Launched in 2015, “Made in China 2025” (MIC 2025) is a strategic blueprint by the Chinese government aimed at transforming the nation from a low-cost manufacturing hub into a global leader in high-tech industries.
Inspired by Germany’s “Industry 4.0” strategy, MIC 2025 focuses on upgrading China’s industrial capabilities, reducing reliance on foreign technology and fostering innovation to move up the global value chain.
Objectives and Key Sectors
The initiative targets ten key sectors deemed critical for future economic growth and national security. They are:
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Advanced information technology
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Automated machine tools and robotics
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Aerospace and aviation equipment
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Maritime engineering equipment and high-tech shipping
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Modern rail transport equipment
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New energy vehicles
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Power equipment
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Agricultural machinery
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New materials
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Biopharma and advanced medical products
By 2025, China’s aims is to achieve 70% self-sufficiency in core components and materials within these sectors. Indeed, the broader goal is to position China as a dominant player in global manufacturing by 2049, as a special year for China as it’s the centenary of the People’s Republic of China.
Implementation Strategies of the “Made in China 2025” Programme
To realise these objectives, the Chinese government has employed several strategies:
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Financial Support: Providing substantial subsidies, low-interest loans and tax incentives to domestic companies in targeted sectors.
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Research and Development: Investing heavily in R&D to foster innovation and technological advancement.
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Talent Development: Enhancing education and training programs to build a skilled workforce.
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International Collaboration: Encouraging partnerships with foreign firms to acquire advanced technologies and expertise.
Also, the government has established “National Demonstration Zones” and manufacturing innovation centres to pilot and scale new technologies. These zones serve as testing grounds for integrating advanced manufacturing practices and fostering regional specialisations.
Progress and Achievements of the MIC 2025
A decade into its implementation, MIC 2025 has yielded mixed results. China has made significant strides in sectors like electric vehicles, renewable energy and high-speed rail. For instance, Chinese companies have become global leaders in solar panel production and electric vehicle manufacturing.
However, challenges remain in achieving self-sufficiency in semiconductors and other critical technologies where China still relies heavily on foreign suppliers.
Research from Bloomberg Economics and Bloomberg Intelligence indicates that China has achieved global leadership in five of thirteen critical technologies tracked, including high-speed rail and electric vehicles, while narrowing the gap in others.
Nonetheless, the pursuit of technological self-sufficiency, especially in semiconductors, has been hampered by international opposition and export controls.
What Does the Rest of the World Think About MIC 2025?
MIC 2025 has elicited mixed reactions globally. While some view it as a natural progression for China’s economic development, others express concerns over its implications for global trade and competition.
Critics argue that the initiative relies on state-led policies that may distort markets and create unfair advantages for Chinese firms. Concerns include:
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Intellectual Property (IP) Issues: Allegations of forced technology transfers and IP theft have raised alarms, particularly in the United States and Europe.
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Market Access: Foreign companies often face restrictions when entering the Chinese market, leading to calls for reciprocal treatment.
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Subsidies and Overcapacity: State subsidies may lead to overproduction and dumping of products in international markets, affecting global competitors.
In response, countries like the United States in particular have implemented measures including tariffs and investment restrictions.
For example, the U.S. recently imposed steep tariffs on Chinese imports – up to 135% – affecting various sectors and leading to supply chain disruptions. Similarly, the European Union has imposed tariffs on Chinese electric vehicles, citing unfair subsidies.
What Are the Implications of MIC 2025 for the Global Economy?
The MIC 2025 initiative has significant implications for the global economy, including:
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Increased Competition: As Chinese firms move up the value chain, they pose greater competition to established companies in high-tech industries.
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Supply Chain Shifts: Countries may reassess their supply chains to reduce dependence on Chinese technology and components.
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Policy Responses: Nations like the United States have implemented measures such as tariffs and investment restrictions in response to perceived threats from MIC 2025 it’s possible that other countries will start doing the same.
In addition, China’s emphasis on self-reliance and domestic innovation aligns with its “dual circulation” strategy which is all about strengthening internal economic cycles while remaining open to international trade. This approach may lead to a more inward-focused China, with potential repercussions for global trade dynamics.
Ultimately, “Made in China 2025” represents China’s ambition to become a global leader in advanced manufacturing and technology.
While the initiative is all about modernising China’s economy, it also raises concerns about fair competition, market access, and global trade dynamics. As the world navigates these challenges, ongoing dialogue and cooperation will be essential to ensure a balanced and equitable global economic landscape.
