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This paper aims to investigate how the recent overheating economy and other economic factors influence the manufacturing industry in China. It makes use of Chinese historical data from 1950 to 2007 provided in the China Statistical Databases authorized by the National Bureau of Statistics of China for the development of econometric models. Regression analysis is used to investigate and verify the importance of and relationships among the variables, while exponential smoothing and autoregressive integrated moving average methods are applied for forecasting the important variables. This study provides empirical evidence to identify the main impact factors on the growth of the manufacturing industry, thereby enabling firms to take them into account when planning their manufacturing strategy. It also enables firms to get an insight into the development of China’s manufacturing industry in this dynamic, competitive economy. [ABSTRACT FROM AUTHOR]