El Made in China 2025 aims for long-term structural change resulting in greater productivity and competitiveness, as well as in the China's rise in global value chains and the reallocation of labor between sectors.
China works assiduously on this, and its growing technological strength is evident.
Its R&D spending in high and medium technology sectors has increased significantly, as has the number of patent applications, or even exports, which are improving thanks to government regulations and tools.
See: How does China work on a legal level?
A focus on selected technological competencies and the traditional advantage of relatively cheap labor underpin China's growth in innovation performance and export competitiveness.
Relative specialization in net exports and technology is similar, and the degree of specialization is comparable in pharmaceuticals, communications, broadcast engineering, computers, optical, measurement and electrical technologies, as well as railway vehicles.
Seek the expansion of industries with the greatest benefits throughout the ecosystem.
According to the European Commission report China: challenges and prospects from an industrial and innovation powerhouse, China has become a major expanding industrial competitor, and the structural reforms and large investments implied by the MIC25 strategy will further boost the capabilities of this giant in the high-tech fields.
Noting, furthermore, that it is entirely possible for China to achieve its goal of becoming an innovation leader by 2049, and even sooner in specific areas.
Therefore, in response, The EU will have to boost its industry in R&D, as well as develop a trade policy that can guarantee a level playing field for EU companies in China and for Chinese companies in the EU.. Reciprocity being fundamental.
Likewise, the EU must also protect the strategic assets of foreign investors, whether of Chinese or American origin, always taking into account the substantial benefits that can be derived from industrial investments from abroad.
In fact, within the framework of MIC2025, Beijing has taken advantage of the opening offered by the European market to carry out large investments in Europe, above all, in strategic sectors directly related to national security and acquisition of European companies.
Also has signed cooperation agreements with some member states outside the EU.
That is to say, it seems that economic investments in the EU have helped prove that China's strategy of investing in other countries to get their approval of its international expansion works.
This has caused concern in some states such as Germany or France, which fear that the Asian giant will gain access to strategic technologies that concern national security.
Even Germany has called for a more defensive and state interventionist EU industrial policy.
In the Germany's National Industrial Strategy 2030, Economy Minister Peter Altmaier advocates a German and European industrial policy that maintains closed value-added chains within the EU in the industrial sector, as well as states acting as temporary owners of certain strategically important companies to, equally As China did, “national and European champions” are promoted through subsidies and more flexible competition rules.
It suggests using government intervention to boost the competitiveness of EU-based companies in technological sectors such as AI (artificial intelligence), the digital economy or autonomous vehicle technology.
Such measures would provide a competitive, albeit artificial, advantage to European companies over foreign ones.
Strategy motivated by production costs and supply chain disruptions driven by trade war between the US and China, as well as the existing general uncertainty.
Closed value-added chains, established by consolidating research and development, parts production, assembly and distribution, are a form of EU resilience in the face of an unpredictable global economic environment.
This proposal has not stopped being criticized, but it seems to have gained strength.
Shortly after Altmaier presented the strategy, the German Ministry of Economic Affairs and Energy, together with its French counterpart, issued a Franco-German manifesto for a European industrial policy suitable for the 20th century. XXI.
The manifesto calls for the weakening of EU competition law to facilitate the creation of European champions and allow temporary state involvement in specific sectors.
Margrethe Vestager also expressed her support for an industrial policy.
With the EU's two largest economies leading the political debate, It will only be a matter of time before an industrial policy is implemented.
Along these lines, the EU Chamber of Commerce in China calls to prevent China from fueling tensions with its international trading partners through the application of a carefully prepared industrial strategy.
Including the use of policy tools such as subsidies, continued support for inefficient public companies, limiting market access for foreign companies and state-backed acquisitions of EU and other companies.
According to Meng-Chun Lee and Wolfgang Reimer (2019), the MIC2025 can be extremely problematic.
LL.M in International Business Law and Law from ISDE and graduated in Law and International Relations from Loyola University. CEO and business internationalization consultant at Reáculoateypunto.
