Revisiting Made in China 2025 (MIC25)

The perfect case study how the west underestimates China at its own peril

I have written about the western misconceptions about Chinese economy and innovation capacity. And how such confused perception of realities will eventually lead it to a disastrous confrontation with China. https://huabinoliver.substack.com/p/chinese-economy-is-growing-more-slowly

https://huabinoliver.substack.com/p/china-vs-us-gdp-comparison-and-what

As discredited frauds like Gordan Chang and Peter Zaihan continue to have an eager audience in the west, a vicious cycle of self-delusion and disinformation gets reinforced and amplified into what I call a “demeritocracy” in the west – essentially, stupidity and derangement become the norm, and one must be more stupid and crazy than the next guy to get ahead in the echo chambers in national security, economics, academia and media.

A perfect case study is how the west has mis-judged the Made in China 2025 project, a ten-year plan launched by the Chinese government in 2015 to promote innovation, enhance technological self-reliance, and move up the manufacturing value chain.

An industrial policy is not particularly remarkable in itself, as nations, even capitalist ones, do some level of central planning and develop grand strategies such as Germany’s Industry 4.0.

What is interesting is the western reactions to China’s initiative and how it reflects its poor understanding and perennial underestimation of Chinese capacity.

Headlines from BBC, recipient of USAID funding and chronic China basher, tells a good story of constant western surprises when it comes to China.

In May 2015, BBC published a lengthy report titled Can China become a high tech economy? (You guessed the answer: of course, no. No way an authoritarian state can catch up with the “democratic” west, right?). Ten years on, the venerable BBC has started to sing a different tune by publishing titles like UK will not be able to resist China's tech dominance (Jan 2025); DeepSeek, TikTok, and Temu: how China is taking the lead on tech (Feb 2025).

The reactions of the western governments are also predicable – first came the derisions about the wisdom of state planning. Many made comparisons with the Soviet 5-year central plans and automatically wrote off the validity of the initiative (by the way, China still does 5-year plans and usually delivers on them). Many ridiculed Xi as being an economic revisionist.

Next came a wave of obstructions as western politicians attempted to derail China from developing technologically and moving up the value chain. To the collective west, China is moving its cheese.

Soon enough, the US regime started the trade war with China in 2017. Trump and Biden also launched a tech war on China, going after Huawei, and trying to sever China’s access to advanced chips. An escalating cycle of export control and sanctions on Chinese tech companies quickly followed suit. Sadly for the US, the trade war and tech war have backfired spectacularly.

Next came emulation. The US regime threw out decades of neoliberal economic gospel and started the Chips Act, a multi-billion-dollar subsidy-based industrial policy – the mother of all industrial policies.

To top it off, the US and the west launched a “trillion-dollar” so-called Build Back Better World project with great fanfare in 2021 to compete with China’s Belt and Road Initiative. 5 years on, the west has exactly zero to show for that grandiose plan, having funded not one project with money that doesn’t exist. People say emulation is the best form of flattery. What do they say about failed copying?

Finally came the realization that somehow, defying all odds, the Chinese government has delivered on almost all its goals (260 of them) in the MIC25. China is even way ahead of its own targets in many critical areas such as EV production and green energy adoption.

What the west gets wrong about China is what it gets wrong about itself – China can innovate, and the west is not superior.

A side note – when people say the west is innovative, they are really saying the US is innovative. What are the latest technological wonders coming out of England, Belgium, Australia, Poland or Lithuania? Politicians in those countries jump on the US bandwagon and claim superiority like Mussolini flexing muscles with Hitler’s army – a complete farce.

So today, at the 10-year mark, I think it’s a good time to take a look where China stands on the MIC25 and what it means for our world.

What is MIC25?

Since market reforms in early 1980s, China integrated itself into the global economy with its low-cost labor force and large market. China gradually developed its manufacturing capacities in many industrial sectors, primarily in the lower end of the value chains. Economic growth was rapid, and the so-called China Price advantage helped China to gain market share in many basic industries. However, the Chinese economy was heavily reliant on the technologies and innovations of more advanced economies in high end manufacturing.

President Xi, who took power in 2013, found the dependency precarious and unsustainable. In 2015, the Chinese government officially announced that it planned to promote indigenous technological innovations, increase self-sufficiency in high end manufacturing, and eventually move to the higher end of value chains.

The plan is presented in a document to the National Congress entitled Made in China 2025, which covered 10 critical industries to focus on and listed 260 specific quantitative targets to achieve by 2025.

For anyone familiar with corporate strategy documents, the MIC25 is a straightforward program with clearly articulated strategic focuses and associated KPIs. Every company has one.

One very interesting part of the MIC25 plan was in the preface of the document where the Chinese government discussed what made the west successful.

According to this analysis, the west gained economic and political power through development of science and technology, industry and manufacturing, NOT because of its adoption of multi-party electoral system or universal suffrage. Economic and technological development didn’t have to go hand in hand with privatization and deregulation. Markets didn’t always work efficiently. Manufacturing was the foundation of national strength and financialization was detrimental to the real economy.

Basically, the Chinese government dispelled the myth that a nation can achieve modernity only through a wholesale adoption of western political and economic systems, i.e. modernization equals westernization. Instead, the Chinese government believes the core of western success is in its technological and industrial superiority.

For China to modernize, the best path is to adapt these key success factors to the Chinese realities while discarding the many fallacies in western economic and political thinkings. Hence, the plan repeatedly called for developing a technology-, manufacturing-, and innovation-based market economy with Chinese characteristics.

Such an approach has been advocated for 3 decades by Wang Huning, China’s leading intellectual, the 4^th most senior state leader, and the country’s ultimate geo-strategist.

Wang Huning strongly emphasized the role of technology and industry in the success of the US in his seminal book, America Against America, published in 1991. Wang Huning’s thoughts have been the shaping force in Chinese economic and political developments for the past 30 years. I plan to write about this topic in some depth in a future essay.

On a granular level, the MIC25 identified 10 major industries for China to focus on:

- Next generation information technology (5G, integrated circuits, artificial intelligence)

- Advanced digitally controlled machinery and robotics

- Aeronautical and aerospace equipment (passenger jets, satellite)

- Ocean engineering equipment and advanced ship building

- Advanced rail transport equipment (high speed rail, magnetic levitation rails)

- New energy vehicles (i.e. EVs)

- Electric power systems and equipment (nuclear power, intelligent grid, ultrahigh voltage electricity transmission)

- New materials (advanced composite materials, nanomaterials, bio-based materials)

- Biopharmaceutical and advanced medical equipment

- Agricultural machinery equipment

In each of the 10 categories, highly specialized technologies and equipment were identified for indigenous development. Specific targets were set to measure success in each area. Altogether 260 goals were established.

The MIC25 wasn’t just about catching up. It was also forward looking. For example, MIC25 included AI-enhanced mobile chipsets as a deliverable as early as in 2015. Only last year, AI phones became a hot topic at the Consumer Electronics Show in Vegas.

By now, Chinese smartphones with AI features are widely available and highly competitive. With the recent success of AI startup DeepSeek, all major Chinese mobile phone makers (Huawei, Xiaomi, Vivo, etc.), and mobile carriers (China Mobile, China Telecom, etc.) are incorporating DeepSeek into their devices and networks, further enhancing the application of AI in the world’s largest mobile market.

How did China perform with the MIC25?

When the plan was first set out, China stood at the lower end of the global industrial value chain, producing mostly cheap and technically backward products. Most cars on Chinese roads were from Western carmakers, making China the biggest market for GM, BMW, and VW. Practically all major global auto brands had joint ventures in different parts of the country. Chinese sky was dominated by Boeing and Airbus. Chips, operating systems, and software in computers and mobile phones were mostly sourced from the US. Many Chinese factories could not operate without imported machine tools.

Since the announcement of the plan, the Chinese government and businesses have invested heavily in building technology and innovation capacities in these industries. Policies and subsidies are rolled out to enable technical development, commercialization, and adoption. The government has also focused the country’s education system and talent pools to these areas.

Fast forward to today, Chinese EVs have taken over the domestic markets. 80% new cars sold in China are domestic brands. Chinese consumers now buy more EVs than fossil fuelled ICE cars. Chinese EV sales in 2024 reached 11 million units vs. 1.3 million for the US. China has become the world’s No 1 car exporter ahead of Japan and Germany.

Even the Chinese government did not anticipate the rapid growth in demand for EVs. According to MIC25 goals, EV annual sales were supposed to reach 3 million by 2025, BYD alone sold more than 3 million unit in 2024.

Chinese EVs are not only price-competitive but also technologically ahead of their competitors. As early as a decade ago, the government set the development of low-cost, high-performance, vehicle-mounted lidar as a national goal. This has enabled Chinese carmakers to develop more reliable and powerful intelligent driving systems than competitors like Tesla, which does not use lidar.

Nowadays, new Chinese-branded cars can connect to the internet and provide rich entertainment features – something also planned a decade ago. China is very likely to reach widespread adoption of autonomous driving earlier than any other country.

China launched its COMAC C-919 passenger jet, now serving the busiest air corridors between Beijing, Shanghai, Guangzhou and Hong Kong.

China developed the most sophisticated high speed rail technology and built the longest high speed rail network globally at 48,000 kilometres, more than the rest of the world combined. Traveling at average speed of 350 kilometres per hour, the trains are so smooth that you can put an egg upright on a table and it will stay that way for the rest of the journey. Check out the numerous YouTube or TikTok videos.

Chinese-made chips now power Huawei’s latest mobile phones. Huawei’s HarmonyOS, its mobile operating system against Android and iOS, is used on over 1 billion smart devices.

Chinese domestically produced and AI-enabled robots run the world’s most automated factories to assemble cars, computers and even other robots. Across the country are numerous “Dark Factories” as lights and heat are not needed for the robots.

China is now the undisputed world leader in green energy production from solar, wind, nuclear and hydro powers. Chinese scientists and engineers have developed the world’s most efficient and clean coal-fired generating plants, as well as the most advanced 4^th generation nuclear technology including high-temperature gas-cooled reactors, sodium-cooled fast reactors and thorium-based molten salt reactors.

They have also created the world’s most powerful hydroelectric power plants, the most efficient solar power stations, the most powerful wind turbines and the most advanced, largest-scale long-distance transmission and distribution network.

China’s new nuclear power plants lead the US by a generation. Its market share in solar panels and wind turbines globally is over 80%. China now consumes more than twice as much electricity as the US (9.85 trillion kWh vs. 4.08 trillion in 2024).

China’s lead in low-cost energy production will also give it a massive advantage over competitors in AI development and deployment as AI and data centers consumes huge amounts of energy.

Chinese companies can independently design and manufacture the world’s most advanced superconducting magnetic resonance system, which can generate a magnetic field of 5 tesla, 70 per cent higher than the planned target. Now over 90% MRI machines used in Chinese hospitals are domestically made, at 10% of the price of foreign brands.

Anti-cancer drugs developed by Chinese companies have started to enter the US market, with prices just a fraction of similar drugs offered by Western pharmaceutical companies.

Technological advancements have also significantly increased China’s agricultural output. Despite having less than 15% of the world’s arable land, China produces more than half the world’s vegetables, thanks to the use of drones, automatic seeders and biotechnology.

China has the most advanced 5G technology in the world today and the widest adoption by far. China’s 5G technology allows railway passengers in China to enjoy uninterrupted high-speed internet connection even when passing through the longest tunnels in the world, most of which are found in China. On this topic, China’s tunnel-boring machines are several generations ahead of Elon Musk’s Boring Company.

China has more smart factories and automated port terminals than any other country. Over 50% industrial robots in the world are in Chinese factories.

Chinese made drones dominate global consumer markets with over 80% market share. Chinese new year celebrations featured drone swarms in the formations of moving fireworks and dragons with 12,000 synchronized drones, operated by one single laptop.

Latest AI-enabled humanoids from Unitree and Deep Robotics, both based in Hangzhou, can outrun Usain Bolt and perform traditional Chinese dances.

China achieved all the goals in MIC25 regarding robotics, agricultural equipment, biopharmaceuticals and marine engineering.

In space technology, China operates the only national space station, Tiangong, in the world today. China can also send astronauts to the space station and bring them back on time. Unlike some other “superpower” who claims it sent men to the moon 6 times and brought them back safely every time - more than 50 years ago. But somehow it has lost all the technologies and can only send astronauts on one-way ticket to a near-earth-orbit space station in 2024. Very believable indeed.

Chinese lunar rovers landed on the dark side of the moon and brought back lunar soil samples, for real.

China now deploys the world’s leading satellite navigation system, the Beidou network. It has built the world’s largest commercial satellite observation network for earth observation. It has started a Mars exploration program.

The production capacity of Chinese shipyards has surpassed that of the United States by over 200 times. According to the US Navy, one single shipyard in China, Jiangnan Shipyard in Shanghai, produces more tonnage of navy ships in a year than all shipyards in the US combined.

While China has made significant strides against the MIC25 plan, some goals remain behind schedule, including advanced photolithography technology used in chip manufacturing and broadband internet satellite networks. The delay is largely due to the obstructions of China’s adversaries.

Despite this challenge, China has achieved most of the goals set in integrated circuits, operating systems, industrial software and smart manufacturing. Chinese companies can now produce high-end servers, desktop CPUs, solid-state drives, high-speed fibre optics, industrial operating systems and big data systems. In 2015, it relied on foreign suppliers for all of the above.

Henry Kissinger famously quipped “the criminal we can do right away, the unconstitutional will take a little longer”. For China, the difficult we can do right away, the impossible will take another 5-year plan.

According to analysis by the US think tank CSIS, China has achieved 86% of the goals identified in the MIC25 and on track to achieve the rest in the next 2-3 years.

Verdicts, threat inflations, and calls for stealing Chinese technologies and talents from the US

One of the most alarming aspects of MIC25 for the US is China’s ability to fuse military and civilian technology development.

China’s technological and industrial might is powering its military development in the fields of hypersonic missiles, drones, military robotics, electronic warfare, space warfare, and network centric warfighting. This technical and industrial prowess has already resulted in China’s massive naval and aerospace buildup as China prepares itself for a military showdown with the US.

As the US regime repeatedly makes noises about going to war with China over Taiwan and South China Sea, it finds itself in a position to have to back up its bravado. Consequently, the US congress and military have assembled “experts”, pundits, and think tankers for a variety of congressional hearings and brainstorming panels in the past year to understand MIC25 and its implications for such a future war.

The comments coming out of these sessions were a strange mixture of disbelief, condescension, honesty, envy, and call for outright copying and even theft of Chinese technologies and talents. The fig leaf is off, and stealing is ok for the “exceptional” country who accuses China of IP and technology theft at every turn. Of course its words are good as gold and no evidence needed.

Just two weeks ago, the US-China Economic and Security Review Commission, which monitors and reports on the national security risks of bilateral trade and economic ties with China, held a congressional hearing titled “Made in China 2025 – Who is winning?”

Liza Tobin, managing director at Garnaut Global, a geopolitical-risk advisory firm, said in the hearing: “Beijing has obliterated the myth that used to prevail in Washington a few years ago that China can’t innovate – that it can only borrow and steal technology.”

She warned: “We are unprepared to sustain a prolonged conflict with our primary strategic rival. The US defence industrial base now depends on a potential adversary for critical inputs, from rare earth minerals to advanced electronics and even the energetic materials used in explosives for weapons.”

“We risk losing the next industrial revolution, which is unfolding as AI converges with physical industry to transform how things are made.”

In another testimony, Tim Khang, director of global intelligence at Strider Technologies, said Congress should use America’s H-1B immigration policies to “attract” more Chinese talents: “The best and the brightest of the PRC system – in schooling from middle schools to high school – they want to come to the universities here and study (STEM), you can have freedoms here, you can get citizenship here, you can become an American”. (Sounding as if becoming an American is the highest aspiration for all us humble earthlings).

He continued, “China’s AI and robotics ecosystem has seen significant growth, with major companies driving innovation in humanoid robotics and embodied intelligence…These firms are pioneering advancements in robotic hardware, AI integration, and industrial automation, positioning China as a leader in next-generation intelligent robotics.”

“What must be stressed is that many of China’s industrial successes can be traced more directly to a strong market environment and entrepreneurial culture than to industrial policy. It is striking that China’s biggest successes have come in industrial sectors where entry barriers are not particularly high, and where a diverse and competitive seedbed of enterprises provides numerous candidates for success.”

The most blatant call for action (theft) came from Melanie Hart of the Washington-based Atlantic Council, the NATO think tank, at a hearing convened by the Senate Foreign Relations Committee. She said, “Let’s steal their best engineers.”

Referencing the Chinese talent behind DeepSeek’s AI models, Hart testified that “we’d be better off if the engineers behind that were working here in the US”. To achieve that, she continued, students from the mainland would need to feel safe in America, adding: “We can beat Beijing at making Chinese scientists feel safe.”

While one has to give credit to her “honesty”, it is a great leap forward from the FBI’s infamous China Initiative and banning Chinese students from studying STEM in the US to “granting freedom to Chinese students” and “making Chinese scientists feel safer here than their home country”.

Clearly these “experts” subscribe to a belief the Chinese talents they are trying to “attract” are so brain dead that they cannot tell when the fox comes calling.

Do the US “experts” really want such “talents” who are dumb enough to fall for this laughable Mickey Mouse move? Maybe that is the intellectual level they themselves are operating at in the demeritocracy they live in. https://huabinoliver.substack.com/p/the-west-is-a-demeritocracy

In the final analysis, one of the most important takeaways from MIC25 is that the Chinese government can execute grand strategies against all odds and it is a deadly mistake for the west and the US to believe that they can stop China’s progress or challenge China militarily.

https://huabinoliver.substack.com/p/comparing-war-readiness-between-china

The US underestimation of China and overestimation of its own power will lead it to a disastrous defeat that it is unlikely to ever recover from.

From the sweatshop of the world, China has transformed into the global leader in developing and adopting cutting edge technologies in every industrial sector in 10 years.

From a China Price shock a decade ago, the US and the west is now drumming up a China Overcapacity threat. https://huabinoliver.substack.com/p/the-myth-of-chinese-overcapacity

From “stopping Chinese theft” to “let’s steal from them”, the hegemon looks more ridiculous and scared shitless by the day.

China isn’t done yet. In 2024, the Chinese government has proposed another ambitious plan to develop “new productive forces”, which is a continuation of the Made in China 2025 initiative. The focus of the next decade will be on AI, quantum computing, and deep space technology.

Now China has succeeded in its MIC25, all eyes are on Trump and we’ll find out how well he will do with Project 2025. Maybe just like MIC25 is making China great again, Project 2025 will make the US great again?