On May 19, the State Council of China published the country's first ten-year plan to boost its manufacturing sector, the China Manufacturing 2025 strategy. Chinese Premier Li Keqiang first mentioned the China Manufacturing 2025 strategy in his Government Work Report earlier this year, as a part of a broader 30-year strategy of transforming China from a "big manufacturing country" into a "powerful manufacturing country." As it begins implementation of this ten-year plan, China's manufacturing sector faces pressure from increasing labor costs, shrinking markets, and resource constraints, and the country's monthly producer price index (PPI) has decreased each month since March 2012.
The ten-year blueprint sets forth a general framework of China's 30-year strategy of building a "powerful manufacturing country," which is divided into three steps.
Step one, China shall become a "powerful manufacturing country" within ten years. In particular, by 2020, China shall attain industrialization, further fortifying its status as a big manufacturing country, and significantly increasing the level of information technology in China's manufacturing sector. By 2025, the intention is to significantly increase the overall quality of the manufacturing industry, strengthen innovation capacity, improve labor productivity, and push industrialization and information technology integration to a higher level.
Step two, by 2035, China's overall manufacturing level shall reach the middle level of powerful manufacturing countries in the world.
Step three, by the 100th anniversary of China's founding (2049), China should further fortify its big manufacturing country status, securing a position as one of the most powerful manufacturing countries in the world.
The plan calls on the Chinese manufacturing sector to follow five guidelines for the next 30 years: give priority to developing the capacity to innovate; improve product quality; develop the "green" economy; optimize China's industrial structure; and attach importance to the cultivation of talent.
For the first ten years, the plan sets specific targets with respect to innovative capacity, quality and efficiency, integration of industrialization and information technology, and environmental protection. For example, the plan aims to increase research and development expenditures to 1.26 percent of manufacturing revenue by 2020 and 1.68 percent by 2025 from 0.88 percent in 2013. The plan also aims to reach a 7.5 percent average annual growth rate in labor productivity by 2020 and 6.5 percent by 2025, and to increase the growth rate of value-added manufacturing by 2 percent by 2020 and 4 percent by 2025 over the growth rate in 2015. The plan also identifies ten areas as development priorities: (1) new-generation information technology industry; (2) high-grade computerized numerical control machines and robots; (3) aviation and aerospace equipment; (4) marine engineering equipment and technologically-advanced ships; (5) advanced rail transportation equipment; (6) energy-saving and new-energy cars; (7) power equipment; (8) agricultural machinery; (9) new materials; and (10) biopharmaceutical and high-performance medical devices.
As supporting measures, the plan calls for both policy banks and commercial banks to strengthen the support they provide to manufacturers, and calls on the government to provide funds and improve taxation policies to ensure the accomplishment of the goals and targets set forth in the document. The Government of China is expected to implement additional supporting policies in the near future.