China is increasingly placing strong emphasis on developing its cultural industries. Prolonged economic difficulties in what are essentially Chinese manufacturers' main export markets pose long-term challenges to the country's economic model.

The cultural industries pioneer Li Wuwei, a Shanghai economist, estimates in How Creativity is Changing China (written in 2009 and translated into English last year) how little Chinese factories receive for making high-quality goods for Western brands: much less than 10 percent of the retail price of the product in the Western market.

With rising inflation in China leading to higher pay demands from workers, the profit margin for Chinese manufacturers is becoming ever tighter. In the face of competition from less developed nations, China can no longer depend on low-cost manufacturing industries.

In contrast, Li reports that China's cultural industries grew significantly from 2006 to 2009 period, with figures from the China Industrial Design Association recording an average business net profit in excess of 30 percent in 2009.

In addition, in relocating most of its manufacturing production to countries like China, the West has outsourced many of the negative consequences of these industries, most noticeably pollution.

The creative industries directly produce value without needing to consume large amounts of material resources. Western countries have cultivated the creative industries idea, with the objective of resolving high-energy consumption, pollution and low added value within manufacturing industries.

Another reason for China's desire to grow its cultural industries is more socio-political in nature, and is tied to long-term structural changes within Chinese society. At my own university I have witnessed in the past five years a rapid increase in the number of students with an academic interest in the cultural industries.

Many go on to take cultural industries' postgraduate degrees in Britain and further afield. Academics in other universities in China have no doubt noticed the same trend. And these students want jobs that reflect their creative aspirations.

How can the Chinese government further develop these industries? It has already made significant progress in restructuring media industries to make them more commercially competitive, partly if not wholly as a response to China's accession to the World Trade Organization.

But commercialization does not necessarily always lead to greater creativity. It sometimes brings with it the growth of related industries that are not really cultural in orientation, as witnessed by Shanghai municipal government's inclusion of consultancy and exhibition services on its official list of cultural (though it uses the term creative) industries.

Similarly, the development of clusters in cities has had mixed results, with many empty units beyond the more commercially successful spaces like Tianzifang in Shanghai and the 798 art zone in Beijing. Even in these successful ventures there is a sense in which the main beneficiaries have been real estate agents, not creative workers.

In other countries, clusters that have developed organically have usually been more successful in encouraging creativity than those that have been centrally planned. Here one thinks of places like Greenwich Village in New York and Soho in London. The goal of the Chinese government should therefore be to develop creative individuals rather than clusters.

How to do this? A good place to start would be in education, where further expansion of subjects that encourage student autonomy in learning, mainly but not exclusively associated with the arts and humanities, will encourage more creative thinking.

Additionally, innovation in teaching methods should be encouraged, especially seminar-based teaching, where the students are able to express themselves freely even when what they say contradicts their teachers.

More cultural industries programs should be developed in Chinese universities, as indeed has already happened in institutions like Peking University.

The key, then, is to develop a creative society rather than a series of discrete policies.

One of China's greatest success stories in the cultural industries paradoxically highlights the challenges those industries face.

The Beijing animation company Crystal not only produced all the 3D images for the spectacular opening of the 2008 Beijing Olympics, but has also been given the contract for digital imaging services for this year's London Olympics.

Its success is an important part of China's projection of soft power. But most of the estimated 120,000 minutes of animation that is produced each year in China is for Japanese or Korean companies.

So, even in the cultural industries, much content is, to paraphrase Michael Keane, made in China rather than created in China. The Ministry of Culture is aware of this problem, and the inclusion for the first time of a national plan for the cultural industries in the 12th Five-Year Plan (2011-15) is to be welcomed.

The success of Crystal has demonstrated that China's cultural industries can compete on the global stage, and it is to be hoped that institutional and social changes will make it the rule rather than the exception.

The author is an associate professor of creative industries and digital media at the University of Nottingham Ningbo China. The views do not necessarily reflect those of China Daily.