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Made in China 2025 ()Made in China 2025
. CSIS, June 1, 2015.
(MIC25, MIC 2025, or MIC2025) is a national
strategic plan Strategic planning is an organization's process of defining its strategy or direction, and making decisions on allocating its resources to attain strategic goals. It may also extend to control mechanisms for guiding the implementation of the s ...
and industrial policy of the
Chinese Communist Party The Chinese Communist Party (CCP), officially the Communist Party of China (CPC), is the founding and sole ruling party of the People's Republic of China (PRC). Under the leadership of Mao Zedong, the CCP emerged victorious in the Chinese Civil ...
(CCP) to further develop the
manufacturing sector In macroeconomics, the secondary sector of the economy is an economic sector in the three-sector theory that describes the role of manufacturing. It encompasses industries that produce a finished, usable product or are involved in constructio ...
of the
People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
, issued by Premier Li Keqiang and his cabinet in May 2015. As part of the Thirteenth and Fourteenth Five-year Plans, China aims to move away from being the "world's factory"—a producer of cheap
low-tech Low technology (low tech; adjective forms: low-technology, low-tech, lo-tech) is simple technology, as opposed to '' high technology''. History Historical origin Primitive technologies such as bushcraft, tools that use wood, stone, whoo ...
goods facilitated by lower labour costs and supply chain advantages. The industrial policy aims to upgrade the manufacturing capabilities of Chinese industries, growing from
labor-intensive Labor intensity is the relative proportion of labor (compared to capital) used in any given process. Its inverse is capital intensity. Labor intensity has been declining since the onset of the Industrial Revolution in the late 1700s, while its inv ...
workshop Beginning with the Industrial Revolution era, a workshop may be a room, rooms or building which provides both the area and tools (or machinery) that may be required for the manufacture or repair of manufactured goods. Workshops were the on ...
s into a more technology-intensive powerhouse. The stated 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. To help achieve independence from foreign suppliers, the initiative encourages increased production in high-tech products and services, with its
semiconductor A semiconductor is a material which has an electrical conductivity value falling between that of a conductor, such as copper, and an insulator, such as glass. Its resistivity falls as its temperature rises; metals behave in the opposite way. ...
industry central to the industrial plan, partly because advances in chip technology may "lead to breakthroughs in other areas of technology, handing the advantage to whoever has the best chips – an advantage that currently is out of Beijing’s reach." Since 2018, following a backlash from the U.S., Europe, and elsewhere, the phrase "MIC 2025" has been de-emphasized in government and other official communications, while the program remains in place. The Chinese government continues to invest heavily in identified technologies. In 2018, the Chinese government committed to investing roughly US$300 billion into achieving the industrial plan. In the wake of the
COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...
, at least an additional $1.4 trillion was also invested into MIC 2025 initiatives.Anjani Trivedi, "China Is Winning the Trillion-Dollar 5G War", ''Washington Post'', July 12, 2020, https://www.washingtonpost.com/business/china-is-winning-the-trillion-dollar-5g-war/2020/07/12/876cb2f6-c493-11ea-a825-8722004e4150_story.html . Given China's current middle income country status, the practicality of its disproportionate expenditure on pioneering new technologies has been called into question.


Background and stated goals

Since the
2010s File:2010s collage v21.png, From top left, clockwise: Anti-government protests called the Arab Spring arose in 2010–2011, and as a result, many governments were overthrown, including when Libyan dictator Muammar Gaddafi was killed; Crimea is ...
, China has become an emerging superpower as the second largest economy and the largest one on a purchasing power parity (PPP) basis. It faces manufacturing competition from countries with lower wages, like Vietnam, as well as from highly industrialized countries. In order to maintain economic growth, standards of living, and meet the demand of its increasingly educated workforce, China undertook stimulating the potential of its economic and technological competitiveness with MIC 2025, to become a "world-leading manufacturing power." Alan Wheatley of British
think tank A think tank, or policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-governmenta ...
Chatham House Chatham House, also known as the Royal Institute of International Affairs, is an independent policy institute headquartered in London. Its stated mission is to provide commentary on world events and offer solutions to global challenges. It is ...
indicated, in 2018, that a broad and growing Chinese
middle class The middle class refers to a class of people in the middle of a social hierarchy, often defined by occupation, income, education, or social status. The term has historically been associated with modernity, capitalism and political debate. Com ...
is necessary for the country's economic and political stability. China believes in its industrial policy programs, which it sees as key to its economic success."Li Keqiang: The Internet + Double Innovation + Made in China 2025 Will Give Birth to a 'New Industrial Revolution' 李克强:互联网+双创+中国制造2025催生一场“新工业革命". Xinhua 华网 October 15, 2015. http://www.xinhuanet.com/politics/2015-10/15/c_1116825589.htm. Its leaders hope that government investment in crucial technology sectors will lead to a strong position in the
Fourth Industrial Revolution The Fourth Industrial Revolution, 4IR, or Industry 4.0, conceptualizes rapid change to technology, industries, and societal patterns and processes in the 21st century due to increasing interconnectivity and smart automation. The term has bee ...
. The key objective of the Made in China 2025 program is, in a world which it views as increasingly dominated by U.S.-China competition, to identify key technologies, such as AI, 5G, aerospace, semiconductors, electric vehicles and biotech, indigenize those technologies with the help of
national champions National champions are corporations which are technically private businesses but due to governmental policy are ceded a dominant position in a national economy. In this system, these large organizations are expected not only to seek profit but als ...
, secure market share domestically within China, and ultimately capture foreign markets globally. The
Center for Strategic and International Studies The Center for Strategic and International Studies (CSIS) is an American think tank based in Washington, D.C. CSIS was founded as the Center for Strategic and International Studies of Georgetown University in 1962. The center conducts polic ...
in
Washington, D.C. ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...
described MIC 2025 as an "initiative to comprehensively upgrade Chinese industry", which is directly inspired by Germany's proposed
Industry 4.0 The Fourth Industrial Revolution, 4IR, or Industry 4.0, conceptualizes rapid change to technology, industries, and societal patterns and processes in the 21st century due to increasing interconnectivity and smart automation. The term has bee ...
strategy. 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.


Policies

In order to achieve the stated goals, a number of specific policies have been implemented, including: * High-tech companies are subject to reduced taxation rates. * Incentivization of mergers and acquisitions of foreign technology companies * Increased R&D funding by large manufacturing enterprises * Direct state-funding of R&D * Roadmap stating specific targets for factors such as R&D spending share, productivity, digitization and environmental protection


Strategic initiatives

For better implementation of the policies the
Chinese Communist Party The Chinese Communist Party (CCP), officially the Communist Party of China (CPC), is the founding and sole ruling party of the People's Republic of China (PRC). Under the leadership of Mao Zedong, the CCP emerged victorious in the Chinese Civil ...
also implemented 5 strategic initiatives # Building Research and Development Centers across China (40 to be built by 2025) # Development of High-End Projects across all of the key industries # Sustainable production and worldwide leading green manufacturing practices # Smart Manufacturing incl.
robotics Robotics is an interdisciplinary branch of computer science and engineering. Robotics involves design, construction, operation, and use of robots. The goal of robotics is to design machines that can help and assist humans. Robotics integrate ...
and digitalization # New materials production to be less dependent


Key industries

Industries integral to MIC 2025 include
aerospace Aerospace is a term used to collectively refer to the atmosphere and outer space. Aerospace activity is very diverse, with a multitude of commercial, industrial and military applications. Aerospace engineering consists of aeronautics and astr ...
, biotech,
information technology Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of Data (computing), data . and information. IT forms part of information and communications technology (ICT). An information te ...
, smart manufacturing, maritime engineering, advanced rail, electric vehicles, electrical equipment, new materials, biomedicine, agricultural machinery and equipment, pharmaceuticals, and
robotics Robotics is an interdisciplinary branch of computer science and engineering. Robotics involves design, construction, operation, and use of robots. The goal of robotics is to design machines that can help and assist humans. Robotics integrate ...
manufacturing, many of which have been dominated by foreign companies. MIC 2025 lists the following 10 key industries that the Chinese government targets for becoming a world leader. 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: File:CRRC Sifang CETROVO at Metro Trans 2019 (20190726131643).jpg, CRRC carbon fibre metro concept File:2019-03-23 - Mavic Pro -3941.jpg, DJI Mavic Pro Platinum Drone in flight File:BYD Han EV 2021032002.jpg, BYD Han EV File:Wind Farm Outside Urumqi.jpg,
Goldwind Xinjiang Goldwind Science & Technology Co., Ltd., commonly known as Goldwind, is a Chinese multinational corporation, multinational wind turbine manufacturer headquartered in Beijing, China. Goldwind was a state-owned enterprise before 2007, with ...
turbines in operation at a wind farm Outside Ürumqi File:Cockpit mock-up of COMAC future aircraft at the Five-Year Achievements Exhibition (20171015151820).jpg, Cockpit mock-up of
Comac , type = State-owned limited company , industry = Aviation , founded = , founder = , location_city = Pudong, Shanghai , location_country = China , area_served = Worldwide , products = Commercial airliners , services = , key_people ...
future aircraft


Funding and evaluation

The amount of state funding to support the MIC 2025 industries has not been publicized, but is estimated to be "in the order of hundreds of billions of dollars" of state funding, low interest loans, tax breaks and miscellaneous subsidies. This amount includes US$2.9 billion for the Advanced Manufacturing Fund and US$20.2 billion for the National Integrated Circuit Fund. China's investment in 5G is seen as part of the MIC 2025 program. As of early 2020, China had around 200,000 5G towers in use; by the end of the year, it aims to have more than 500,000, with an ultimate goal of 5 million. In its 14th five-year plan, China's National People's Congress approved the spending of $1.4 trillion in 5 to 6 years to build 5G networks, "install cameras and sensors to create smart cities, and integrate this network with industry to accelerate progress in smart manufacturing." Barry Naughton, a professor and China expert at the
University of California, San Diego The University of California, San Diego (UC San Diego or colloquially, UCSD) is a public land-grant research university in San Diego, California. Established in 1960 near the pre-existing Scripps Institution of Oceanography, UC San Diego is t ...
, questioned whether it is sensible for China, considering it is still a middle income country, to be taking "such a disproportionate part of the risky expenditure involved in pioneering new technologies". He commented that while it does not make sense from a purely economic perspective, Chinese policymakers have "other considerations" when implementing their industrial policy such as Made in China 2025.


Reactions


European Union

A
European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...
published report calling for the
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
(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". The EU Chamber of Commerce in China said that MIC 2025 would increase Chinese protectionism favouring domestic companies. In a report they have written that the MIC 2025 initiative distorts the market, and that market-based innovation provides a better way to pass through middle-income status than industrial policies. Jörg Wuttke, president of the chamber, said: "Very often these major plans, with lots of money, where government bureaucrats decide who's the winner and who's the loser, end up in tears."


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.


South Korea

A report by the
Korea International Trade Association The Korea International Trade Association (KITA) ( Korean: 한국무역협회, Hanja: 韓國貿易協會) is a private non-profit trade organization founded in 1946 with 105 traders as its founding members. It is one of Korea's largest umbrella e ...
(KITA) sees MIC 2025 as a step towards Chinese self-sufficiency, threatening
Korean Korean may refer to: People and culture * Koreans, ethnic group originating in the Korean Peninsula * Korean cuisine * Korean culture * Korean language **Korean alphabet, known as Hangul or Chosŏn'gŭl **Korean dialects and the Jeju language ** ...
exports, but also acknowledges opportunities for Korea due to changing industry demands. KITA calls for a response by improving Korean innovation, preventing
brain-drain Human capital flight is the emigration or immigration of individuals who have received advanced training at home. The net benefits of human capital flight for the receiving country are sometimes referred to as a "brain gain" whereas the net co ...
and loss of
intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, cop ...
through
mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
, preventing unfair trade practices by China and actively playing into market opportunities that arise from MIC 2025.


Taiwan

Aggressive campaigns to recruit Taiwanese chip industry talent with lucrative offers resulted in the loss of more than 3,000 chip engineers to MIC 2025, and raised concerns of a " brain drain".
Charles K. Kao Sir Charles Kao Kuen Charles K. Kao was elected in 1990
as a memb ...
, considered Taiwan's "Godfather of DRAM" was among those to leave
Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the nort ...
for a position in China, spending five years with
Tsinghua Unigroup Tsinghua Unigroup is a Chinese technology and semiconductor manufacturer that also supplies digital infrastructure and services to domestic and global markets. Based in Beijing, it is among the country’s largest technology conglomerates; subsid ...
which, two years after Kao was hired, had also recruited Sun Shih-wei, formerly vice chairman of United Microelectronics.


United States

At the start of the 2010 decade, United States policy makers began to make defensive adjustments against China's growing position in the digital world. These adjustments consisted of regulated the amount of imports and exports, regulating financial investments, creating financial sanctions and visa bans. In recent years, the United States has taken a more offensive strategy to compete against China. The United States has inserted themselves into the digital world by increasing their own investments in their research and development fields and also banning the use of certain Chinese made technology inside universities and other sites of academia. The offensive measures to compete with China have been proven to be more effective in slowing Chinese influence over the technology sector. However, they take more time to have a sufficient influence unlike their defensive counterparts. Researchers believe the defensive measures being taken are meant to yield the rapid growth of China in order to allow time for the United States strategy to take place. The growth of the Made in China 2025 initiative is seen by the United States as a threat to national security. U.S officials believe that if Beijing continues to create a significant gap throughout the technology sector officials in Washington should be concerned about breaches inside government departments and agencies. This has fostered the creation of a process by the United States government called “technological decoupling". The United States is strategically finding different means of separation away from technology originating in the borders of China. This is implemented through establishing restrictions on Chinese goods and services or the creation Made in USA corporations to compete domestically. Throughout the 2010's, the rise in popularity of the technological decoupling theory has come because of the United States shifted view of China and the
Xi Jinping Xi Jinping ( ; ; ; born 15 June 1953) is a Chinese politician who has served as the general secretary of the Chinese Communist Party (CCP) and chairman of the Central Military Commission (CMC), and thus as the paramount leader of China, ...
ran regime. In pervious decades, U.S policy makers saw the growth and benefits in China as mutual gains in their own borders as well. However, the unique intensity around Chinese policy decisions in recent years have proven to give a voice to a growing weariness about their future agenda. The United States and China continue to sustain a healthy amount of economic interaction, but how they view one another has shifted to a more competitive level. In 2018, the Council on Foreign Relations, an American
think tank A think tank, or policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-governmenta ...
, stated that MIC 2025, with its government-sponsored subsidies, is a "threat to U.S. technological leadership". The
Li Keqiang government The Li Keqiang Government is the Central People's Government of China from 2013. Premier Li Keqiang took office on 15 March 2013. It succeeded the Wen Jiabao government. Premier Li is ranked only second to Party general secretary Xi Jinping ...
maintained that MIC 2025 aligns with the country's
World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and ...
obligations. On 15 June 2018, the
Trump administration Donald Trump's tenure as the 45th president of the United States began with his inauguration on January 20, 2017, and ended on January 20, 2021. Trump, a Republican from New York City, took office following his Electoral College victory ...
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. The U.S. began individual investigations over Chinese companies participating in the MIC 2025 plan, such as
Fujian Jinhua Integrated Circuit Fujian Jinhua Integrated Circuit Co. Ltd. or JHICC is a Chinese state-owned DRAM manufacturer based in Fujian, China. It is part of the Made in China 2025 program, a component of China's strategy to gain self sufficiency in the semiconductor indu ...
, based on concerns over technology theft and national security. On November 14, 2022, President Joseph Biden and President Xi Jinping met in person for the first time to discuss future relations between the two nations. The meeting touched on improving bilateral relations between the two nations. However, President Biden released a statement summarizing that they will not attempt to contain Chinese development in the technology or financial sectors. Rather, they will continue to "vigorously" compete alongside China. Biden emphasized his strong opposition against a build up of arms that could lead to the two hegemonies promoting the start of a new cold war.


See also

*
Made in China Made in China, Product of China or sometimes Made in PRC is a country of origin label affixed to products manufactured in the People's Republic of China. The ''Made in China'' label is the most recognizable label in the world today, due t ...
* Made in USA * Buy American Act * Berry Amendment * Industrial policy * China–United States trade war * Middle income trap


Further reading

* * *BBC (2019) ''China: A New World Order'' *


References


External links

* *
Made in China 2025
by the State Council of the People's Republic of China (English translation) {{Economy of China Economic history of the People's Republic of China 2010s in China 2020s in China China