Made in China 2025: Prospects and Challenges in Advanced Manufacturing
This article was originally published in Italian in Class on 20th May 2025.
Please note that this is a courtesy translation of the Italian language article originally published in the Panorama Magazine Issue at: https://www.classxhsilkroad.it/news/industria/made-in-china-2025-luci-e-ombre-sulla-manifattura-avanzata-202505201043387255
China is now the only global manufacturing superpower, accounting for 29 per cent of global value manufacturing as of 2023, which represents the manufacturing size of the United States and the European Union combined. While China has long had this manufacturing power for low-tech goods, it has increasingly expanded its reach into advanced manufacturing capabilities. Undoubtedly, the Made in China 2025 (MIC2025) policy had a critical impact on reaching this goal.
But what is Made in China 2025?
Launched in 2015, MIC2025 is part of a long-term strategy aimed at bringing China to a high level of self-reliance and leadership in strategic technologies or even self-sufficiency in some instances[1]. Following the same trend as the 2010 Strategic Emergence Initiative, its main evolution was setting specific market share targets, global and domestic, for 10 sectors: next-generation information technology, high-end numerically controlled machinery and robots, aerospace and aviation equipment, maritime engineering equipment and high-tech maritime vessel manufacturing, advanced rail equipment, energy saving vehicles and new energy vehicles, electrical power equipment, agricultural machinery and equipment, new materials, biopharmaceuticals and high-performance medical devices.
Although not all sector-specific targets have been met, the general objective of improving China’s overall manufacturing capabilities has advanced significantly. For example, China’s industrial automation is now greater than any European country, as it surpassed Germany in the number of industrial robots per 10,000 workers. More and more Chinese companies have become world leaders, capturing a growing global market share. Let’s look at a few examples: China’s shipbuilders took around 70 per cent of new global orders; China’s share of the global electric vehicle (EV) market rose to 76 per cent; and Chinese solar panels made up over 80 per cent of the global market share.
Yet, although impressive numbers, MIC2025 also had negative externalities. Policy support and government subsidies led to high inefficiencies in specific sectors, creating saturation. Several industries that performed well on paper also experienced price wars, forcing them to export to survive. The latter created defensive reactions from other markets, such as the EU’s EV probe, which is highly undesirable for China.
Moreover, China underperformed in several sectors; for instance, China’s commercial jet, C919, is still largely dependent on foreign technology. For other sectors, like medical devices, China is able to compete with foreign companies, but their alternatives are of lower quality.
MIC2025 has also been increasingly harmful to foreign companies. Many of them have experienced increasing market barriers or difficulty competing for Chinese procurement, which favours bids at very low prices, even at the expense of quality. Yet, China would not have achieved such a degree of self-reliance without foreign-invested enterprises (FIEs).
We can identify three stages of domestic technology development. In the early stages, FIEs experience a high level of market access, as they are helping Chinese companies to get ahead, the best example being the aviation sector. The developed stage is in between, where Chinese companies produce a comparable but not equivalent product. There, FIEs rapidly lose market share as market barriers are increasing simultaneously. Biopharmaceuticals, numerically controlled machinery and robots are some of the examples. Finally, in the advanced stage, Chinese producers have equivalent or superior products compared to their competitors. Market barriers are being removed as FIEs become less competitive and experience a significant or total loss of market share. This is what happened to the rail and Electric Vehicles sectors.
At a time of increased global trade tensions and US/China tariffs turning into a trade war, it is crucial for the EU to seek enhanced economic cooperation with China. US tariffs towards China partly result from years of political pressure that has built up in Washington to counteract what is seen as unfair practices from China. MIC2025 played a central role in this buildup and was widely cited as a direct threat to the US economy. Although the way US tariffs have been calculated was arbitrary and their execution controversial, the ongoing trade war serves as a reminder of what years of buildup can lead to. While typically acting more targeted and measured than the US, the EU shares many of its concerns and pressure is increasing to address them. The US has provided a roadmap for what not to do by going too far too fast, but this does not significantly change the calculation for the EU; it just raises the stakes for China to deliver on its promises.
‘New productive forces’[2], China’s new industrial policy introduced in 2023, embodies many of the same core principles as MIC2025. However, its comparatively vaguer framework allows China to optimise its self-reliance efforts to be more market-driven so that European companies can continue competing in the country’s strategic sectors in the long term.
By: Avv. Carlo D’Andrea, National Vice President of the European Union Chamber of Commerce in China and Chairman of the Board of the Shanghai Chapter，Founder and Managing Partner of D’Andrea & Partners Legal Counsel
[1] China’s Third Plenum in 2024 called for ‘self-sufficiency in scientific and technological infrastructure’.
[2] New productive forces refer to ‘new productive forces that emerge from continuous breakthroughs in science and technology, driving strategic future and emerging industries that may introduce disruptive technological advancements in an era of intelligent information’.
