The importance of manufacturing is unquestionable, connected to the national economy and people’s livelihood. China’s manufacturing industry faces three existential challenges: a falling population and the end of low wages; a weak dollar regime, and the rising RMB exchange rate; the unstoppable rise of global raw material prices. These three major challenges direct threaten a manufacturing tradition built on hard work and low-cost competition. Can Chinese manufacturing continue to develop and if so, how? This issue makes Chinese manufacturers increasingly anxious. But the situation may not be all bad. This report discusses the bright side of prospects for the sector.