David Zweig

Opinion | China counts the costs of its lurch from market reform to ‘Made in China 2025’

The Xi government pledged market reform in 2013, the same year a think tank began research on a competing plan that would become ‘Made in China 2025’. The latter has outpaced reforms, arguably to the nation’s loss

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David Zweig

Published: 3:00am, 22 Apr 2019Updated: 3:00am, 22 Apr 2019

The year 2013 was a critical year in China’s development. At the Central Committee third plenum in November, President Xi Jinping’s new administration promised to dramatically marketise China’s economy. However, in August that year, the Chinese Academy of Engineering had begun research on an alternative model, “Made in China 2025”. The fact that this industrial plan has superseded the 2013 reform programme has enormous implications for China and its relations with the world.

At the 14th party congress of 1992, China announced the establishment of a socialist market economy, where the market would form the basis of the economy and the public sector would play a decisive role. Every congress thereafter reconfirmed that stance. But in 2013, perhaps prodded by a joint report by the World Bank and China’s Development Research Centre of the State Council, the third plenum notes reversed those positions, giving the market the “decisive role” in the economy.

A host of reforms were outlined in these documents. An expanded private sector would more easily obtain bank loans while state-owned enterprises would undergo intense changes. Decades-old barriers to trade between provinces, between the rural and urban economies, and between China and the world, were to be removed. A robust social welfare regime would be funded by an increasingly vibrant public sector and the hated hospital system would be reformed. Under a new landholding system, villagers would be able to use their land as collateral for new businesses that, by some accounts, could inject 2 trillion yuan (US$298 billion) into the countryside and smaller cities.

However, very few of these initiatives came to fruition. Reports suggest that many proposals based on those goals have not seen the light of day because no senior official is pushing them.

“Made in China 2025” began in 2013 when the Chinese Academy of Engineering initiated nationwide research on what was then called the “Strategy of Innovation Design”. This project involved interviews with 153 firms in 32 cities, over 50 seminars with local governments and design organisations, as well as a dozen academic lectures, and culminated in a report that was a clear challenge by the academy and its partner, the Ministry of Information and Industrial Technology, to the reform programme.