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Why China is targeted with its made in China 2025 strategy [Copy link] 中文

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Post time 2018-4-20 10:48:00 |Display all floors

According to some research paper, US President Trump’s objective is not a full-blown trade war, but an attempt to stymie China’s goal of gaining global technological leadership, as outlined in its “Made in China 2025 Initiative”. What do you think about ‘Made in China 2025’?Why has the "Made in China 2025" program sparked concerns among some Western countries, particularly the US?

Foreign Firms Wary Of 'Made In China 2025,' But It May Be China's Best Chance At Innovation

(Forbes) China is attempting to meet the goals laid out in its "Made in China 2025" proposal, which aims to boost manufacturing innovation and promote home-grown products. The plan was introduced in May 2015 and implementation guidelines were completed last month by the Ministry of Industry and Information Technology, with the participation of more than 20 State Council departments. The program is perhaps overly ambitious, but key to upgrading China’s manufacturing industry.

But it doesn't come without some opposition. A report released by the European Union Chamber of Commerce in China on Tuesday, and other foreign manufacturers, have taken issue with the program as it provides government assistance to Chinese industries, thus reducing the competitiveness of foreign firms operating in China.

Lofty goals

The program aims to increase the domestic content of core materials to 40% by 2020 and 70% by 2025. At present, domestic content is relatively low for high-tech goods, with foreign content comprising more than 50% in these products on average. In some categories, such high-level digital control systems and high-level hydraulic components, China is almost entirely dependent on foreign production.

To lessen its reliance, China is focused on creating innovation centers, which will build a foundation for industrial development and generate a greater variety of high-end equipment.

Smart manufacturing pilot cities, like Ningbo in China’s coastal Zhejiang province, have focused on implementing smart equipment and using cloud computing. Vice Premier Ma Kai has recently encouraged attempts at smart manufacturing, noting that China needs to strive harder to reach international levels in the industry. China is far from reaching the vision of setting up factories that carry out production processes entirely without human intervention. As Boy Lüthje of Sun Yat-Sen University in Guangzhou has noted, even in the “smartest” factories in China, assembly lines in which workers carry out processes persist. China is in the nascent stages of "smart" production, and is addressing one aspect of this process at a time.

Innovation centers, which are to number 15 by 2020 and 40 by 2025, will assist the development of technology, smart manufacturing and creation of new materials. These centers make use of both public and private funds. Innovation centers are to focus on domestically-created, as opposed to foreign-created, technologies for security reasons, although it has been noted that this may restrict the technologies that can be applied.

Companies should also be encouraged to innovate more, as the number of globally-competitive innovative firms, like Alibaba and Xiaomi, have been limited in number. Science- and engineering-based product innovations have previously remained low in China due to a lack of sufficient funding for research with longer incubation periods. While innovation centers may address this gap, particularly for state-owned enterprises, venture capital funding should also be encouraged for private enterprises to inject staged funding into product development as needed. This can help China achieve one of the aims of "Made in China 2025": increase research and development spending to 1.68% of operating revenue by 2025, from less than 1% in 2015 and 1.26% in 2020.

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Post time 2018-4-20 10:48:40 |Display all floors

The criticisms from foreign firms

Though "Made in China 2025" sounds great for China, foreign firms have raised concerns.

The European Union Chamber of Commerce in China recently released a report, "China Manufacturing 2025: Putting Industrial Policy Ahead of Market Forces," criticizing the government subsidies that are provided to high tech industries in China, noting that these firms will be able to compete unfairly with foreign firms that have no government funding.

A paper put out by the Mercator Institute for China Studies in December 2016 underscores this idea. It noted that “while Chinese high-tech companies enjoy massive state backing, their foreign competitors in China face a whole set of barriers to market access and obstacles to their business activities: the closing of the market for information technology, the exclusion from local subsidy schemes, the low level of data security and the intensive collection of digital data by the Chinese state.”

This is already an issue faced by foreign firms, and preferences shown to domestic firms via "Made in China 2025" will exacerbate the problem. While Premier Li Keqiang stated in his report to the National People's Congress on Sunday that foreign firms would receive the same access to license applications, standards, and government procurement, more must be done to reassure foreign firms that China play according to the global rules of the game.

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Post time 2018-4-20 10:49:09 |Display all floors

What does this say about the success of the program?

China still has a long way to go before it will truly master some of these objectives on the level of advanced countries, but upgrading China’s production processes and honing in on innovation are essential to moving up the value chain. China has to create and implement new technology if it is going to remain internationally competitive.

In fact, it may be a good thing that China moves to less labor-intensive processes slowly, as it has a large pool of labor. Recently, the government stressed plans to improve skills among the manufacturing labor force, which is a better point of focus than replacing humans with robots wholesale (though some firms are aiming toward the latter).

One has to question whether the "Made in China 2025" program is the best pathway to setting up an innovation economy. Is this program better than allowing foreign companies to compete, forcing Chinese companies to innovate? The program may not be ideal, but it will move China toward the sophisticated manufacturing regime it aspires to.

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Post time 2018-4-20 19:11:27 |Display all floors
This post was edited by sfphoto at 2018-4-20 19:12

Nothing wrong with Made in China 2025.

Western MNCs are afraid they will lose their technological advantage to Chinese companies which would receive State funding and support under the Made in China 2025 plan. That’s precisely the point: the Chinese State needs to finance and support the development of indigenous designs and  technologies because local companies don’t have the resources to compete against Western MNCs. If Western MNCs are not happy that Chinese companies will eat their lunch, they should pack their bags and move back to where they came from.

In the past, China relied upon foreign designs and  technologies to manufacture products for export markets. In the future, foreign companies will depend upon Chinese designs and technologies to manufacture products for the Chinese market.

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Post time 2018-4-20 20:42:56 |Display all floors
As far as "high-level digital control systems and high-level hydraulic components" I wouldn't worry too much if I were China. If Huiwei can do what it did with cell phone and router technology then perfecting control systems should be a piece of cake. Even I can do that.
Hydraulic systems are so basic it never really gets that complicated. Just messy if you don't
get all the fittings tight.
The real challenge is the balance between "lights out" manufacturing on one extreme and
using a good deal of labor on the other extreme.
Lights out hasn't even been perfected in the most advanced western factories except
in theory. There is plenty of time for that. And even lights out factories need maintenance
workers to fix things when something doesn't go right.
Besides that, lights out factories come to a screeching halt when things don't go right,
at least in the near future and probably beyond. Factories with human labor still function
when things don't go right and can adjust and recover more rapidly.
It might be best to go with the present plan and adjust in a steady way while finding out
the faults with a lights out factory.

If the US is crying out for "Made in the USA" why do they object at all to "Made in China 2025"?
It smells strongly of another double standard by the west.
If capitalism promotes innovation and creativity then why aren't scientists and artists the richest people in a capitalist nation?

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Post time 2018-4-21 13:31:05 |Display all floors
Generally Westerners still want to control Asians. If China acquires technology leadership, the world then has options. It will not be led solely by the US-UK duo. Americans still want to have hegemonic control over the entire world and UK wants the small drips from US. Simple as that.

It is up to Asians, Africans and Latin-Americans whether they still want to be controlled by a US that has no reservation in bombing any country that does not trod down the path as decided by the US or not.

Of course Australia is in unison with US always. It is US' assured bellicose upon China. Countries like Philippines and Indonesia are largely not assured of China's behavior towards them will continue to hedge. If the  Filipinos and the Indonesians find that lifestyle and social norms are compatible with the Chinese, the need to hedge will wane. So the best option for US is to thwart the potential of China-Indonesia-Philippines collaboration by grooming extreme fundamentalists, religious ones in particular. In any case if these religious extremists can help US defeat China, then after that it is still a piece of cake for US to bomb them into the oblivion as there is no shield them. If the proud US that prides itself being able to fight on three fronts and still win all can bomb West Asia into the oblivion, why can't it bomb an Indonesia into total submission and slavery with an ever ready Australia to do so? For Indonesia's interest the demise of Australia will not reduce its options. In fact it increases. Of course the China-Indonesia partnership can be very good. Work ethic wise, these two are compatible. Their difference is in spiritual. If this can be overcome, then the China-Indonesia partnership will bring about immense advancement for Indonesia, only if Australia is Polynesian governed. As Indonesia partners China closely it will not see reduced submission by US to its call. Even without US, Indonesia will have the continued support from India, Saudi Arabia and Egypt which are more than enough to provide a healthy balance to China. In any case China will like to work with Indonesia too from which China can also reach out to Middle East from Indonesia. The only problem = Australia.

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Post time 2018-4-21 15:20:25 |Display all floors
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