The Viscous Mechanism of Transformation and Upgrading of China´s Manufacturing and ITS Path - from the Perspective of the Causes of "Smiling Curve"

The adoption of "Smiling Curve" in guiding the transformation and upgrading of China\´s manufacturing has become the choice of many researchers whose general conclusion is that China\´s manufacturing needs to climb to the two ends of the curve. Yet, little research has been conducted on the causes of "smiling curve". This paper interprets its causes with innovation theory, labor theory and market theory and then explains how to breakthrough the viscous mechanism on the basis of this interpretation. The paths to achieve transformation and upgrading in China are: classify the manufacturing according to the degree of labor complexity and whether the products have got standard interface, transfer the extensive and simple and keep the fine and complex, vigorously develop the productive services. In turn, on the basis of accumulation, Chinese manufacturing can extend to the two ends of "smiling curve".