With the emergence of the global knowledge economy we are seeing changes in the
industrial composition of economies, in the nature of activities within industries, and
in the relationships between industries. In this paper we seek to shed light on the
nature of those changes. We begin by questioning the commonly held notion that a
knowledge economy is a services economy. We then develop an alternative
framework for understanding the economic contribution of various production and
service activities. In this way, we show that the goods producing and goods related
service industries remain at the core of developed economies. We then present a brief
sketch of the nature of 'new manufacturing' in order to highlight the increasing interrelatedness
of both sectors and industries in a knowledge economy. Finally, we
present an example of how an alternative perspective on structural change, and on the
emergence of the increasingly complex product systems which we characterise as
'new manufacturing', can be operationalised and used to inform the study of even the
most traditional manufacturing industries as well as the formulation of industry policy
for a knowledge economy. Implications for China's future development are discussed.