The National Development and Reform Commission held a press conference Tuesday morning, introducing policies for revitalizing China’s Northeast. Zhou Jianping, the division director in charge of the revitalization, said China is going to step up the pace of transferring government functions and reforming SOEs.

One of the highlights of the reform plan is a scheme to transform the region into a manufacturing base for advanced equipment by 2030. Driving innovation and mass entrepreneurship will be crucial in making a successful breakthrough.

After having graduated from a top university in China with a doctoral degree, Yu Min made a decision most PhDs would not have: to work in a noisy factory and dedicate her career to repetitive tests, known as accuracy improvement in the machine tool industry.

“The biggest technical barriers facing Chinese machine tool manufacturers is the low accuracy in processing, which determines how well a machine tool can stay on its programmed path,” said Yu Min, project manager of Shenyang Machine Tool Co. Ltd.

As the latest round of SOE reforms gives prominence to innovation-driven development, the company has kept pace with such principles, by launching the i5M8, the world’s first integrated smart machine toolmaker. This machine is capable of making parts as small as one twenty-fifth the width of a human hair. It has broken the monopoly of companies like Siemens over motion control systems.

“When it comes to innovation development among Chinese SOEs, one common problem is that most new products stay in the laboratory and never made to the market,” said Zhu Zhihao, systems manager of Shenyang Machine Tool Co. Ltd.

“Because the manufacturing industry has been dominated by foreign companies for hundreds of years, and no company wants to be the mouse in the experiment, the only reason a machine tool is bought is to function and start generating revenues.”

Another lingering burden on the company as well as other SOEs in today’s China is overcapacity. The government has been shutting down inefficient factories in the steel-making and coal sectors since last year. Manufacturing stockpiles of low-end products remain high.

“In the manufacturing sector, I don’t agree with the solution of laying people off in exchange for cutting overcapacity. Employees and the company should stick together in difficult times, and only through innovation can they both survive in the market competition,” said Guan Xiyou, CEO of Shenyang Machine Tool Co. Ltd.

When the People’s Republic of China was founded, the country’s first ever national emblem in Tian’amen Square was cast in this factory, that reminds us of its days of glory. But as the manufacturing industry is going through a recession, innovation-powered development is a must to help those companies make a breakthrough.