Made in China 2025 Plan May Edge Out Western Competitors

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While the U.S. focuses on “America first,” China is working on China first.

But the country’s move to boost its manufacturing sector could spell bad news for Western businesses.

As part of its China Manufacturing 2025 industrial policy outlined in May 2015, the Chinese government hopes to see local industries owning as much as 80 percent of their home market by 2025. In a report released Tuesday, the European Union Chamber of Commerce in China said efforts toward the goal could end up “stoking tensions with international trade partners.”

China wants to hit certain domestic and international market-share targets in 10 industries, and reach self-reliance in some of them, meaning they are planning to need much fewer foreign contributions. China knows, according to the report, that its days of double-digit growth in manufacturing output have reached an end thanks to inefficient traditional methods and a lack of high-end manufacturing, which is why it’s investing so heavily in its industrial base.

While textile and apparel manufacturing isn’t specifically outlined as one of China’s focus sectors for the 2025 plan, automation technologies, robotics and electrical equipment are, and if China—which will still make much of the world’s apparel—no longer needs Western contributions for the tools to make the clothing, companies in the industry could take a hit.

The European Chamber is calling China’s Industry 4.0 manufacturing plan a “large-scale import substitution plan,” which will nationalize industries, likely not promoting bilateral opening or nurturing international competition.

“This poses serious problems, not only for European business but also for much of China’s private sector and the wider economy,” European Chamber president Jörg Wuttke said.

The chamber is seeking equal treatment for foreign companies under the 2025 plan, and for now, is urging Western firms to take advantage of the lead they may have on China in terms of technologies China can’t yet produce.

In other China news, the country’s new normal of slower growth continues to set in.

China lowered its economic growth forecast for 2017 to 6.5%, down from a previous 6.5% to 7% target range. The aim, for now, will be to address its rising debt, and with the government spending less, China will be relying more on domestic consumption for growth.

To help improve domestic conditions, the government has said it will cut companies’ tax burdens by 350 billion yuan ($51 billion) this year, according to Reuters. And along with cutting tax burdens, China will be cutting back on capacity. Inefficient companies with surplus capacity will be shuttered and construction will even be halted on already in-work projects of that nature. Instead, the country will look to create upwards of 11 million new urban jobs this year.


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