Is it time Beijing ditched ‘Made in China 2025’ and stopped upsetting the rest of the world?

Ambitious scheme for industrial upgrading has sparked universal concern, but it was only ever meant as a guideline, academic says

PUBLISHED : Monday, 04 June, 2018, 9:30pm
UPDATED : Wednesday, 05 September, 2018, 11:31am

Beijing should stop touting “Made in China 2025” as a development strategy and instead present it as simply a guideline for upgrading its manufacturing sector if it wants to ease growing concerns about its global ambitions, a Chinese academic said.

Zhong Wei, a professor at Beijing Normal University, said the government should, in public at least, play down the significance of the scheme, which is seen in the United States and Europe as indisputable evidence of China’s aim to dominate hi-tech sectors via state-sponsored activities.

The plan has certainly become a thorny issue between Beijing and Washington. Last week, the White House said it “will impose a 25 per cent tariff on US$50 billion of goods imported from China containing industrially significant technology, including those related to ‘Made in China 2025’”.

Beijing, meanwhile, insists the plan does not exclude foreign companies and that Washington’s opposition to it is just an attempt to thwart China’s rise.

Zhong told the South China Morning Post that despite the fanfare, Made in China was actually little more than a guideline for development drafted by the State Council – China’s cabinet – and in no way a detailed action plan.

“The scheme was endorsed at a routine State Council meeting”, not by the ruling Communist Party or the National People’s Congress, both of which have far greater authority, he said.

And so, like other government ideas and schemes, like the urbanisation plan, it should be subject to revision, he said.

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The Made in China initiative was unveiled by Premier Li Keqiang in 2015. Its aim is to guide the country’s industrial modernisation, including replacing foreign technologies with home-grown alternatives in areas such as robotics and electric cars.

The Mercator Institute for China Studies, a Berlin-based think tank, described it as “a forceful and smart challenge to the leading economies of today”.

Despite its lofty ambitions, Zhong said the plan was light on detail.

“There is no evidence that Beijing has made any concrete arrangements for Made in China 2025 in terms of personnel, budgets or resource allocation,” he wrote in an article published on his personal social media account.

“It is a visionary and guiding document, and is completely different from China’s five-year plans on economic and social development.”

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Zhong also questioned the plan’s feasibility, given its short time frame.

“The innovative ability and core competitiveness of a nation can’t be obtained through purchases, theft or hurried acts … it has to be built up and improved in a gradual process,” he wrote.

Also, Beijing should be aware of Western countries’ concerns about the plan, and remove targets such as Chinese firms securing a certain share of the market for computer chips, for example.

“If you set a target for Chinese businesses, it will definitely affect foreign firms in that sector,” he said.

“And if you provide government subsidies [to local companies], foreign businesses will ask questions.”

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In his article, Zhong said “the West is unsure whether China is trying to … intensify ‘state capitalism’ or let the market play a dominant role”.

“They are concerned if a more powerful China will offer broader, credible and sustainable opportunities for Western businesses and products,” he said.

The latest trade talks between China and the US in Beijing over the weekend did not produce any concrete results, and the statement issued later by the Chinese side made no mention of the Made in China plan. Nonetheless, Beijing made it clear on Sunday that its trade promises will “not go into effect” if the US puts any sanctions – including additional tariffs – back on the table.

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Shen Jianguang, chief economist for Mizuho Securities Asia in Hong Kong, said that while he considered it unwise to play up the Made in China plan while the rest of the world had such a deep mistrust of it, he doubted Beijing would change its course.

“If it’s about the inner economic system, the state-owned economy, a state-led catch up strategy in technology … China won’t make compromises,” he said.

“[So] it seems a small-scale trade war is about to happen.”