The Ambitions and Achievements of Beijing’s Policy

In a sprawling factory in Changchun, northern China, rows of glinting industrial robots outnumber human workers. Here, Audi is assembling its next generation of electric vehicles deep inside China’s manufacturing heartland. What’s more striking: the robots doing much of the work hail not from Germany or Japan, but from Chinese-owned companies.

  • From the first automated press that stamps out door panels to the more than 800 welding robots lining the production floor, nearly every stage of Audi’s operations is shaped by China’s rapid ascent in industrial automation.
  • Even the installation of wheels has been turned over to machines from a domestic supplier. The economics are hard to ignore: Audi’s head of manufacturing engineering at the site acknowledged that Chinese suppliers came in at price points the company hadn’t expected to see.

This plant offers a vivid snapshot of the success—and the underlying strategic intent—of Beijing’s “Made in China 2025” policy. Rolled out a decade ago, the plan was aimed squarely at transforming China from a low-cost assembly hub into a high-tech industrial powerhouse. While it sparked trade tensions and policy debates across the West, evidence is mounting that the initiative has quietly—but decisively—reshaped the global industrial landscape.

Ambitious But Realistic

Launched with the ambition of capturing 70% domestic market share in key sectors by 2025, the program targeted ten industries deemed critical to China’s economic and national security goals. These included electric vehicles, advanced robotics, next-generation IT, aerospace, rail equipment, and high-tech shipbuilding. The strategy combined generous state subsidies, regulatory support, and procurement preferences with fierce domestic competition and a booming internal market.

  • Critics abroad swiftly took notice. Washington viewed the policy as a direct challenge to American leadership in advanced technologies. During his presidency, Donald Trump used it as a rationale for his sweeping tariffs on Chinese goods, hitting $50 billion worth of sectors tied to the initiative.
  • His successor, Joe Biden, responded with a homegrown industrial policy, directing billions toward reshoring chip manufacturing and expanding green tech subsidies.
  • Europe, too, began reassessing its economic dependencies, particularly in machine tools, automotive parts, and clean tech—all areas where Chinese producers are rapidly closing the technological gap.

Recent reports from both the European Union Chamber of Commerce in China and the Washington-based Rhodium Group suggest that China has met or surpassed many of the initiative’s early benchmarks. Domestic firms have emerged as formidable global players, capable of matching or even leapfrogging foreign rivals in key technologies. In sectors like robotics, China now boasts more machines per 10,000 manufacturing workers than Germany—once the gold standard for industrial automation.

More Independence And Dependence

At its core, Made in China 2025 has pursued a dual strategy: reduce dependence on foreign supply chains while increasing the rest of the world’s reliance on Chinese production. That logic was put to the test during the U.S.-China trade war, when Beijing held firm while the Trump administration gradually rolled back some of the harshest tariffs. The outcome signaled more than just economic resilience.

  • It illustrated a growing leverage rooted in export dominance—something analysts argue now forms a cornerstone of Beijing’s strategic worldview.
  • Foreign governments are now studying the resources and tools Beijing deployed—such as state-led R&D, targeted financing, and aggressive scaling—and also weighing whether such measures can be replicated in democratic economies.

Meanwhile, fears of industrial overcapacity and market distortion are prompting calls for greater protectionism and reshoring efforts.

Some Issues Appear

A decade after Beijing launched its landmark industrial policy to vault China into the high-tech manufacturing elite, the country is facing a raft of unintended consequences. What began as a bid to break dependence on foreign technology and elevate domestic industry has evolved into a sprawling system of state intervention—one that is now straining both the Chinese economy and the global marketplace.

  • Overcapacity has become endemic, fueled by local governments scrambling to align with central policy directives. These authorities, eager to meet growth targets, have poured resources into subsidized industries—often with little coordination or regard for long-term sustainability. The result: duplication of efforts, a glut of production, and price wars that squeeze profits across entire sectors.
  • Nowhere is this more evident than in electric vehicles. Of the more than 112 manufacturers operating in China, only a 3 are turning a profit.
  • Similar patterns have played out in solar panels and batteries, where rapid state-backed expansion has led to boom-and-bust cycles that have undermined financial stability and weighed on public finances.

For Beijing, the price of this approach is starting to mount. The combination of high debt levels, budget deficits, and a growing pool of lossmaking enterprises is placing new pressure on the state’s ability to sustain its industrial spending spree. Analysts say that while the model of channeling vast sums into favored sectors has delivered short-term industrial muscle, it may have come at the cost of longer-term economic resilience.

A Household Boost Would Help

But structural issues remain. China’s model continues to prioritize supply-side investment over household consumption, an imbalance now magnified by the collapse of its once-booming real estate sector.

  • With domestic demand insufficient to absorb the full weight of its industrial output, China has become increasingly reliant on exports—heightening trade frictions with the U.S., Europe, and the Global South.
  • Some economists argue that China’s next strategic shift should come not from the factory floor, but from the household. A broader and more secure consumer base—enabled by deeper social safety nets and reform to health and pension systems—could unlock the country’s high levels of precautionary savings and deliver more sustainable growth.

That, in turn, could ease the tensions created by China’s ballooning trade surplus, which approached $1 trillion last year.

Disclaimer

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Credits

Photo by Denys Nevozhai / Unsplash.