Date
18 September 2018
Made in China 2025 is part of Beijing's plan to turn China into a global manufacturing power. Photo: english.gov.cn
Made in China 2025 is part of Beijing's plan to turn China into a global manufacturing power. Photo: english.gov.cn

Trump’s trade policy is all about thwarting Made in China 2025

What’s China’s most significant economic strategy? It’s neither Belt and Road Initiative nor Guangdong-Hong Kong-Macau Greater Bay Area. It’s, in fact, the low-profile Made in China 2025.

US President Donald Trump has announced new tariffs on US$50 billion of Chinese goods, which are exactly aimed at hindering China’s Made in China 2025 plan.

Made in China 2025 was unveiled by the State Council on May 8, 2015. The plan has caught the attention of leading US think tanks on China, such as RAND, CATO and Brookings. They’ve been doing research on the Chinese strategy since 2016, and has urged US political and business leaders to take it seriously.

Beijing describes Made in China 2025 as the first 10-year blueprint to turn China into a global manufacturing power.

Under the plan, the government intends to achieve breakthroughs in ten areas: next-generation information technology, high-end numerical control tools and robotics, aerospace equipment, ocean engineering equipment and hi-tech ships, advanced rail transportation equipment, energy-saving vehicles, power equipment, new materials, agricultural machinery and biomedicine, and high-performance medical devices.

The authorities pledge to foster market development, guide inventors and provide supportive policies and fiscal subsidies to meet the goals.

By achieving those breakthroughs, China hopes to become a leading manufacturing power by 2025.

Why is the United States so sensitive about China’s plans? There are three possible reasons.

First, planned economy has proved to be much less efficient than free-market economy over the last several decades. But new technologies such as internet and big data may change that and give China the upper hand.

Second, China is already the world’s second-largest economy. If the plan succeeds, China will seriously threaten the United States’ dominant status.

Third, China itself has the world’s largest market with 1.3 billion population. And it could strengthen access to one-third of the world’s population by adding the areas covered by the Belt and Road Initiative.

Consumer electronics, garments and furniture are the three main sectors where the US has the largest trade deficit with China, amounting to US$167.3 billion, US$29.3 billion and US$23.4 billion respectively.

The US should target these areas first if it seriously wants to reduce the trade imbalance.

But Trump is aiming at new technologies such as robotics, aerospace equipment, new energy products, etc.

This indicates that his true intention is to thwart Beijing’s Made in 2025 plan, and prevent Chinese products to penetrate the US market with the help of subsidies.

– Contact us at [email protected]

CG

Hong Kong Economic Journal columnist

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