In the past 40 years of the reform and opening-up, China, which has entered the new normal of the economy, is in the late stage of industrialization and faces the severe challenges of economic transformation. The manufacturing industry tries to get rid of the dilemma of factor input, low-end〖JP〗 locking and lack of industrial competitive advantage by implementing the service-oriented strategy to achieve overall transformation and continuous upgrading. The nature of industrial upgrading is a technological advancement, a long-term competition between the rising cost of production factors and the upgrading of industrial value chains. The existence and function of technology spillover effect represent the influence on the existing industrial technology foundation in the process of industrial upgrading. Service inputs reflect the recombination of the resources required to generate new industry knowledge for knowledge fusion. The above two complement each other to support the realization of industrial upgrading. Therefore, technology spillovers are the foundation of the existing industry and occupy a vital position in breaking through the "Low-locked" problem.
    In general, there are few studies on industrial transformation and upgrading from the perspective of technology spillovers. In the current China scenario, there are still the following deficiencies: (1) Research on how service transformation affects industrial upgrading is more adequate, but there are few studies on the mechanism of service productivity investment in labor productivity. There is still a lack of research on the effects of different content service elements, which will limit the understanding of the different combination effects of service elements and manufacturing primary elements and the exploration of services to promote industrial upgrading paths; (2) There are many studies on improving labor productivity, but the lack of research on the direct effects of technology spillovers and the indirect effects of service spillovers and technology spillovers is made by incorporating service inputs and technology spillovers into the production function framework. Therefore, it is necessary to consider the factors affecting labor productivity under the new normal of service transformation; (3) Industrial upgrades include intra-industry upgrades and inter-industry upgrades. The existing literature has less discussion on the differences in the elements of inter-industry upgrades. The impact of industrial service transformation on industrial upgrading is more reflected in the indirect role of the existing industrial base, that is, the integration of service elements and the content of the manufacturing industry itself, promoting the efficiency of factor flow and factor allocation, so as to improve factor endowment and achieve Industrial upgrading.
    In view of this, this paper has expanded on the basis of the previous research: (1) Whether the service input of different content has different effects on labor productivity in the process of industrial transformation; (2) How the service input content and technology spillovers affect the productivity of labor. How to use the global value chain to optimize this mechanism of action, so as to effectively break the current blockade effect and achieve industrial upgrading? This paper explores the impact of the interaction between service inputs and technology spillovers on labor productivity in the global value chain, and attempts to compare the mechanisms of different service content to the upgrading of China through technology spillover channels to supplement the existing research. In addition, this paper will further enrich the framework of production functions, and provide theoretical basis for how to further develop the effectiveness of service transformation and improve the level of industrial technology.
    Aiming at the problem of the existing service element content mode and unclear focus, based on the 2002-2015 China Industrial Panel Data, this paper constructs a theoretical model of manufacturing service investment and technology spillover synergy in the global value chain to promote labor productivity. This paper examines the impact of the interaction between service input heterogeneity and technology spillover on labor productivity in manufacturing, and further explores the effect of global value chain embedding, trying to explore the current mode of action and focus of China′s manufacturing service strategy. In this paper, the feasible generalized least squares method (FGLS) is used for regression analysis. The empirical results show that: (1) embedded in the global value chain does not necessarily help to optimize the effect of manufacturing service investment and technology spillover on labor productivity; (2) effectively use different service content inputs in the process of embedding global value chain promoting the reorganization of factor resources is more important for the improvement of labor productivity; (3) During the transition from low-end industries to high-end industries, the key points and ways of factor input have changed. The manufacturing service strategy is still an extremely important factor in developing the existing industrial base, promoting industrial upgrading, and improving the capacity for independent innovation. Theoretically, this paper believes that the service trap and the low-end locking effect still exist, which is consistent with the conclusions of most scholars (Xiao and Huang, 2018; Lyu et al., 2018; Gebauer and Friedli, 2005). This paper discusses different service contents and their differences, which helps to better understand how the industry in China can more effectively use service transformation to achieve industrial upgrading under the current global value chain environment.
     Based on the above conclusions, this paper proposes the following suggestions to try to provide ideas for industrial upgrading: (1) Industry linkage should be strengthened to form a dynamic network that supports the development of manufacturing industry by multi-party service content collaborative evolution; (2) Internalization of service content into manufacturing value chain, local innovation as the primary content, rely on global value chain, not rely on global value chain; (3) Through diversified innovation to break the global structure blockade, effective use of the service elements to achieve modularized development of services is an important way to promote industrial upgrading.