Years ago, floods of entrepreneurs swarmed to the coastal areas in southeast China, the frontier of the country's reform and opening up, and gained huge fortunes. But today, they are looking to developing countries in Southeast Asia where the cost of production is lower.

Entrepreneurs' first rush to the southeast coast significantly drove China's manufacturing forward, with the coastal region, especially the Pearl River Delta area and Yangtze River Delta area, gaining rapid economic growth. China has gradually grown to a manufacturing power since then.

As the manufacturing capacity repatriating to the developed countries, many factories in Dongguan and Panyu, two cities in the Pearl River Delta area, were shut down, and the Yangtze River Delta area is facing overcapacity, weak demand, price falling, financing difficulty, and rising labor cost.

However, within an open global market, capital flows wherever profit is possible. That means, if the costs in Southeast Asian countries get higher than that in the western markets, global manufacturing would also flow to the latter.

In fact, the Chinese government has been brewing a strategic layout to upgrade "Made in China" to "Created in China" for years. But the time-consuming industrial upgrade has had to face various challenges. The traditional processing model that is low-end, extensive, low value-added and labor intensive is reaching a dead end. China's industrial structure is no longer a favoring factor for the growth of the low-end processing model. As the demographic dividend weakens and labor price rises, the low-end manufacturing space in China is being further squeezed.

Statistics from the Economist magazine show that the average labor cost of China's manufacturing is 3.27 US dollars per hour, which is two thirds higher than that of Vietnam and a quarter higher than that of Malaysia. This proves that labor intensive processing and manufacturing industries have become unsustainable in China, and the only way out is to upgrade.

To upgrade the industries, we need to turn "Made in China" to "Created in China," which requires laborers to not only do physical work but also contribute ideas.

In March 2015, Chinese Premier Li Keqiang proposed the Internet Plus initiative, a drive aiming to integrate the Internet with traditional industries while encouraging entrepreneurship and innovation. An Internet Plus guideline maps development targets and supportive measures for sectors which the State Council hopes can establish new industrial models.

On May 19, the State Council issued "Made in China 2025" plan and released a guideline to further boost mass entrepreneurship and innovation in June. With systemic reforms introduced in capital and the market, China is ready to stimulate its huge market of 1.3 billion participants and reshape its industries.

High-end manufacturing is crucial to securing a country's competitiveness. China lacks the core technologies of independent knowledge property rights. It needs to urgently nourish cutting-edge technologies and competitive industries. The country's high-speed railway technology could be used as an example.

With half of the Chinese population gaining access to the Internet and the boom of the mobile Internet, the Internet Plus strategy is pivotal for China's industrial upgrading. As for the macro-economy, e-commerce, derived from the Internet Plus strategy, has tremendously vitalized the consumer market. The tertiary industries have made more contributions to China's macro-economy than the primary industries or the secondary industries. It is noteworthy that the contribution rate of the Internet industry, categorized as a tertiary industry, is around 7 percent, surpassing that of the United States.

Besides the contribution to China's real economy, the Internet industry has tremendously enlightened the people. The traditional lifestyle and mindset was changed and innovation was inspired. The Internet is becoming the incubator of China's innovation, and the Internet Plus strategy has become the representative of China's new productivity, and the country's increasing soft power.

Chinese manufacturing will obtain more market space as Chinese capital and industries go global via the "Belt and Road" initiative . And more dividends and vitality are expected to emerge as a result of pilot free trade zones.

Core technologies and cutting-edge industries are important in creating new engines for economic growth. Utilizing the Internet Plus drive to upgrade its industries, especially manufacturing, is China's urgent mission.

Zhang Jingwei is a researcher of the Charhar Institute.

The article was translated by Fan Junmei. Its original version was first published in Chinese.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.