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.
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.