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Made in China 2025

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Made in China 2025 (Chinese: 中国制造2025; pinyin: Zhōngguó zhìzào èrlíng'èrwǔ)[1] (MIC 2025) is a national strategic plan to further develop the manufacturing sector of the People's Republic of China, issued by Premier Li Keqiang and his cabinet in May 2015.[2] As part of the 13th five-year plan, China aims to move away from being merely the "world's factory" producing cheap, low-tech goods facilitated by lower labour costs and supply chain advantages. The initiative encourages production of high tech value products and services, like aerospace, semiconductors and biotech, to help achieve independence from foreign suppliers.[3][4][5][6][7] It is in essence a blueprint to upgrade the manufacturing capabilities of Chinese industries from labor-intensive workshops into a more technology-intensive powerhouse.[8]

The goals of Made in China 2025 include increasing the Chinese-domestic content of core materials to 40 percent by 2020 and 70 percent by 2025.[9] The plan focuses on high-tech fields including pharmaceutical, automotive, aerospace, semiconductor, IT and robotics manufacturing, all of which have been dominated by foreign companies.[10]

The Center for Strategic and International Studies in Washington, D.C. described MIC 2025 as an "initiative to comprehensively upgrade Chinese industry", which is directly inspired by Germany's proposed Industry 4.0 strategy.[1] It is a comprehensive undertaking to move China's manufacturing base higher up the value chain[11] and become a major manufacturing power in direct competition with the United States.[12][13][14] The Chinese government is committed to investing roughly US$300 billion to achieve this plan.[7]

Background

China faces many internal issues such as a slowing economy, higher wages, increasing costs of an aging population, a shrinking workforce, wealth inequality, an underdeveloped social welfare system,[15] and environmental degradation.[16] China is now also competing in the manufacturing space from newly industrial countries like Vietnam and highly industrialized countries.[7][16] In order to maintain economic growth, standards of living, and meeting the demand of its increasingly educated workforce, it needs to stimulate the potential of its economic and technological competitiveness.[16] Alan Wheatley from British think tank Chatham House indicated a broad and growing middle class is necessary for economic and political stability.[17]

Key industries

The plan lists 10 key industries on which Chinese government focused to become a world leader.[18]

Key Industries of the Made in China 2025
Industry sector Description
Information Technology AI, IoT, smart appliances
Robotics AI, machine learning
Green energy and green vehicles energy efficiency, electric vehicles
Aerospace equipment
Ocean engineering and high tech ships
Railway equipment
Power equipment
New materials
Medicine and medical devices
Agriculture machinery

Premier Li has indicated advanced standards in industries are absolutely essential to foster innovation and eliminate bottlenecks in industrial development. China has a growing middle class who are demanding higher quality goods and services. Compared with overseas competition, the quality and innovation of Chinese goods have not caught up. Premier Li talks about the quality revolution. This revolves around entrepreneurship and craftsmanship. It will involve embracing a culture of continuous innovations and refinement in quality of goods produced.[19]

Some companies that have been named as leaders of the key industries are:[20][21]

Reactions

United States

In 2018, the Council on Foreign Relations, an American think tank, stated that MIC 2025 is a "real existential threat to U.S. technological leadership".[24] The Li Keqiang government maintains that MIC 2025 aligns with the country's World Trade Organization obligations.[25] On 15 June 2018, the Trump administration imposed higher tariffs on Chinese goods, escalating trade tensions between China and the U.S. The tariffs primarily apply to manufactured goods included in the Made In China 2025 plan, such as those integral to IT and robotics industries.[26]

European Union

A European Commission published report calling for the European Union (EU) to increase its industrial and research performance and to "develop a trade policy that can ensure a level playing field for EU companies in China and for Chinese companies in the EU", in response to the Made in China 2025 (MIC 2025) policy. It recognizes MIC 2025 as being similar to the "German and Japanese approaches to innovation and economic development".[27]

The European Chamber of Commerce feared that MIC 2025 would increase Chinese protectionism favouring domestic companies.[28]

Japan

Japanese commentators note that MIC 2025 has led to growing exports of Japanese high-value goods such as semiconductor manufacturing equipment and production line robotization equipment and see it as a business opportunity, but fear that China may become a strong competitor in the long run.[29][30]

South Korea

A report by the Korea International Trade Association (KITA) sees MIC 2025 as a step towards Chinese self-sufficiency, threatening Korean exports, but also acknowledges opportunities for Korea due to changing industry demands. KITA calls for a response by improving Korean innovation, preventing brain-drain and loss of intellectual property through mergers and acquisitions, preventing unfair trade practices by China and actively playing into market opportunities that arise from MIC 2025.[31]

See also

Literature and documentaries

  • Boris Lee (2019). Assessing Made in China 2025: The US - China Trade War and Ways Going Forward. Claremont Colleges Library.
  • Edward Alden, Nicholas Burns, Ash Carter, Jack Clark (2019). Technology and National Security: Maintaining America's Edge. The Aspen Institute. ISBN 978-0578427959.{{cite book}}: CS1 maint: multiple names: authors list (link)
  • BBC (2019) China: A New World Order [32]
  • Shaun Rein (2012). The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World. John Wiley & Sons.

References

  1. ^ a b Made in China 2025 Archived 2018-12-29 at the Wayback Machine. CSIS, June 1, 2015.
  2. ^ “Made in China 2025” plan unveiled to boost manufacturing Archived 2018-07-25 at the Wayback Machine. China News Service, May 2015.
  3. ^ "Is China ready for a memory chip fab?". February 7, 2017.
  4. ^ "China memory chip output zooms from zero to 5% of world total". Nikkei Asian Review. Archived from the original on 2020-03-29. Retrieved 2020-04-13.
  5. ^ "Taiwan loses 3,000 chip engineers to 'Made in China 2025'". Nikkei Asian Review. Archived from the original on 2020-03-28. Retrieved 2020-04-13.
  6. ^ "Archived copy". Archived from the original on 2019-10-06. Retrieved 2020-04-13.{{cite web}}: CS1 maint: archived copy as title (link)
  7. ^ a b c Fang, Jason; Walsh, Michael (2018-04-29). "What is Made in China 2025 and why is the world concerned about it?". ABC News. Archived from the original on 2019-01-10. Retrieved 2019-01-10.
  8. ^ "China to invest big in 'Made in China 2025' strategy". english.gov.cn. Archived from the original on 2019-01-11. Retrieved 2019-01-10.
  9. ^ Foreign Firms Wary Of 'Made In China 2025,' But It May Be China's Best Chance At Innovation Archived 2018-07-25 at the Wayback Machine forbes.com Sara Hsu, March 10, 2017.
  10. ^ China Prepares for Big Pharma Archived 2018-07-25 at the Wayback Machine. Zachary Torrey, thediplomat.com, March 2018.
  11. ^ Made In China 2025: A New Era For Chinese Manufacturing Archived 2018-09-10 at the Wayback Machine CKGSB, September 2, 2015
  12. ^ "What is 'Made in China 2025' — and why is it a threat to Trump's trade goals?". Archived from the original on 2018-07-31. Retrieved 2018-08-11.
  13. ^ "YouTube". www.youtube.com. Archived from the original on 22 October 2018. Retrieved 12 May 2019.
  14. ^ U.S.-China competition for global influence. National Bureau of Asian Research. 2020. ISBN 978-1-939131-59-1. OCLC 1134423136.
  15. ^ "The question mark hanging over China's middle class". South China Morning Post. 2018-10-12. Archived from the original on 2019-01-11. Retrieved 2019-01-10.
  16. ^ a b c "Made in China 2025 and US–China power competition". www.lowyinstitute.org. Archived from the original on 2019-01-10. Retrieved 2019-01-10.
  17. ^ "The question mark hanging over China's middle class". South China Morning Post. 2018-10-12. Archived from the original on 2019-01-11. Retrieved 2019-01-10.
  18. ^ China, McKinsey (2015-05-27). "China Is Betting Big on These 10 Industries". McKinsey Greater China. Archived from the original on 2018-09-15. Retrieved 2019-01-10.
  19. ^ "Quality revolution needed for 'Made in China'". english.gov.cn. Archived from the original on 2019-01-11. Retrieved 2019-01-11.
  20. ^ "Cultivating "Made in China" champions". www.eiu.com. Archived from the original on 2020-04-12. Retrieved 2020-01-06.
  21. ^ "Evolving Made In China 2025" (PDF). MERICS. Archived (PDF) from the original on 2019-11-05. Retrieved 2020-01-06.
  22. ^ Kharpal, Arjun (July 7, 2020). "China's biggest chipmaker is up over 200% this year as it begins $6.6 billion share sale". CNBC.
  23. ^ "SMIC's $7.6 billion share sale reveals China's ambitious plan for technological self-sufficiency". TechSpot.
  24. ^ Why Does Everyone Hate Made in China 2025? Archived 2018-12-29 at the Wayback Machine CFR, March 28, 2018
  25. ^ China says "Made in China 2025" in line with WTO rules Archived 2018-07-25 at the Wayback Machine Xinhua, 2018-04-04, Zhou Xin
  26. ^ U.S. and China Expand Trade War as Beijing Matches Trump’s Tariffs Archived 2018-06-18 at the Wayback Machine NY Times, 15 June 2018
  27. ^ "China: Challenges and Prospects from an Industrial and Innovation Powerhouse". Publications Office of the European Union. 15 May 2019. Archived from the original on 28 March 2020. Retrieved 28 March 2020.
  28. ^ "European Business In China Position Paper 2019/2020". European Union Chamber of Commerce in China. 24 September 2019. Archived from the original on 28 March 2020. Retrieved 28 March 2020.
  29. ^ "【インサイト】中国製造2025、日本にとって脅威よりもチャンス" [[Insight] China manufacturing 2025, more chance than threat for Japan]. Bloomberg.com.
  30. ^ ""中国製造2025"と日本企業" [“Made in China 2025” and Japanese companies]. ニッセイ基礎研究所.
  31. ^ "중국 제조 2025 추진성과와 시사점" [China Manufacturing 2025 Promotion Results and Implications]. Korea International Trade Association. 14 February 2019.
  32. ^ China: A New World Order, archived from the original on 2019-09-26, retrieved 2019-09-26
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