China’s ‘two sessions’ 2021: Beijing zeroes in on eight core areas for country to become manufacturing superpower

The renewed focus on advanced manufacturing forms an integral part of China’s 14th five-year plan
The strategy would help offset rising production costs, reduce reliance on foreign technologies and enhance competitiveness against the US

Two Sessions 2021 (Lianghui)

Che Panin BeijingandCelia Chenin Shenzhen

Published: 10:00pm, 5 Mar, 2021

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China unveiled on Friday a comprehensive plan to upgrade its manufacturing capabilities by 2025 via eight priority areas, sharpening its global competitiveness amid a broad trade and tech dispute with the United States.

The plan, which was introduced at the annual meeting of top legislative body the National People’s Congress (NPC), is focused on rare earth and special materials, robotics, aircraft engines, new energy vehicles and smart cars, high-end medical equipment and innovative medicine such as vaccines, agricultural machinery, major equipment used in shipbuilding, aviation and high-speed rail, and industrial applications of China’s Beidou global navigation satellite system.

“We must keep the share of manufacturing stable in the overall economy and enhance China’s competitive advantages in this sector,” the government said in the 142-page 14th five-year plan, which is set to be endorsed by the NPC’s nearly 3,000 delegates.

Beijing’s emphasis on advanced manufacturing forms an integral part of the country’s 14th five-year plan, which spells out the country’s economic and development goals for 2021 to 2025. The “two sessions” – the annual gatherings of the NPC and the Chinese People’s Political Consultative Conference – provide a window on the central government’s new priorities and programmes.

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The renewed focus on advanced manufacturing, years after Beijing played down its “Made in China 2025” strategy amid complaints from Washington and Brussels, reflects the Chinese government’s determination to pursue a hi-tech transformation of this sector. That would help offset rising production costs, strengthen the country’s position in global supply chains, reduce reliance on foreign technologies and enhance its competitiveness against the US.

China’s latest manufacturing strategy comes amid reports that the US Senate is considering including US$30 billion in funding in a new bill to boost competitiveness against China. US lawmakers aim to bring the package, which would include other elements to boost America’s tech sector, to a full vote in April, according to a Reuters report citing a congressional source.

China will fix its weak links in key components, software, materials and fundamental systems over the next five years, according to the new five-year plan. It said the country will develop an industrial value chain that is “more innovative, secure and with higher value added”, helping enhance competitiveness in “high-speed rail, electrical equipment, new energy and shipbuilding”. It also indicated that “key parts of the value chain” must remain within China.

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Advanced manufacturing, which covers various aspects, from scientific research to production, provides China with the foundation to foster innovation and cut reliance on foreign technologies, according to industry experts.

“Look at these companies blacklisted by the US [including telecommunications equipment maker Huawei Technologies Co and chip foundry Semiconductor Manufacturing International Corp] and you will see that what is being stifled is advanced manufacturing in things like chips and lithography equipment,” said Li Yi, chief research fellow at the Shanghai Academy of Social Sciences. “China’s top authorities are shifting talent and funding to manufacturing industries because they realise the risks.”

Manufacturing – which accounted for 38 per cent of China’s gross domestic product in 2020, according to official data – is considered the backbone of the country’s industrial economy. China is the world’s largest manufacturer in terms of output and has gained a reputation as the “world’s factory” soon after its accession to the World Trade Organisation in 2001.

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“Advanced manufacturing’s impact on China’s economic growth covers not only employment, but also the development of supply chains,” said Guo Wanda, executive vice-president of Shenzhen-based think tank China Development Institute.

The draft plan presented to the NPC also expects “nascent industries” to add significant economic value and account for 17 per cent of the country’s GDP from 2021-2025 period. It also pushed for a faster roll-out of 5G mobile networks to increase user penetration up to 56 per cent in the same five-year period.

Stressing the importance of tech innovation benefiting a range of industries, Chinese Premier Li Keqiang mentioned “technology” 23 times in the government’s work report this year, up from nine times last year.