Made in China 2025


Made in China 2025 is a strategic plan of the People's Republic of China issued by Premier Li Keqiang and his cabinet in May 2015. With it, China aims to move away from being the "world's factory", producing cheap, low-quality goods facilitated by lower labour costs and supply chain advantages. The initiative encourages production of high value products and services, like aerospace and semiconductors, to help achieve independence from foreign suppliers. It is in essence a blueprint to upgrade the manufacturing capabilities of Chinese industries into a more technology-intensive power.
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. 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.
The Center for Strategic and International Studies in Washington, D.C. described MIC 2025 as an "initiative to comprehensively upgrade Chinese industry" as a whole that is directly inspired by the German Industry 4.0. It is a comprehensive undertaking to move China's manufacturing base higher up the value chain and become a major manufacturing power in direct competition with the United States. The Chinese government is committed to investing roughly US$300 billion to achieve this plan.

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, and environmental degradation. China is now also competing in the manufacturing space from newly industrial countries like Vietnam and highly industrialized countries. 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. Alan Wheatley from British think tank Chatham House indicated a broad and growing middle class is necessary for economic and political stability.

Key industries

The plan lists 10 key industries on which Chinese government focused to become a world leader.
Industry sectorDescription
Information TechnologyAI, IoT, smart appliances
RoboticsAI, machine learning
Green energy and green vehiclesenergy 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.
Some companies that have been named as leaders of the key industries are:

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". The Li Keqiang government maintains that MIC 2025 aligns with the country's World Trade Organization obligations. 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.

European Union

A European Commission published report calling for the European Union 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 policy. It recognizes MIC 2025 as being similar to the "German and Japanese approaches to innovation and economic development".
The European Chamber of Commerce feared that MIC 2025 would increase Chinese protectionism favouring domestic companies.

Japan

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.

South Korea

A report by the Korea International Trade Association 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.

Literature and documentaries

*