Like Make in India, China had ‘Made in China 2025’ plan: 10 years later, lessons it holds for India

The ‘Make in India’ initiative was launched in September 2014, aimed at making India a hub for manufacturing, design, and innovation.. A year later, China launched its own ‘Made in China 2025’ plan.

Unlike Make in India, which the Indian government regularly talks about, the slogan ‘Made in China 2025’ pretty much disappeared from public discourse in a few years.

However, the World Economic Forum (which holds the annual Davos conference), has recently come out with a stock-take of China’s policy, and it has important takeaways from India.

What is ‘Made in China 2025’, how successful has it been, and why do the Chinese rarely talk about it? We explain.

What is ‘Made in China 2025’?

‘Made in China 2025’, released in 2015, was the blueprint for China’s manufacturing sector for the next 10 years. While China was already the world’s factory by then, this policy aimed to expand to higher-value manufacturing, in terms of both products, technology, and innovation.

It identified 10 core focus areas, including electric cars, artificial intelligence (AI), and next-generation information technology (IT), agricultural technology; aerospace engineering; new synthetic materials; advanced electrical equipment; emerging bio-medicine; high-end rail infrastructure; and high-tech maritime engineering, as listed in 2015 by think tank Council on Foreign Relations (CFR).

The WEF report from last week said, “First announced in 2015, Made in China 2025 (MIC2025) set the tone and tempo of China’s industrial ambitions. Today, this strategy is entering a new phase — an AI-augmented, green-energy-powered, self-reliance-oriented transformation of the world’s most formidable industrial base.”

Why do Chinese leaders not talk about it much?

An article in The Economist from January rather eloquently says, “Like Lord Voldemort from Harry Potter, “Made in China 2025” is an initiative which induces so much fear and loathing abroad that Chinese officials dare not speak its name.”

This is because many policies in the document are widely seen as giving unfair advantage to Chinese companies and putting too many hurdles for firms from other nations.

The Chinese government heavily supports its industries, with capital expenditure, easily available loans, tax relief, etc. This enables them to manufacture goods cheaply, which they then export across the world, often at the cost of the industries in the importing country. India’s markets being flooded with cheap Chinese goods are a case in point.

On the other hand, China puts stringent conditions for foreign firms to do business there. Often, companies are allowed entry into China only if they part with technical expertise and know-how.

When ‘Made in China 2025’ was released, many countries, especially in the West, cried foul over its proposed measures. Fearing adverse action, like sanctions or export curbs, China stopped talking up the policy.

How successful has Made in China 2025 been?

Very. According to the WEF report, “China now dominates key green technologies: over 75% of global lithium-ion battery manufacturing, nearly 80% of solar module production, and the lion’s share of the world’s electric vehicle output. High-speed rail has become a showcase of engineering prowess. In robotics and sensor technologies, rapid progress has narrowed the gap with global leaders.”

Other major benefits have been the focus on research and development, the upskilling of its workforce, and the creation of integrated supply chains.

In fact, the only major areas where China has fallen short of its goals are making semiconductors and manufacturing passenger aircraft.

The other downside has been that excessive focus on manufacturing meant China neglected the demand side of the economy, and did not develop its services sector to its full potential.

The ‘Made in China 2025’ story, thus, holds many lessons for India, which has a well-developed services sector but has a long road to cover in manufacturing.