What ‘Made in China 2025’ Means for Trade

China is trying to achieve new goals and broaden their manufacturing skill set from inexpensive, labor-intensive tasks to developing more sophisticated products in the technology industry with their new plan, ‘Made in China 2025.’ This week, we cover how China’s advancements are contributing to the trade war and how the U.S. is responding to the situation.

 

A Closer Look at the Plan

The Los Angeles Times offers a breakdown of the plan by explaining, “The plan funnels billions into 10 industries, everything from biopharmaceuticals to aerospace and telecom devices. It calls for 70% of related materials and parts to be made domestically within a decade.” China is setting high goals to create a different future for their country, including delving into artificial intelligence and become the leader by 2030.

Their plan was inspired by Industrie 4.0, a manufacturing initiative created by Germany to enhance their automation and intelligence. Economist Ashley Qian Wan from Beijing’s Bloomberg Economics reveals, “The labor supply is decreasing and that’s going to be a big problem for China.” The country had to follow a similar course of action as Germany to keep up with the demand of higher wages and outsourcing factories to other countries. Ultimately, they are trying to take steps that will better their country.

 

Playing Catch Up with Other Countries

China has struggled to keep up with countries like the U.S. when it comes to technology and innovation. The LA Times references Kennedy’s promise to send a man to the moon in 1961 while China had just experienced a famine and long-term university closures during the time the Internet was being developed in Silicon Valley. From China’s perspective, they simply view themselves as playing catch up with the rest of the world. Last year, they demonstrated growth with the creation of their first bullet train and jetliner, and they want to continue making progress with their ‘Made in 2025’ plan.

When the U.S. dismissed China’s plan, the country’s Foreign Ministry spokesman Hua Chunying stated, “We have good reasons to question the legality and legitimacy of many actions taken by the U.S. on the grounds of national security, like its plan to impose high tariffs on many industries of Made in China 2025.” The trade war seems to be brewing more tension between the U.S. and China, as it has not dissipated since the import ban was enacted last year.

 

The U.S.’s Perspective

U.S. officials worry that China’s advancements will make it difficult to compete in areas where we currently flourish. Though these worries seem to be a product of speculation, the U.S. wants to ensure our businesses will be protected when it comes to profit. A U.S. Trade Representative mentioned, “…if China dominates the world, it’s bad for America.” The Chinese President was open about sharing China’s desire to advance their economy. The U.S. seems to have a response to every action China takes, especially because China is now entering a competitive ring in the industry.

At Berg Mill, we continue to work hard to overcome fluctuating commodity markets, opening markets in other countries, forging strategic alliances, and improving domestic processing capabilities.

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