Announced in 2015 by China's cabinet with President Xi Jinping's blessing, Made In China 2025 is the country's road map for upgrading its industries from the world's factory for low cost goods to a global power on par with the U.S. and Germany. But, since trade tensions flared up with the U.S. last year, China has eliminated references to the initiative. These targets were 'predictive,' 'nonbinding' and 'not a government action,' stated Miao Yu, a minister in China's Industry and Information Technology department in 2017. But the West has interpreted Made In China 2025 as factual evidence of China's ambition and - even more important - capacity to dominate the global tech sector with brute government force.

 

As trade tensions escalate, not only will China miss the targets, but the country may take decades longer - or may indeed never - fulfill these lofty objectives. The U.S., on the contrary, will need to reevaluate if it has been fearing a tech 'paper tiger' all along. Similarly as the perceived threat from the Soviet Union was pumped during the Cold War era, the U.S. is likely to realize that China's threat to its technology dominance has been grossly exaggerated.

 

Missed targets will come from so many sectors. Beijing aspired that domestically made industrial robots would meet 50% of Chinese market demand by 2020. In 2018, the market share of Chinese domestic industrial robot makers stood at 32.2%. This included a 5.5 percentage point jump from last year after one segment of the market, automobile industrial robots, dominated by foreign companies, shrank, according to China Robot Industry Alliance (CRIA).

 

'We are facing a high degree of difficulty in reaching the objective set for 2020,' Qu Daokui, chairman of CRIA, declared at the World Robot Conference in Beijing last year. In aerospace, China aspired to complete the research, production and delivery of self-developed 150-seat single-aisle mainline passenger aircraft by 2020. More over, it hoped domestically-made mainline passenger aircraft would meet 5% of Chinese demand by next year.

 

But the Comac C919, China's flagship effort to develop such an aircraft, is suffering delays and is still carrying out test flights. It will take three to five years to get crucial approvals in China before the C919 can begin production and delivery, according to a Chinese news report pointing out government officials. That means meeting this goal will be tremendously delayed. By 2020, China also hoped to notably expand its rail equipment sector overseas, with 30% of business generated outside its borders. Industrywide figures are unavailable, but China's leading rolling stock manufacturer, CRRC Corporation, made 9.5% of its revenue from outside of China in 2018, roughly unchanged for the past three years, according to its annual report.

 

Looking at Beijing placed its hopes on CRRC as the main vehicle for internationalization, the country is unlikely to meet the 30% target next year. The less tangible goals in Made In China 2025 are becoming almost impossible to meet given the intensifying trade frictions with the U.S. 'Becoming one of the leaders in 5G international standards, technology and industry,' for example, is definitely questionable since Huawei Technology's 5G systems have been or are being banned by major countries around the world.

 

Other aspirations will take much longer for China to attain after international cooperation tends destined to decline. These include 'reaching internationally leading levels in critical core systems in new energy cars' and 'in integrated circuits' and 'realizing breakthroughs in core technology in new generation robots.' What does this mean?

 

First, widespread misinformation must be cleared up. Chinese government and media created these lofty policy documents and self-aggrandizing reports to rally the population and generate national pride. The West unknowingly took it all at face value. Much is lost in translation in this process and has led to unsound policymaking in the West to 'contain' China now.

 

Second, we must caution against elevating current grievances relating to trade and economic issues to an ideological divide that amounts to a new cold war. Today, 60% of Americans have an unfavorable opinion of China, up from 47% in 2018 and the highest level since the Pew Research Center began asking the question. A new cold war will lead the world to unprecedented turmoil and hurt all of us.

 

Finally, the world should find incremental improvements, not one-shot solutions. The worldwide economy and financial markets are in uncharted waters, and so are China's reforms. Structural issues such as reforming state-owned enterprises and corporate deleveraging are incredibly hard to solve after years, sometimes decades, of kicking the can down the road. As we look at 2020 and beyond, China may not be the only country that faces disappointing outcomes in national policy. The U.S. and others need to reassess their own policies if we want to return our future to international cooperation and collective advances.

 

TRONSERVE