Why is made in China 2025 besieged by Germany

2022-09-23
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As a national strategy, why is made in China 2025 under siege while German industry 4.0 is OK

the third round of Sino US trade negotiations ended fruitlessly. Last Sunday (June 3), U.S. Secretary of Commerce Ross and Chinese Vice Premier Liu he did not issue a joint statement after two days of discussion, which focused on industries such as mobile and light vehicles. The US delegation left for home without comment

in the final analysis, the root cause of the trade conflict between the two countries is at the institutional level. The real concern is not only from the trade deficit, but also that the overall strategy of the United States towards China has changed

in American academia, business circles and politics, everyone has formed a consensus that the communication strategy advocated by the United States in the past has failed, and it is time to adopt a tougher way to deal with relations with China

industry 4.0 and made in China 2025 are both national strategies, but they are treated differently by the United States: Although the competition between Germany and the United States has always existed, the former has not caused trade conflicts between the two countries; On the contrary, made in China 2025 was under siege

why

the main concern of the United States about China

theoretically, the United States should not curb China's innovation, but should increase its own support and capital investment for scientific and technological development. Because under the conditions of market competition, government transparency, respect for intellectual property rights and the legal system, the scientific and technological development of any country will benefit all mankind

but this is also the key to the problem: made in China 2025 needs further improvement in market competition, government transparency, respect for intellectual property rights and the legal system. Made in China 2015, the government led, exclusion and barriers to other countries have essentially become a focus of the conflict between China and the United States

from the perspective of the United States, China's state led innovation will bring the following problems:

first, concerns about market equity. As early as 2016, the Chinese government announced a plan to invest $150billion to strive to make China's integrated circuit chip products reach 70% of the local market share by 2025. Penny Pritzker, then U.S. Secretary of Commerce, fiercely attacked this approach:

this unprecedented state driven intervention will distort the market and destroy the innovation environment in the industry. This has led to a situation similar to the high requirements of steel, aluminum and green industries, especially in the indicator of pressure: global overcapacity and artificially low market prices. Not only the United States, these industries will be severely damaged worldwide and forced to cut jobs

followed by concerns about intellectual property rights. The report of the European Chamber of Commerce in the United States has repeatedly mentioned that the government rather than the market is the leading industry in China. The recent wave of large-scale acquisitions of Chinese enterprises in western countries is also the result of the behavior driven by the state. The purpose is to use the power of the state to obtain key business technology and achieve large-scale forced technology transfer

according to the United States, these new factories often rely on the technology that foreign companies have to transfer, which is their exchange condition for participating in Chinese market competition. Global trade rules prohibit compulsory technology transfer. The United States believes that China's wanton acquisition of foreign companies and technologies is out of the interests of the government, rather than actual business goals

in addition, during the implementation of made in China 2025, China will restrict the investment field and development scale of foreign-funded enterprises in China through qualification, certification and other means. It is foreseeable that the development space of foreign-funded enterprises in China will be compressed in the future. In some fields, it will be difficult for foreign enterprises to obtain opportunities in the future

in addition, in the view of the United States, China's state-owned banks will provide low interest loans to Chinese enterprises in target industries, which will lead to global overcapacity, which may lower prices, overturn the high input and high return operating rules of intellectual property rights in the market economy and the innovation incentive system formed after the entire industrial revolution. This will drag down the orderly development of global innovation

why German industry 4.0 has not been questioned

there is such a country, which has a large trade surplus with the United States, also has a grand industrial and technological development strategy, and even highly overlaps with China in the field of development, but this country has not had a devastating trade war with the United States. It is Germany

many countries have a strong consensus on the importance of the real economy to a country. German industry 4.0 and made in China 2025 all embody this idea. But this is basically the only common ground of the two countries' models of developing the real economy

Germany launched the industry 4.0 strategy in the new round of industrial revolution in 2013. That is, in an intelligent and networked world, the Internet of things and services will permeate all key fields. Germany hopes to continue to lead the global manufacturing industry with industry 4.0, maintain the global competitiveness of German manufacturing industry, and compete with American Internet giants for business opportunities in the future manufacturing industry

in 2015, China proposed made in China 2025, which has a considerable intersection with German industry 4.0 in terms of time and technology. The made in China 2025 plan includes ten key areas such as the development of a new generation of information technology industry

whether it is German industry 4.0 or made in China 2025, the key is to promote the development of intelligent manufacturing. Although the competition between Germany and the United States has always existed, industry 4.0 did not cause trade conflicts between the two countries, because Germany operates in a market economy and legal environment, in sharp contrast to made in China 2025, which is mainly driven by the state and state-owned enterprises

the reason for the US 301 survey is that the operation mechanism of made in China 2025 is a non market model. The list of Chinese imported products that the report proposes to impose tariffs covers aerospace, information and communication technology, robotics, machinery and other industries, including about 1300 independent tariff items

there is little about the Sino US trade deficit in the report. What is really discussed is China's industrial policy represented by made in China 2025 and the outline of the national medium and long term scientific and technological development plan (year)

the most fundamental cause of Sino US trade conflict is the institutional conflict between China and the United States, not the technical conflict. What the United States is more worried about is not the rise of technology, but the system behind its technological rise in China

how should China deal with

clarify enterprise behavior and government behavior

one of the most significant differences between the project of German industry 4.0 and made in China 2025 is that the main body of the former is the business community, and there is clear disclosure even if there is government intervention; The main body of the latter is the national plan. What worries the United States is that the sample has broken, which is the institutional arrangement behind this national plan

the technology and industrial reform of German industry 4.0 adopts a dual structure in supervision, which is composed of a series of non-governmental organizations such as the government and the Standardization Association under the same building area, and the division of labor between the two is clear. The main responsibility of the German government is to promote scientific research innovation and the establishment of enterprise social system, ensure the sustainable development of the industry, the government does not interfere in the specific operation of enterprises, and promote a competitive market economy. Industry 4.0 is basically a spontaneous behavior of German industry

made in China 2025 is a national plan. This plan covers a wider range and more complex content. Its goal is not only to modernize the manufacturing industry, but also to enhance China's global position in 10 key areas, including robots and new materials

the Chinese government spent 300billion to subsidize high-tech enterprises made in China 2025 is not a market economy model, but a government operation. The role of government in market economy generally covers basic research, property protection and macro guidance, which is quite different from the mode of arrangement and manipulation of national furniture bodies

clarify the relationship between enterprises and the government

in the past, western market economy countries did not need to deal with private enterprises with government backgrounds such as Huawei and ZTE. For ZTE and Huawei to be blocked overseas, a major domestic point of view is that the United States wants to suppress China's scientific and Technological Development and curb China's economy. This conclusion is too simple

in a purely economic sense, the United States is not worried about the rise of Chinese private enterprises such as Huawei and ZTE, but about the system behind them. Huawei faces this problem not only in the United States, but also in Europe, Australia and India. Chinese enterprises now have the scale of world-class enterprises, but their disclosure system is very primitive

One of the most basic principles of market economy and legal system is disclosure. American society is unaware of the boundaries and relations between these enterprises and the government, and is deeply worried about the opaque background of Chinese enterprises. In the case of ZTE, ZTE's deception and concealment of facts from the US government further strengthened the distrust of American society towards Chinese enterprises

in fact, this concern began very early. Since the Obama era, the United States has prevented Chinese technology companies from acquiring American companies. Tsinghua unisplent attempted to acquire micron technology, an Idaho memory chip manufacturer, for $23billion in 2015, but US regulatory concerns frustrated the deal

the trump administration vetoed and blocked the acquisition of lattice semiconductor by Chinese investors last year. Huawei has long been rejected by the United States. The White House also blacklisted Midea Group, CHEMCHINA, CRRC, COMAC and AVIC, Tsinghua unisplenum, BGI, etc. in a 200 page report

the innovation models and institutional foundations of China and the United States are quite different. The United States promotes national innovation from the bottom up, based on investment in scientific research and universities. And China is a national leading industry. Over the past 40 years, the Chinese government has been carrying out top-down innovation, and made in China 2025 has highlighted the dominant position of the government. This institutional difference has also led to great differences between China and the United States in market competition

the only way to solve the institutional conflict between China and the United States is for China to accelerate market-oriented reform. Increasing orders for American products will solve the short-term problem, but the long-term friction stems from Chinese enterprises' large-scale participation in international market competition in a non market mode. China's economy has completed the integration of the international economy, and the integration of the system is still on the way

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