Letter IEDI n. 827–The 'Made in China 2025' initiative
Following the IEDI studies on Industry 4.0, this Letter looks at the strategic plan Made in China 2025, launched by China's State Council in May 2015. The reader interested in the topic can find additional information about Industry 4.0 and the actions different countries are taking for its development in the following Letters IEDI: n. 797 "Industry 4.0: Challenges and Opportunities for Brazil" (Jul/21/ 17); n. 803 "Industry 4.0: The Future of Industry" (Sep/01/17); n. 807 "Industrial policy for the future – Germany's INDUSTRIE 4.0 Initiative" (Sep/29/17); n. 820 "Industry 4.0: The US Strategic Plan for Advanced Manufacturing" (Dec/11/17) and n. 823 "Industry 4.0: National policies and strategies under the new productive revolution" (Dec/29/17), among other studies.
In China, the launch of the Made in China 2025 program is a government response to the Chinese industry’s potential loss of competitiveness as the country faces increasing competition from both developing countries, with equally competitive labor costs, and developed countries, which benefit from efficiency gains based on innovative technologies.
Partly inspired by Germany's Industry 4.0 initiative, the Made in China 2025 (MIC 2025) strategy seeks to enable the country to escape the "middle-income trap" and reach the top of the manufacturing value chain. This comprehensive and long-term national plan, designed to develop in three stages, has the ultimate purpose of transforming China into a world-class industrial powerhouse, based on advanced technology, by 2049.
Its first stage, whose quantitative targets are to be achieved by 2020/2025, includes targets such as: comprehensive modernization of industrial segments; strengthening of China's position as an important industrial nation; promotion of quality production and intelligent manufacturing technologies; efficiency improvements in energy, labor and material consumption; having Chinese enterprises move up in the manufacturing value chains; mastering key technologies in core industries rather than importing them.
The second stage, to be achieved by 2035, represents an even greater effort to encourage domestic innovation, especially in key sectors. In the third and final stage, to be completed by 2049, the goal is to make China a world leader in the main high-tech industrial sectors, boosting home-developed innovative activities and maintaining the country's competitive advantages.
The implementation of MIC 2025 is being led by the Ministry of Industry and Information Technology, focusing on nine strategic tasks, including: promoting the use of integrated and digital production, especially in intelligent manufacturing technology; strengthening the base of Chinese industry, focusing on "four basic capabilities" (basic components, basic processing technologies, basic materials and basic industrial services); applying "green" production methods; developing service-oriented manufacturing and producer services; and promoting the internationalization of Chinese industrial companies.
Ten sectors are defined as priority by MIC 2025, with high and medium-high technological intensity segments accounting for more than 40% of Chinese industrial value added. Strategic sectors for the Chinese include advanced marine equipment and high-tech ships; railroad and rail advanced equipment; agricultural machinery and technology; aeronautical and aerospace equipment; biological medicine and high-performance medical apparatus and instruments; integrated circuits and new information technologies; electric power technology and equipment; high-end computer control machine tools and robotics; energy saving and new energy vehicles; new and advanced materials.
At its core, the Made in China 2025 strategy aims to transform the country into a global leader in high-quality, high-tech products by the end of first half of the 21st century, with the gradual replacement of foreign technology with Chinese technology, developed and produced domestically.
As the country is aware, achieving this goal depends on the ability to develop innovative products, to create internationally known brands and to build modern industrial production facilities. In addition to channeling huge financial resources to support the technological modernization of its industrial enterprises, both state and private, China has adopted a set of measures and policies complementary to industrial policy, which include: fiscal and tax measures, institutional reorganization, intellectual property policy and human resources policy. MIC 2025 is, thus, only the most visible part of China's great effort to continue conquering the successive stages of development in a changing world.
There are, however, doubts and concerns about the Chinese strategy among think tanks analysts, consultancies and business entities linked to the industrial sector of developed countries. On the one hand, there is a degree of skepticism about the success of this industrial policy, which seeks to challenge the primacy of leading industrial economies and their international corporations. China's initial position in the global race for smart manufacturing would not be favorable, given the current lag of its industry in terms of automation and digitalization compared to industrialized countries.
On the other hand, there is great concern about the impacts of this Chinese strategy that targets virtually all high-tech industries that contribute heavily to economic growth in industrialized economies. It is feared that the Chinese government will systematically intervene in domestic markets in order to benefit and facilitate the economic dominance of Chinese firms and to hinder foreign competitors by accelerating the acquisition of international high-tech enterprises by Chinese companies and funds.