Made in China 2025 is China’s grand economic strategy. Crafted in 2015, it lays out a plan for growing China’s core industries with the intent of first making them self-sufficient, and then world dominant by 2025. It also seeks to migrate China’s economy from low wage manufacturing and mineral extraction to high-end high-tech goods production. Rarely does a country lay out its strategy so explicitly.
MIC25 involves using state subsidies for research, development, and manufacturing. It calls for state-owned companies to establish themselves in new industries. It also seeks to reduce the amount of foreign materials used in Chinese finished goods in key industries. Because most other countries use free markets to develop their industries, the plan has an inherent bias against foreign investment.
Meanwhile, China makes its own investments in the industries of other nations, especially those with military applications. China invests heavily in US facial-recognition, 3-D printing, virtual reality systems, and autonomous vehicles. Yet, China maintains control of the cobalt supply chain—a mineral used in most advanced electronics. This acquisition of technology and control of scarce resources has given some countries cause for concern. The US began a series of tariffs and other restrictions on Chinese goods. Australia has blocked Chinese attempts to buy agribusinesses and electric grids in their country. France increased restrictions on foreign investment in sensitive technologies; and Germany has called for a European-wide review of Chinese investment.
China’s actions clearly focus on the four leadership power sources. It intends to increase its per capita income, which is currently is $8000 annually, compared to $56,000 in the United States. It (perhaps accurately) sees protectionist behavior as its only means for raising its behemoth population out of poverty and into the middle-class. Meanwhile it pursues investments that give it military strength, while limiting the foreign reach into its own industries. China is not trying to play on a level field: it unapologetically looks after its own interests.
Reference:
“Is Made in China a Threat to Global Trade?” Council on Foreign Relations, 13 May 2019; retrieved from https://www.cfr.org/backgrounder/made-china-2025-threat-global-trade
“Made in China 2025: Global Ambitions Built on Local Protections,” U.S. Chamber of Commerce, 2017.
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