Made in China 2025, and what it means for foreign investors

Made in China 2025, and what it means for foreign investors

Made in China 2025 (MIC 2025), an initiative to transform China into a hub for advanced manufacturing, has been met with curiosity, and some confusion, by observers since it was unveiled in 2015.

The international business community is curious about how effective the policy will be. Many wonder whether MIC 2025 will end up like Germany 4.0, which was successful in increasing Germany’s national industrial capacity, or Make in India, an initiative to encourage manufacturing in the country, which has not fully lived up to expectations.

While many aspects of MIC 2025 are a work in progress, the government has released two important sets of information since 2015: the leadership and membership of MIC 2025’s Small Leading Group (SLG) and 12 documents called “1+X” that serve as a general outline for how MIC 2025 will be implemented.

Given the heavy hitting roster of high-level officials in MIC 2025’s Small Leading Group (SLG), it is clear that MIC 2025 has administrative weight, which is unsurprising given that the policy will guide China’s economic development. The SLG has the capability to effect real and meaningful economic reforms.

The SLG’s main implementation tool, as defined in 1+X, is financial support for R&D that will in turn support indigenous innovation.
This support will primarily come from increased access to capital and subsidies, which will not be available to foreign companies.
A closer examination of both the SLG and the 1+X sheds further light on MIC 2025 and what it means for business in China.