing the resilience and response speed of industrial chains. In essence, this transformation shifts manufacturing from “experience-driven” to “data and intelligent-driven.”

It can be said that AI large models are becoming a core engine for the transformation and upgrading of Guangdong’s manufacturing industry. They are not only a technological upgrade, but also a systemic reshaping of production modes, management methods, and industrial ecosystems—providing unprecedented opportunities for “Made in Guangdong” to leap to “Intelligent Manufacturing in Guangdong.”

Key words: Timing

**　　“Two-industry integration”: not a moment to spare—precise planning to truly achieve a virtuous cycle**

Nanfang Metropolis Daily: In your view, is there a “window period” for promoting “two-industry integration”? Why do you think the present is a key time for Guangdong to push “two-industry integration”?

Jiangfan Li: The so-called “window period” originally refers to the best time range for a rocket to enter orbit—too early or too late won’t work. But the strategic window period for industrial development is not a time slot that is short, critical, and hard to come by again once missed. Rather, it should be understood in light of the urgency of manufacturing upgrading—“not to wait.”

Promoting “two-industry integration” requires that the manufacturing industry has demand for productive services, while the service industry has the corresponding supply capability. Today, this condition has become mature.

From the规律 of industrial evolution, as the level of economic development improves, demand across the three industries for production services keeps growing. From 1978 to 2025, the shares of China’s primary, secondary, and tertiary industries evolved from 27.6%, 47.6%, and 24.7% to 6.7%, 35.6%, and 57.7%. Guangdong evolved from 29.8%, 46.6%, and 23.6% to 4.0%, 37.7%, and 58.3%. The tertiary industry has already surpassed half of the “upper” share, which means that for further manufacturing upgrading and optimization, it must rely on the driving role of productive services.

From the perspective of development demand, China’s manufacturing industry has already built one of the world’s most complete production systems, but the problem it faces is no longer whether there is a system, but whether it is “good.” Many manufacturing industries in global division-of-labor chains are still in the low end, with low added value. Trade frictions happen frequently, and constraints from resources and the environment are increasing. If we only focus on manufacturing itself and ignore the role of productive services, continuing the old path of expansion for “more volume,” we will miss the opportunity to upgrade manufacturing through “two-industry integration.”

Guangdong proposed accelerating the development of the service industry as early as 2004 and placed the service industry in a priority strategic position for development, focusing on cultivating three major productive service industries: information services, technology services, and cultural industries. Back then, there was some foresight, but the manufacturing foundation was still not solid and service supply capabilities were limited, meaning the conditions for large-scale integration were not yet mature. Now, both manufacturing and the service industry have built a certain foundation, and two-industry integration has become possible and necessary.

Nanfang Metropolis Daily: Faced with the opportunities and challenges of “two-industry integration,” how should Guangdong plan its next steps to truly achieve the virtuous cycle of “when manufacturing is strong, services thrive; when services are excellent, manufacturing becomes strong”?

Jiangfan Li: To form this virtuous cycle, we need to work systematically from two dimensions: the industrial level and regional layout.

From the industrial level, first, we need to focus on developing the “core layer” of productive services—services directly applied to the production process, such as product R&D, technology, information, creativity, and production management. We should strengthen the development of scientific research and technology services, and enhance the level of digital empowerment and the supply level of key core technologies. Guangdong’s number of national industrial design centers ranks second in the country, but its overall scale and service capabilities are relatively weak. There are especially不足 in providing high-end service areas such as system design solutions, as well as providing inclusive services for small and medium-sized enterprises.

Second, we need to consolidate and upgrade the “outer layer,” accelerate the development of modern commercial and trade services, and enhance the global channel capability of Guangdong’s manufacturing. In 2025, Guangdong’s cross-border e-commerce import and export value exceeded 800 billion yuan, accounting for more than one-third of the national total. Guangdong has cultivated 20 pilot programs of “industrial clusters + cross-border e-commerce,” and 100 e-commerce brands with sales exceeding 100k yuan. We should continue cultivating leading internet-based e-commerce platform enterprises and support the development of cross-border e-commerce platforms.

Third, we should advance the “related layer,” which provides production services that act on producers and the investment environment—such as business hotels, catering, entertainment, leisure services for producers, and supporting business services. At the same time, we should accelerate the development of specialized services such as law, accounting, and consulting, build clusters of cross-border legal services, cultivate headquarters-type firms, and improve internationalization levels.

From the perspective of regional layout, the whole province should implement a forward-looking strategic positioning for developing productive services based on actual conditions: focus on promoting the development of productive services in the secondary industry; expand the development of productive services in the tertiary industry in megacities; and in rural areas focus on developing productive services in the primary industry. Developing productive services cannot drift blindly without regard to service targets; it must be targeted, aligned with the industrial integration and integrated development of the industries it serves.

Economic development is not only a story of “productive services.” Besides developing productive services, to promote the development of manufacturing, agriculture, and the service industry itself, we should also vigorously develop people-serving (life-oriented) services, enhance their capabilities and quality, and improve residents’ living standards. We should avoid developing productive services according to a “supply-determines-demand” logic. Instead, based on market demand and industrial realities, we need to plan precisely and promote in a coordinated manner.

As a pioneer and founding figure of tertiary-industry economics in China, Jiangfan Li, more than 30 years ago, was already keenly aware of the enormous potential of service industry development.

In 1987, Jiangfan Li published a series of papers on the economic development of the tertiary industry. The monograph “Economics of the Tertiary Industry,” published in 1990, has been hailed by the academic community as a “milestone work that fills the theoretical blank in China’s tertiary-industry economics,”—and for this, he also received the Sun Yefang Award for Economic Science Publications. To this day, “Economics of the Tertiary Industry” is still regarded by the academic community as a classic in this field.

Overall planning: Li Lingbo

Executive overall planning: Chen Jiesheng Wu Xuan

Reporting and writing: Nanfang Metropolis Daily reporter Zhu Weixin

Produced by: Nanfang Government Affairs News Department