"Made in China 2025" - China's next economic rise?

(Baonghean.vn) - Based on a plan involving “smart manufacturing” and “industry 4.0” instead of labor-intensive manufacturing, China aims to become a leading industrial power by 2049. What does this mean for other industrialized countries?

The State Council, the cabinet headed by Premier Li Keqiang, recently announced the “Made in China 2025” strategy, a national-scale strategy to enhance regional competitiveness through automation and comprehensive technological improvement.This is part of China's vision of an economy less driven by exports and investment and more by services and smart industrial manufacturing.

The 10-year strategy is expected to help shift China’s economy away from low-value, labor-intensive manufacturing toward higher-value-added manufacturing. It includes plans for reform, technology and industry consolidation, strengthening the industrial base, promoting Chinese brands, and greening manufacturing.

The strategy also aims to promote breakthroughs in 10 key industries in which China wants to become a future leader, including information technology; robotics; aerospace; railways; and electric vehicles. To achieve this, Beijing plans to continue state-led innovation, proposing to establish 15 manufacturing innovation centers by 2020 and expand to 40 by 2025.

China aims to boost manufacturing output by 2025. Photo: Xinhua.

This new vision shows that China’s leaders recognize that it is time to transform its traditional manufacturing industry to catch up with or outpace other countries’ manufacturing industries. “The new measures reflect the increased competitive pressure that Chinese manufacturing is facing,” said Rajiv Biswas, a senior Asia-Pacific economist at global analytics firm IHS. “Other Asian markets are emerging while production costs are rising in China.”

Inspired by Germany

The main inspiration for this grand strategy is Germany's “Industry 4.0” concept – a plan launched last year to boost competitiveness through globally interconnected production chains and plants.

“Germany’s ‘Industry 4.0’ plan is shaping China’s internal debate on industrial modernization and competitiveness,” said Jost Wübbeke, a research fellow at the Mercator Institute for China Studies (MERICS) in Germany. Beijing and Berlin have also established strong bilateral ties. China is one of Germany’s largest trading partners, and Germany is one of China’s most important sources of technology and know-how.

In fact, Michael Clauss, the German ambassador to Beijing, said in a recent statement that the Chinese and German governments agreed that 2015 would be a year of innovation, “with the promotion of Industry 4.0 at the core of the common agenda.”

Will the world economic landscape change?

But China will have to overcome many challenges, including improving data and cybersecurity, and providing faster internet speeds to keep up with the rapidly increasing data flows. The transformation of China’s manufacturing sector toward higher value-added will only be partially completed in the next 10 years, experts say.

But Beijing appears to have taken this into account and is now planning two further phases aimed at turning China into the world's leading “industrial superpower” – a goal that analyst Wübbeke sees as realistic.

“Despite a large technological gap compared to industrialized countries, China’s extremely dynamic development will greatly promote industrial innovation. China will have a superior innovation capability in the future and create technology that can compete with leading technology providers,” said the MERICS expert.

So what does this mean for the world? On the one hand, it seems that consumers around the world will benefit from better and cheaper products that come from a sustainable green development model. However, a key consequence is increased competition – meaning that this new strategy could pose a threat to industrialized nations that currently have an advantage in advanced manufacturing sectors.

According to Biswas, increased competition is already evident in some advanced manufacturing segments, such as high-speed rail – an area where China is competing with the EU and Japan for orders in developing countries.

Thu Giang

(According to Deutsche Welle)