Macroscope | Why Made in China 2025 should scare Donald Trump less than those betting on Chinese tech dominance
Shang-Jin Wei says the US president’s attacks on China’s strategic plan might lead to more intervention by Beijing, to the detriment of the country’s economy
Made in China 2025 is a strategic directive issued by the Chinese government in 2015 to upgrade the country’s economic structure and growth model over the next decade. The plan comprises five key priorities – accelerating innovation; improving the quality of products and services; boosting environmentally sustainable production techniques and renewable energy; promoting the structural transformation of industries and firms; and, investment in human capital and talent development.
Both US and Chinese policymakers have become increasingly mindful of what Graham Allison of Harvard University has called the “Thucydides trap”, which suggests that when a rising power like China meets a hegemon such as the US, military conflict is hard to avoid.
Many Chinese interpret US accusations of “unfair trade practices” as an excuse for the US to do what it was going to do anyway: block China’s rise to global economic predominance.
Made in China 2025 is essentially an industrial policy, but industrial policies are not necessarily incompatible with World Trade Organisation rules. The very concept of state-guided development was practically invented by the US over 200 years ago, when Alexander Hamilton, the country’s first Treasury secretary, called for more government support of manufacturing.