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Updated December 12, 2024
Made in China 2025 and Industrial Policies: Issues for Congress
The People's Republic of China (PRC or China) aims to
gain a global economic and technology leadership position
through a range of state-led industrial and related science
and technology (S&T) policies. These policies feature a
heavy government role in directing and funding PRC firms
to acquire foreign technology and related capabilities-
including basic and applied research and talent-in areas
where the United States has long been a global leader and
has strong comparative advantages. Some Members of
Congress have expressed concern that China's policies, if
successful, could undermine U.S. technological leadership,
further shift advanced technology, production, and research
to China, and support a wide range of China's technological
advancements, including in defense. The scope and scale of
China's efforts are evident in the amount of state direction
and support devoted to these efforts; PRC policies to lead
across the entire value chain (rather than just segments of it)
in key advanced and emerging technologies; and the tactics
China uses to target and acquire U.S. and allied capabilities.
Overy ew
In November 2022, at its 20th Party Congress, the
Communist Party of China (CPC) reiterated its focus on
technological innovation as the core driver of China's
development, a focus it first set in its Medium- and Long-
Term Plan for Science in Technology (MLP) (2006-2020)
and reaffirmed in its MLP for 2021-2025. These MLPs call
for advancing China's technological and scientific self-
reliance and advocate for assertive PRC corporate efforts to
acquire foreign technology and knowhow.
To implement the 2006-2025 MLP, in 2015, China's State
Council issued Made in China 2025 (MIC2025)-a broad
set of industry plans to boost PRC competitiveness by
advancing China's position in the global manufacturing
value chain, leapfrogging into emerging technologies
where there are not yet defined global industry leaders and
standards, and reducing reliance on foreign firms. PRC
plans rely on foreign technology and research to develop
PRC capabilities and talent. MIC2025 stresses indigenous
innovation, a process that often involves the acquisition,
absorption, and adaptation of foreign technology by PRC
entities, which may later recast these capabilities as their
own. This indigenous strategy obscures the extent of PRC
state ownership and control of PRC firms, and the role PRC
firms may play in advancing PRC development goals.
MIC2025 calls for technological breakthroughs in 10
sectors (Figure 1) and support for a range of sector-specific
plans. These plans aim to make China the leader in all parts
of the global value chain, and to increase the share of inputs
and finished goods produced in China and worldwide by
PRC firms. (Figure 2.) For semiconductors, for example,
this includes leadership in the full supply chain (e.g.,
design, operating systems, production, packaging, testing,
equipment, and materials) by PRC firms. MIC2025 is
focused on advanced manufacturing and on transforming
China's economy from one that assembles goods to one that
invents the products it makes. Specific goals include the
following:
By 2025. Boost manufacturing quality, innovation, and
labor productivity; obtain an advanced level of technology
integration; reduce energy and resource consumption; and
develop globally competitive firms and industrial centers.
By 2035. Reach a level of development that is on par with
global industry at an intermediate level, improve
innovation, make major technology breakthroughs, lead
innovation in specific industries, and set global standards.
By 2049. Lead global manufacturing and innovation with a
competitive position in advanced technology and industrial
systems. (This date coincides with the 100th anniversary of
the founding of the PRC.)
Figure I. China's Industrial Priorities (2015-2025)
Source: Notice of the State Council on Issuing Made in China 2025,
May 8, 2015, Guofa [2015] No. 28.
China's current economic development plan, the 14th Five-
Year Plan (FYP) for 2021-2025, promotes MIC2025 goals
by seeking to strengthen PRC-controlled supply chains in
order to bolster MIC2025 priority industries. The FYP also
calls for expanding the use of antitrust, intellectual
property, and technical standards tools to set market terms
and promote the export of MIC2025 priority goods and
services. The FYP also directs the expansion of foreign
research ties for the development of PRC capabilities in
MIC2025 areas. Deliberations on the 15th FYP are slated to
start in 2025.](ViewImageLocal?handle=hein.crs/goverqj0001&div=1&collection=&method=preview&ext=.png&size=3)