Tom Holland

Abacus | Beijing’s ‘Made in China 2025’ plan isn’t dead, it’s out of control

The ‘Made in China 2025’ strategy, announced four years ago to great fanfare, targets a 70 per cent self-sufficiency in critical components across a range of hi-tech industries

But while authorities have publicly stopped talking about it, Beijing has continued to aggressively pursue the plan’s goals, with the central and local governments pouring billions into the development of new industries

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Workers at a production line manufacturing electronic keyboards in Tianjin, China. Photo: Reuters

Tom Holland

Published: 8:00am, 8 Apr 2019Updated: 2:42am, 9 Apr 2019

When Li Keqiang stood up in the Great Hall of the People last month to deliver his annual work report, he spoke for more than an hour and a half. Yet, the Chinese premier was notably silent about one high-profile government policy.

Not once did he mention Beijing’s flagship “Made in China 2025” industrial strategy, unveiled with such fanfare back in 2015.

Since then, of course, MIC2025 has attracted intense criticism internationally. Beijing’s plan to pour vast state resources into seizing a dominant position in emerging high-technology industries was one of the main complaints in the US Section 301 report that last year led Washington to impose punitive tariffs on imports from China. And MIC2025 was one of the main reasons the European Union last month declared China a “systemic rival” and promised curbs on Chinese state-backed businesses in Europe.

But anyone who thinks Li’s uncustomary silence on the subject means that Beijing is backing away from its signature strategy is barking up the wrong tree. Far from crumpling in the face of foreign pressure, the Chinese government is more likely to double down and pursue its policy with even greater vigour.

One of the principal aims of MIC2025 is to sever, or at least reduce, the dependence of Chinese industry on imports of sophisticated foreign-made technologies, such as advanced semiconductors.

This dependence was thrown into sharp relief last year. In April, the US Department of Commerce banned American companies from selling components to state-owned Chinese telecommunications equipment company ZTE for breaches of US sanctions on Iran and North Korea. With ZTE’s viability threatened, Chinese President Xi Jinping was obliged to intervene personally to get the ban lifted.

Don’t mention ‘Made in China 2025’: Beijing budget vow has notable omission

Then in November, the US cited national security concerns to impose controls on exports of all “commodities, software and technology” to Fujian Jinhua Integrated Circuit, a move that quickly brought the state-owned semiconductor manufacturer to its knees.