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“Made in China 2025” Strategy Is What Really Worries the US

Last updated on September 2, 2018

While the Trump administration decided to impose tariffs on imports from China covering wide-ranging categories of goods, but actually it’s China’s high-tech industries that really worry the US, especially those covered in the Made in China 2025 strategy, will be particularly targeted in this trade war.

White House adviser Peter Navarro said in an interview with Bloomberg on Wednesday that the list of products the US hits with tariffs will line up with technologies China identified in its “Made in China 2025” strategy.

High-tech industries listed in Made in China 2025 Strategy
(Source: People’s Daily overseas edition)

“China in my view brazenly has released this China 2025 plan that basically told the rest of the world, ‘We’re going to dominate every single emerging industry of the future, and therefore your economies aren’t going to have a future.’ It’s artificial intelligence, robotics, quantum computing,” he added.

Made in China 2025 is the President Xi Jinxing’s strategy announced in 2015, which highlighted 10 industries considered as backbone industries to help China become an advanced manufacturing power.

The strategy covers information technology, high-end machinery and robotics, aerospace, marine equipment and ships, advanced rail transport, new-energy vehicles, electric power, agricultural machinery, new materials, and bio-medical. In addition, China published a separate strategy for artificial intelligence in 2017.

Here are some of the key companies covered in the Made in China 2025 and also listed in the US report released after the Section 301 investigation.

Midea information in 301 investigation
(Source: USTR)

Midea Group

Although Midea is privately owned and well known for its leading position in making home appliances, the company is also viewed as a critical part of China’s ambition to become the world leader in robotic industry.

In 2016, Midea spent $4.2 billion for shares of KUKA AG to expand its original 13.51 per cent stake to 94.55 per cent.

Midea said that “by taking KUKA as a platform, we will continue the layout of industrial robots, commercial robots, service robots and artificial intelligence, and actively develop key components in the field of industrial automation.”

(Source: USTR)

The acquisition relied on financing from a consortium of banks headed by Chinese state-led policy banks. In particular, China Exports and Imports Bank provided $870 million in loans and in a press release, linked this loan to the “One Belt One Road”. The bank states that the acquisition will “assist in optimising the domestic robotics industry layout, promote the process of multi-industry production automation and enhance China’s intelligent manufacturing technology level.”

China National Chemical Corporation

The company acquired the Swiss-based Syngenta in May 2017 with a final price of $43 billion, the largest acquisition or merger ever completed by a Chinese enterprise.

Through this acquisition, ChemChina gained access to a long list of patented genetically modified seed, agriculture, and biotech products cited as targets in Five-year plans.

(Source: USTR)

Commercial Aircraft Corporation of China

The company is the maker of China’s first homegrown large commercial aircraft the C919

According to the investigation, industry observers have described the purchase order process for the C919 as state directed, coerced and choreographed by the central government.

Within this process, JVs are used as a key mechanism for obtaining the technology needed to support the development of a domestic supply chain for Chinese-made aircraft.

 

Tsinghua Unigroup and its parent company, Tsinghua Holdings

Tsinghua Holdings notes in its annual report that its development strategy is oriented toward  he needs of national strategy and that Tsinghua In-group employs an international acquisition and indigenous innovation development model focused on the IC industry.

Beijing Genomics Institute

Although the company is privately-owned, it has operated at the centre of China’s gene research industry since participating in the Human Genome Project, and has evident links to the government.

In January 2013, the company acquired Complete Genomics for $117 million, through which, BGI gained access to Complete Genomics’ gene sequencing equipment intellectual property rights and the development of domestic equipment production.

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