US using trade to check China's rise
China introduced the Made in China 2025 plan on May 19, 2015, to keep pace with the new industrial revolution, and for upgrading and transforming its manufacturing industry. Since the global financial crisis, many countries have adopted a re-industrialization strategy, such as the US' National Strategic Plan for Advanced Manufacturing and Germany's Industrie 4.0, to meet the challenge of the new industrial revolution.
As a big industrial power with the world's largest manufacturer, China too should make efforts for upgrading its manufacturing industry. Made in China 2025's aim is to do exactly that, by promoting innovation in manufacturing and improving the industry's quality and efficiency. The plan's focus is on intelligent manufacturing, similar to the US and German strategies, and its 10 key areas of focus are also similar to those of the US' advanced manufacturing plan, and both aim to provide the direction for industrial development.
Since the United States has no reason to launch a trade war using such a plan as a pretext, its actions prove it wants to maintain its hegemony to deprive China's development rights.
Made in China 2025 follows the principle of market-orientation and competition, which is intrinsic to China's industrial upgrading and development. The primary principle of Made in China 2025 is to be led "by the market while (being) guided by the government". The Chinese government supposes that without the principle of market-orientation, China cannot fully transform and upgrade its manufacturing industry and effectively meet the challenges of the new industrial revolution.
China has stepped into the later stage of industrialization, where the economy's driving force has to be innovation, and Made in China 2025's aim is to inspire innovation by following the principle of market-orientation and competition.
On Oct 12, 2015, the State Council, China's Cabinet, issued a document on promoting price mechanism reform through enhanced price supervision, enforcement of the Antitrust Law and gradual establishment of a basic competition policy. And in 2016, the State Council launched a fair competition review system to develop a fair market environment for foreign and domestic enterprises.
The Made in China 2025 plan promotes five major projects to cultivate and improve the innovative capacity of the manufacturing industry, because the Chinese government knows the key to implement Made in China 2025 is to build a sound innovation ecology.
In recent years, China has laid a lot of emphasis on inclusive policies to reduce enterprises' burden, inspire innovative activities and strengthen intellectual property protection. And while the Chinese government plans to establish a manufacturing innovation center to accelerate innovation, the US National Network for Manufacturing Innovation has plans to establish more than 15 national manufacturing innovation institutions with $70 million to $120 million of federal government funds.
Following the principle of Made in China 2025, the Chinese government will treat foreign and domestic enterprises equally. Many US enterprises have played a role in the implementation of the Made in China 2025 plan, and China has not imposed any technology transfer policy on any foreign company.
All this shows the US investigation under Section 301 of the Trade Act of 1974 against China, using Made in China 2025 as an excuse, is groundless. The US accuses China of not providing adequate IPR protection, ignoring the progress China has made in improving the innovation ecology and strengthening IPR protection.
The Section 301 investigation, based on false accusations, distorts the aim and purpose of Made in China 2025. The US criticizes China for restricting foreign investors from entering some key industries when the fact is, it is the US that imposes many restrictions on foreign investors based on reasons such as national security. For instance, the US government has thwarted Chinese telecommunications equipment company Huawei's attempts to enter the US market.
To put it simply, Made in China 2025 doesn't violate any international principle, and the US is using it as an excuse to check the development of China's manufacturing industry.
The author is director of the Institute of Industrial Economics, Chinese Academy of Social Sciences.