Manufacturing firms need assistance

China's manufacturing industry is showing a declining trend, with production likely to drop again in the third quarter of this year. This is the greatest challenge the industry has faced since the global financial crisis that started in 2008. But, unlike during the financial crisis, the problems faced by the industry today are related to the domestic market.

This trend is not a nationwide phenomenon, however. The decline has mostly been in coastal areas such as Guangdong and Zhejiang provinces, because many of the manufacturing companies there are labor intensive and original equipment manufacturers with low-addition values.

During the global financial crisis, shrinking capital was main cause of the manufacturing industry's problems. The financial crisis led to a sharp decline in demand in overseas markets. But the industry's problems today are pre-eminently domestic and can be divided into four parts.