More efforts should be made to optimize the layout of the industrial chain, bolster innovation and improve the business environment for foreign investors, amid mounting instability and uncertainties in the domestic industrial and supply chains, said a report published by the Chinese Academy of Social Sciences.

The annual study with a focus on the industrial competitiveness of China showed the country's industrial and supply chains is facing new challenges and problems, such as rising labor costs and unbalanced development in different regions. In addition, some key technologies rely heavily on foreign companies, the report said.

Zhang Qizi, deputy director of the Institute of Industrial Economics at the CASS, said Chinese enterprises should step up efforts for breakthroughs in key technologies through self-dependent innovation, and promote integration of the new generation of information technologies and intelligent manufacturing with the current industrial supply chain.

Zhang, the key author of the report, said resolving technological bottlenecks is crucial for fostering high-quality development. "Efforts should be made to cultivate new growth engines for emerging industries and world-leading manufacturing clusters, boost infrastructure construction and build a modern and efficient logistics system to improve circulation efficiency."

The country should establish more national-level comprehensive innovation centers, create steady, fairer, transparent and more predictable business environment for foreign enterprises, attract more attention from foreign investors in the emerging industrial chain and enhance global cooperation, Zhang added.

The country will make efforts to build more independent and controllable industrial and supply chains, as the security and stability of these chains are the foundation of forming a new development paradigm, the Ministry of Industry and Information Technology said.

Also, more efforts will be made to monitor and evaluate the safety of key industrial and supply chains, strengthen the supply chains in the manufacturing industry and tackle weak links, said Xiao Yaqing, minister of the MIIT.

Referring to the auto sector, the report said although China is the world's largest market, the penetration rate of homegrown automotive chips is low. In the first half, a serious shortage of global auto chips triggered a supply-demand imbalance in the domestic market.

A report from market tracker Mordor Intelligence said the global automotive semiconductor market was valued at $48.13 billion in 2020 and is expected to be worth $129.17 billion by 2026, expanding at a compound annual growth rate of 17.94 percent from 2021 to 2026.

More efforts should be made to quicken the layout in the whole industrial chain of auto chips, grasp opportunities arising from some emerging and niche fields, such as lidar and radio frequency identification chips, and further deepen opening-up in the semiconductor segment, said Li Xianjun, an associate researcher from the Institute of Industrial Economics at the CASS.

"The country's auto industry has entered a stage of innovation and development. The most important work is to build an industrial ecosystem suitable for the development of the automotive chip industry," said Dong Yang, co-chairman of the China Automotive Chip Industry Innovation Strategic Alliance.