When China announced the Made in China 2025 plan, it was very clear that this would be a very hard pill to swallow for the world, especially the West. The negative outlook is not because China is aiming to advance technologically, but the path it is choosing to advance is fraught with possibilities of global trade conflicts.
The 2025 strategy
The vision for 2025 aims for a China that is a global behemoth in technology and industry. Unlike the current economy, which largely relies on duplicating ideas, the Chinese government wants to create a country that will innovate and grow.
“We will implement the ‘Made in China 2025’ strategy, seek innovation-driven development, apply smart technologies, strengthen foundations, pursue green development, and redouble our efforts to upgrade China from a manufacturer of quantity to one of quality,” SCMP quotes Premier of the State Council of the People’s Republic of China Li Keqiang from the 2015 presentation.
In short, China wants to be the market leader in every major technology industry of any value. And for this, it has a three-phase plan ready. While the first phase would encourage the localization and indigenization of production, the second phase would move on to focus on substitution. The third and the final phase is where the businesses will start focusing on capturing the global market.
The Chinese have very ambitious targets in mind. It wants the domestic industry to have an 80 percent share of ship component and new energy vehicle industries, 40 percent in the chip making industry, 60 percent in cloud computing, and so on by 2025. And countries like Taiwan, South Korea, and Germany are all worried that the Chinese might just push them aside and march on.
The trade fears
A major point of conflict that has arisen between the U.S. and China is with regard to technology transfer. The Chinese were trying to force U.S. companies to divulge their IPs in order to gain access to their domestic market. And this did not sit well with the United States.
“China has engaged for a very long time in the theft of our intellectual property, as well as practices like forced technology transfer… We’re hopeful that China will basically work with us to address some of these practices,” The New York Times quotes Peter Navarro, trade advisor for U.S. President Trump.
Part of the fear from the American side is also the possibility that they might actually end up becoming dependent on the Chinese for critical technologies like semiconductors, ship components, and so on. The U.S. definitely does not want this to happen.
In fact, the United States government has started to impose tariffs on Chinese imports in a bid to force the Chinese government to honor international trade agreements and end unfair trade practices. In an interview with PBS, Navarro clears the U.S. position on China: “So all we’re doing is imposing tariffs, not to punish China, but to recover — let me be clear about this — but to recover the US$50 billion a year in damages they inflict upon this country by engaging in these practices.”
How the Chinese government will react to this is something that is to be seen. Though they also have started to impose tariffs on American imports, the Chinese government should understand that its dream of “Made in China 2015” will not be possible if it continues its unfair trade practices and irks its major export markets like Europe and the U.S.