China’s Voldemort policy that must never be named

It is the Voldemort of policies and its name must never be mentioned.

Like the dark lord in the Harry Potter fantasy franchise, the “Made in China 2025” program can only be whispered in select circles.

Breathtaking in scale, President Xi Jinping’s ambitious plan was rolled out in 2015, four years after Germany’s Industrie 4.0 initiative was launched at the influential Hannover Fair.

Hardly a single sector in China’s economy has escaped the effects of this multibillion-dollar project with the blueprint encompassing an array of industries, from chips, computers and the cloud to smart cars, smart cookers and the holy grail of 5G.

Renewables, railways and robotics are other vital areas earmarked, along with the Internet of Things, and interconnected smart technology linked through artificial intelligence, or AI, for the biopharmaceutical sector. Fintech is yet another crucial component of the program.

Yet, tellingly, there was no mention of Xi’s policy in Premier Li Keqiang’s 35-page Work Report during his keynote speech at last month’s National People’s Congress.

In part, this was due to China’s delicate trade talks with the United States, which are due to resume late on Wednesday in Washington.

But that does not mean the world’s second-largest economy has abandoned its plans to become a technological superpower.

Intelligent Plus

Buried in his address to the Communist Party faithful, Li said:

“[In developing] high-quality manufacturing, we will strengthen the foundations of industry and the capacity for technological innovation, boost the integrated development of advanced manufacturing and modernized services, and work faster to make China strong in manufacturing.

“We will create industrial internet platforms and expand Intelligent Plus initiatives to facilitate transformation and upgrading in manufacturing. We will support enterprises in speeding up technological transformation and equipment upgrading by extending the preferential policy to the entire manufacturing sector.”

For Intelligent Plus, read “Made in China 2025.”

To illustrate the sensitivity of Xi’s program, four years after coining the name that should not be spoken now, China’s state-run media was packed with photos and commentary from this year’s Hannover Fair, which opened on Sunday. But missing was “MiC 2025.”

“One of the most significant row backs has been the government’s softening of its ‘Made in China 2025’ initiative,” Audrey Jiajia Li wrote on openDemocracy, a non-profit political website based in the United Kingdom. “The policy provoked alarm in the West, particularly in Washington, and was subsequently downplayed by the state-run media.

“The state news agency Xinhua referred to the policy more than 140 times in the first half of 2018, but abruptly stopped doing so after June 5. A propaganda directive ordering media to stop using the term was leaked later that month,” she added.

Still, on Wednesday, another round of trade discussions will take place in the US capital.

Major progress has been made in key areas such as intellectual property rights and the theft by stealth of US technology by Chinese companies.

Xi’s administration has also promised to open up a raft of sectors to foreign companies and speed up its reform timetable.

Yet, significantly, there was no mention of the business model favoring state-owned companies, particularly in the high-tech sector.

Another bone of contention is enforcing a deal and relaxing the tariffs on Chinese imports in the US worth US$250 billion.

Last week in Beijing, the negotiating teams spearheaded by Treasury Secretary Steven Mnuchin, Trade Representative Robert Lighthizer and Chinese Vice-Premier Liu He spent hours scrutinizing the text of a proposed agreement.

“We’re getting to the point where it’s clear that both governments want a deal,” Myron Brilliant, the head of international affairs at the US Chamber of Commerce, told a media briefing. “[Both] presidents want a deal, and they need to get through the end-game issues. This is a critical week.”

Dominant role

Separately, Washington has issues with China’s technology powerhouse Huawei and its dominant role in 5G.

More than 20 times quicker than existing 4G, these ultra-fast networks will power smart manufacturing and the AI-linked factories of the future.

Just as important, 5G was added to the “Made in China 2025” portfolio back in 2017. “5G can enable and enhance critical control of production line robotics,” Zhang Zhiwei, the head of marketing for Ericsson North East Asia, told The Innovator website in Paris.

“This includes tethered or untethered robots that are controlled, monitored, and can be reconfigured remotely. This technology could be used in factory floor production, reconfiguration and layout changes, real-time analysis and even to steer a robot’s movement from a remote location.”

In March, a government report revealed that Beijing will increase science and technology spending by 13% to 354.31 billion yuan (US$52.88 billion) this year, despite the economy showing signs of stress.

Nothing, it appears, will derail “MiC 2025,” or the goal for at least 70% of related high-tech materials and products, such as semiconductors, to be made domestically by 2030.

“‘Made in China 2025’ seeks to make China dominant in global high-tech manufacturing. The program aims to use government subsidies, mobilize state-owned enterprises and pursue intellectual property acquisition to catch up with – and then surpass – Western technological prowess in advanced industries,” a report by James McBride and Andrew Chatzky for the New York-based think tank, the Council on Foreign Relations, said.

“For the United States and other major industrialized democracies, however, these tactics not only undermine Beijing’s stated adherence to international trade rules but also pose a security risk. Washington argues that the policy relies on discriminatory treatment of foreign investment, forced technology transfers, intellectual property theft, and cyber espionage,” they added.

Beijing has repeatedly denied those accusations, despite drafting new regulations to tighten up IP protection, and its Potteresque approach to the policy which must not be named.