Made in China 2025 is a national strategic plan and industrial policy of China to further develop its manufacturing sector by rapidly developing ten high-tech industries.
These industries include new energy vehicles, next-generation information technology, biotechnology, advanced robotics, aerospace equipment and new materials. The goal is to reduce China’s dependence on foreign technology and promote Chinese technological manufacturers in the global marketplace by the year 2025. The plan draws direct inspiration from Germany’s Industry 4.0 plan, which aims to apply the tools of information technology to production3.
Made in China 2025 has been seen as a threat to global trade by some countries, especially the United States, which accuses China of unfair trade practices such as forced technology transfer, intellectual property theft and state subsidies.
The plan has also faced some challenges due to the US-China trade war, the COVID-19 pandemic and domestic issues such as overcapacity and debt. However, China has not abandoned its ambition to become a global leader in innovation and manufacturing. It has recently adopted a new strategy called “dual circulation”, which focuses on both domestic consumption and international markets
“Made in China 2025” has clear principles, goals, tools, and sector focus.
Its guiding principles are to have manufacturing be innovation-driven, emphasize quality over quantity, achieve green development, optimize the structure of Chinese industry, and nurture human talent.
The goal is to comprehensively upgrade Chinese industry, making it more efficient and integrated so that it can occupy the highest parts of global production chains. The plan identifies the goal of raising domestic content of core components and materials to 40% by 2020 and 70% by 2025.
Although there is a significant role for the state in providing an overall framework, utilizing financial and fiscal tools, and supporting the creation of manufacturing innovation centers (15 by 2020 and 40 by 2025), the plan also calls for relying on market institutions, strengthening intellectual property rights protection for small and medium-sized enterprises (SMEs) and the more effective use of intellectual property (IP) in business strategy, and allowing firms to self-declare their own technology standards and help them better participate in international standards setting.
Although the goal is to upgrade industry writ large, the plan highlights 10 priority sectors: 1) New advanced information technology; 2) Automated machine tools & robotics; 3) Aerospace and aeronautical equipment; 4) Maritime equipment and high-tech shipping; 5) Modern rail transport equipment; 6) New-energy vehicles and equipment; 7) Power equipment; 8) Agricultural equipment; 9) New materials; and 10) Biopharma and advanced medical products.
The principles, goals, tools, and sector focus mentioned in the previous section, it is important to note that Made in China 2025 also aims to foster innovation through increased investment in research and development (R&D). The plan calls for R&D expenditure to reach 2.5% of GDP by 2020 and 2.8% by 2025. This investment is intended to spur the development of indigenous technologies and help Chinese companies move up the value chain.
Another important aspect of the plan is its emphasis on international cooperation. Made in China 2025 calls for increased collaboration with foreign companies, universities, and research institutes to promote technology transfer and knowledge sharing. The plan also encourages Chinese companies to invest overseas and participate in global supply chains.
Despite these efforts to promote international cooperation, Made in China 2025 has faced criticism from some quarters, particularly in the United States. Critics argue that the plan represents a form of economic nationalism and unfairly advantages Chinese companies over their foreign competitors. The US government has responded with tariffs on Chinese goods and restrictions on Chinese investment in certain sectors, which have in turn sparked a trade war between the two countries.
The COVID-19 pandemic has also posed challenges for Made in China 2025, as supply chains have been disrupted and demand for certain products has fallen. In response, the Chinese government has announced measures to support its manufacturing sector, including tax cuts and subsidies for high-tech industries.
Looking ahead, the success of Made in China 2025 will depend on a variety of factors, including the ability of Chinese companies to develop innovative technologies, the effectiveness of government policies in supporting industry upgrading, and the willingness of foreign companies to cooperate with Chinese counterparts. As the global economy continues to evolve, it remains to be seen how Made in China 2025 will shape the future of manufacturing and trade.
Here are some potential benefits and strengths of Made in China 2025 for trade partner countries:
Increased opportunities for trade: As China’s manufacturing sector becomes more advanced and efficient, it could potentially create more opportunities for trade partner countries to export goods and services to China.
Access to new markets: Made in China 2025 emphasizes international cooperation and collaboration, which could potentially create new opportunities for trade partner countries to access the Chinese market and expand their businesses.
Technology transfer and collaboration: Made in China 2025 prioritizes the development of high-tech industries such as biotechnology, advanced robotics, and next-generation information technology. This could potentially lead to opportunities for technology transfer and collaboration between Chinese and foreign companies.
Increased efficiency in global supply chains: As China’s manufacturing sector becomes more efficient and integrated, it could potentially help to optimize global supply chains and benefit trade partner countries that are part of those supply chains.
Potential for job creation: As China’s manufacturing sector grows and becomes more advanced, it could potentially create new job opportunities both in China and in trade partner countries that are part of China’s supply chains.
Trade partner countries can leverage on the Made in China 2025 policy in several ways:
Strengthening partnerships: Trade partner countries can strengthen their partnerships with China by collaborating on research and development, sharing technology, and cooperating on manufacturing processes. This could help to build stronger relationships with Chinese companies and open up new opportunities for trade.
Identifying opportunities: Trade partner countries can identify opportunities to supply goods and services to Chinese companies that are part of the Made in China 2025 initiative. This could involve analyzing China’s priority sectors and identifying areas where their own expertise and capabilities can be applied.
Intellectual property protection: Intellectual property protection is a key concern for many trade partner countries when it comes to doing business with China. As part of the Made in China 2025 policy, China has pledged to strengthen intellectual property rights protection for small and medium-sized enterprises (SMEs) and improve the use of intellectual property in business strategy. Trade partner countries can leverage these commitments to protect their own intellectual property and ensure that their rights are respected when doing business with China.
Joint ventures: Trade partner countries can form joint ventures with Chinese companies that are part of the Made in China 2025 initiative. This could involve collaborating on research and development, sharing technology and expertise, and accessing new markets.
Developing skills and capabilities: Made in China 2025 places a strong emphasis on nurturing human talent and developing skills and capabilities in the manufacturing sector. Trade partner countries can leverage this focus to develop their own skills and capabilities in areas such as advanced robotics, biotechnology, and next-generation information technology. This could help to create new job opportunities and strengthen their own manufacturing sectors.
the Made in China 2025 policy is a national strategic plan that aims to comprehensively upgrade China’s manufacturing sector, making it more efficient and integrated, and to reduce its dependence on foreign technology. By promoting the development of ten high-tech industries, including new energy vehicles, biotechnology, and advanced robotics, the policy seeks to position China as a global leader in innovation and manufacturing.
The policy has several strengths, including its guiding principles of innovation-driven manufacturing, emphasis on quality over quantity, and focus on green development. It also places a strong emphasis on nurturing human talent and developing skills and capabilities in the manufacturing sector. Furthermore, the policy aims to strengthen intellectual property rights protection for small and medium-sized enterprises (SMEs) and improve the use of intellectual property in business strategy.
Trade partner countries can leverage on the Made in China 2025 policy by strengthening partnerships, identifying opportunities, protecting intellectual property, forming joint ventures, and developing skills and capabilities. While the policy has faced some challenges and concerns from some countries, it still represents a significant opportunity for China to advance its manufacturing sector and for trade partner countries to benefit from collaboration and cooperation with Chinese companies.
