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Commentary
Xi Jinping’s vision for “Made in China 2025” and for China’s global leadership by 2040 calls for the country to dominate advanced manufacturing. However, so far, only a small percentage of Chinese factories qualify as truly advanced under the most widely accepted definitions.
The Chinese Communist Party (CCP) views large-scale investment in advanced manufacturing as essential to strengthening national power and establishing China’s position as a global technological leader. These goals, consistent with the “14th Five-Year Plan,” have been advanced through the Manufacturing Innovation Centers (MIC) program. Initiated in 2015 in response to the U.S. “Manufacturing USA” network and Germany’s “Industrie 4.0,” the MICs were designed to serve as specialized research and development (R&D) and innovation hubs linking industry, research institutions, and government.
Over nine years, the CCP invested more than
$300 billion to establish 33 innovation centers, with a target of 40 by 2025. Each center connects with state key laboratories and regional partners to form manufacturing ecosystems in priority sectors identified by the Ministry of Industry and Information Technology (MIIT), including robotics, semiconductors, aerospace, biopharmaceuticals, and electric vehicles. The aim was to achieve up to 80 percent domestic production in these industries by 2025, strengthening self-reliance and reducing dependence on foreign technology.
The MIC program became a central mechanism of “Made in China 2025,” launched to move China from low-end manufacturing
toward innovation-driven, high-value production. Its functions include promoting standards and intellectual property protection, supporting the commercialization of new technologies, and accelerating the adoption of advanced manufacturing across the industrial base. The
14th Five-Year Plan (2021–2025) continued this large-scale investment, emphasizing reduced reliance on foreign suppliers for key components such as integrated circuits and the further integration of MICs into national and regional development plans.
Despite these massive investments, the results have been mixed. China’s manufacturing output has grown rapidly, but the industrial base remains uneven. The majority of factories still operate at low or mid-level technological capacity, lacking automation, digital integration, or strong R&D. Only a small share meets the criteria for “advanced manufacturing.” Studies by NIST and MERICS describe China as narrowing the “high-end manufacturing gap,” yet advanced industry output remains a small fraction of total production. Many companies have increased R&D spending without realizing equivalent productivity or innovation gains.
At the same time, China’s strategy has, by design, generated massive industrial overcapacity. Solar production capacity now exceeds global demand by two to three times. Automotive plants operate at roughly 59 percent of capacity, while electric vehicles are often sold at negative profit margins. State
subsidies sustain these losses, allowing China to dump below-cost products on foreign markets and undercut competitors. The long-term strategy appears to be to overproduce,
flood global markets, drive competitors out of business, and emerge as the dominant supplier.
In this objective, China has succeeded in gaining market share, but it still lags far behind in innovation. The United States, by contrast, has invested only about
$160 million across a number of advanced manufacturing institutes, yet continues to lead in
technological development. The difference lies not in scale but in efficiency, originality, and
real innovation outcomes.
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China’s system has also relied heavily on intellectual property theft. According to the U.S. Trade Representative, China remains one of the world’s worst offenders in IP theft through espionage and cyber intrusions. Foreign companies operating in China have also faced forced
technology transfer requirements as a condition for market access. These practices have accelerated China’s technological accumulation, but not its ability to
innovate independently.
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President Donald Trump’s tariffs on Chinese goods have begun to disrupt this pattern. Foreign
direct investment in China
has declined, as U.S. and other foreign companies are increasingly discouraged from manufacturing there, reducing Beijing’s access to advanced technology. This secondary effect
—limiting technology theft—may slow China’s technological progress while encouraging renewed research, investment, and
industrial development in the United States.
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Such measures could help restore America’s industrial base and maintain its technological advantage. However, if Republicans lose the White House in 2028, the country could return to the failed policies of the past, policies that allowed China to “eat our lunch,” something former President
Joe Biden once
claimed could never happen.
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Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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Udumbara
