“Made in China 2025”: China’s strategy for the future – a threat to the industrialised nations?

At least since US President Donald Trump declared punitive customs duties on Chinese imports to be a declaration of war against “Made in China 2025”, China’s project for the future has been widely talked about. The objective of the strategy is to fundamentally modernise China’s industry and to put it in a position to produce the high-tech products that the country has in the past had to import. In principle this is an important, indeed a long overdue, step in the right direction. This is because China’s previous growth model – cheap mass production of relatively simple industrial goods – has become outdated with demographic change and the country’s improved level of prosperity.

“Made in China 2025” is based on the concept of “Industry 4.0”, the digitisation and networking of industrial production. It is planned that, by means of digitisation, ten selected key industries in China, including electromobility and robotics, will catch up to the technological level of the industrialised nations by 2025. By the middle of the century China intends to have acquired technology leadership in these sectors. “Made in China 2025” is thus far more than just a plan for a new growth model for the Chinese economy. It is a strategy to finally secure China a place among the industrialised nations.

Internationally the Chinese project is, however, facing growing resistance: in particular focused technology transfer resulting from the joint ventures compulsion in the domestic territory and participations abroad is viewed extremely critically, not least due to the shadowy role of the Chinese state. There has for some time been an impression that China not only gives top priority to its own interests, but also fails to comply with the international rules of play.

By contrast the prospects of success of “Made in China 2025” are not especially rosy, only partial success is realistic. Despite generous financial assistance and in some cases unfair state support the strategy displays the typical inefficiencies of a top-down approach. In particular the still low educational level of the Chinese is likely to prove to be a bottleneck. In 2015 not even every tenth working-age Chinese had a higher education qualification. It will take years to create a whole generation of well-trained, innovative specialists.

With strong support from Beijing already progressive individual companies should certainly manage by 2025 to match the level of development of the industrialised nations and to successfully maintain its ground against international competition. “National champions” such as these would then indeed be a serious challenge for their competitors in the industrialised nations. However, the idea that whole industry sectors can catch up to the level of the industrialised nations within a few years appears to be much too ambitious a goal – China’s technological deficit is still much too large for this.

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