The Evolution of ‘Made in China 2025’

The success of China’s “Made in China 2025” initiative cannot be judged simply by how effective the policy was in developing robotics, aerospace, advanced information technology, biopharma, new energy vehicles, and the five other key sectors that were meant to transform the country from a low-cost manufacturing hub into a global high-tech leader. It also needs to be evaluated in light of the priorities that fully emerged only after its launch in 2015: achieving technological self-reliance and bringing industrial supply chains within China’s borders.

Over the past decade, the Made in China 2025 strategy has successfully driven industrial development in many of its 10 focus sectors. But Beijing’s shift toward economic security has broadened this approach, bringing a wider move toward cross-sectoral industrial dominance and more self-sufficient, high-tech supply chains.

While localizing value chains inside China and self-sufficiency were part of the mix 10 years ago, the strategy was primarily designed to help China avoid the middle-income development trap, position its companies to become global leaders in their fields, and generate sustained economic growth through assertive industrial policy. China has made great strides in shifting its focus from low-cost production to tech innovation and manufacturing quality – yet supply chain dependencies persist.

When Made in China 2025 was launched, it focused on 10 industries with a range of goals. The original policy and roadmap prioritized targets for market share and patent applications and the development of quality Chinese brands, while more broadly aiming to upgrade the economy to move China up global value chains. At the time, the country enjoyed access to international markets, foreign technology, and cross-border investment – and most of its policymakers, private sector, and scientific community did not support a push for more self-reliance. For instance, tech companies like Alibaba and Tencent focused their R&D efforts on the design side of the semiconductor value chain but relied on South Korean or Taiwanese technology for the actual production of chips.

The onset of the China-U.S. trade war during Donald Trump’s first presidency changed this equation. Washington’s restrictions on Chinese tech giants Huawei and ZTE and the resulting broader tech war after 2018 galvanized Chinese society to embrace a whole-of-nation effort for technological advancement and self-reliance. Accordingly, the focus of Made in China 2025, as well as Beijing’s metrics for assessing its results, shifted from avoiding the middle-income trap to achieving technological independence across its 10 focus sectors – with varying degrees of success.

Evaluating Made in China 2025’s Targets

In three of the 10 targeted sectors, China has been largely successful.

For example, in the field of advanced railway transportation equipment, Chinese companies now produce highly competitive technology and rely very little on imported parts, with notable exceptions being screws and bearings. Unequal treatment in public procurement has squeezed foreign companies out of the Chinese market, allowing the China Railway Rolling Stock Corporation (CRRC) to achieve scale in the domestic market, before venturing abroad to capture a global market share of 50 percent in 2022.

Similarly, in energy saving and new energy vehicles (NEV), Chinese companies dominate their home market, capturing a 90 percent share in the first half of 2024. Most of the supply chain is now local, although semiconductors, especially computing and control chips, remain a vulnerability, as manufacturers rely on foreign suppliers for more than 90 percent of them.

China has also become the global leader in green energy technologies, holding 80 percent of the solar panel and 60 percent of the wind turbine market worldwide. Its dependence on imports has fallen to virtually zero, while exports to the EU have increased dramatically since 2021. In the field of nuclear energy, China’s domestically developed Hualong One reactor does not quite reach the capacity target of 2000 MWe, but 90 percent of major nuclear power equipment is made in China.

In five other targeted sectors, Made in China 2025 achieved more moderate success.

Although China leads the way in telecoms network equipment and has developed extensive capabilities across the supply chain, it is still unable to produce extreme ultraviolet (EUV) lithography machines, which are necessary for making the most advanced semiconductors.

China fell short of its 60 percent supply chain localization target for high-tech ship equipment by 2020, reaching only 30 percent by 2022. But it achieved its goal of building a mid-sized luxury cruise ship, and dominates the global commercial shipbuilding market, capturing 70 percent of new orders worldwide in 2024.

China achieved its goal of reaching a domestic market share of 95 percent for agricultural equipment by 2025, building on an already high starting point of 90 percent in 2015. But Chinese manufacturers still lag behind foreign competitors at the higher end of the market. In 2024, 80 percent of high-end agricultural machinery was still being imported, although this was down from 90 percent in 2022.

Despite making progress in developing advanced basic materials, such as petrochemicals, China remains reliant on foreign suppliers for cutting-edge products. In 2023, for example, Chinese companies only held 10 percent of the domestic markets for high-performance reverse osmosis membranes for water purification and semiconductor photoresist materials for making high-tech chips.

Finally, foreign companies maintain a technological lead in the higher end of the biomedicine market. Although Chinese companies offer alternatives in most areas of medical equipment technology, their products are often still of a lower quality. The healthcare sector remains dependent on imports, and China still runs a trade deficit with the EU in both biomedicine and medical devices – although this imbalance is declining.

And in the fields of high-end computerized machines and robots as well as aerospace equipment – the final two of the 10 targeted sectors – success was more limited.

China significantly increased its level of industrial automation, but much of this progress has relied on foreign technology. Chinese manufacturers held only 48.4 percent of the domestic industrial robot market in 2024, falling short of the official target of 70 percent set for 2025. Chinese manufacturers remain highly dependent on imported machines, as reflected in China’s persistent trade deficit with the EU in high-end numerically controlled machinery and robots.

In terms of the aviation industry, production of the C919 narrow-body passenger jet by the Commercial Aircraft Corporation of China (COMAC) relies heavily on foreign suppliers. With only a small number of jets in service, COMAC is far from its goal of capturing 10 percent of the domestic market by 2025. Meanwhile, the maiden flight of COMAC’s first wide-body jet, the C929, is not expected until 2035.

Made in China 2025 has undoubtedly led to some significant progress. Even the aerospace sector, in which China still falls way short of supply chain autonomy, has passed major milestones. The ability to integrate the vast array of components, systems, and software to make a passenger jet is a feat that only a handful of players worldwide, notably Airbus and Boeing, have managed. That said, China’s reliance on imported components even in its most successful sectors – for example, those foreign screws for high-speed rail and foreign chips for NEVs – underlines just how complex and challenging total self-sufficiency is for any country.

The Costs of Putting Security First

The strategy has produced painful side effects. Policy tools such as subsidies, cheap credit, research and development incentives, and limits on industry consolidation have created significant overcapacity. More than 20 percent of industrial companies are in the red – a level not seen since the early 2000s. China’s NEV manufacturers, in particular, are locked into a fierce price war and showing signs of competition stalling rather than driving progress. Only BYD, Li Auto, and a few other companies are profitable in a sector with more than 90 players. Losses in their home market led many manufacturers to export their products to the European Union – which in turn led the EU in 2024 to hit Chinese NEV imports with additional tariffs.

Beyond overcapacity, the strategy has increased debt levels and produced opportunity costs, with funds directed toward industrial policy goals instead of improving social services.

But these side effects are not unintended. They are built-in features of a system that has increasingly focused on security as a central goal of economic policy. As a result, Beijing likes to prioritize supply-side over demand-side measures, leading to overinvestment, overcapacity and inefficiency. The rationale behind the securitization of its economy is that industrial upgrading and technological advances are more important than profitability or other commercial interests. If enough Chinese companies compete in strategic high-tech areas – even at a loss – the hope is that some will eventually deliver a decisive technological breakthrough.

In June, for example, financial regulators once again allowed unprofitable firms to be listed on Shanghai’s technology-focused STAR market, reinforcing the stock exchange’s role in supporting companies in the high-tech sector and strategic emerging industries. China has accepted stagnating productivity growth as the price to pay for technological advances and the ability to produce those new technologies itself. By contrast, if China again committed to a system of global technological interdependence and leveraged its comparative advantages in such a system, its productivity would probably improve markedly.

The shift in priorities of Made in China 2025 from 2015 to 2018 shows that self-reliance in supply and value chains – as part of a growing emphasis on economic security – has become the overarching objective of China’s current and future industrial policy. The strategy now aims to construct a comprehensive, cross-sectoral industrial base that extends far beyond the 10 sectors identified a decade ago. By incorporating all sectors and striving to localize entire value chains inside the country, Beijing aims to make China as self-reliant and resilient as possible in the face of a new era of pressure from other governments and geopolitical uncertainty.

When “New Productive Forces” Meet “Traditional Industries”

China’s push for across-the-board industrial upgrades is encapsulated in the concept of “New Productive Forces,” first outlined by Xi Jinping in 2023. The term evokes the idea that ongoing breakthroughs in science and technology form the basis of high-quality economic growth and development. In the context of an industrial strategy increasingly shaped by the needs of securitization, China’s leadership is placing its hopes for sustained economic development – and for reigniting stagnating domestic productivity – in the emergence of new technologies that can bring benefits to large parts of the country’s economy.

The drivers of this increasingly horizontal industrial policy include data, digitalization, and making economic activity more environmentally sustainable. Beijing sees data as an essential component of economic activity. Over the past year, it has issued plans to develop China’s data industry, utilize enterprise data resources, develop the data-annotation industry, construct a national data infrastructure and pilot a program for the whole-process management of data assets. Digitalization is referenced in development plans for various industries – for example, through the implementation of artificial intelligence (AI), 5G, data management platforms and other advanced information and communication technologies.

The number of industries targeted in this way goes far beyond the original 10. For example, three recent plans have addressed the digital transformation of light industries (including home appliances, furniture, lighting and papermaking), the electronic information manufacturing sector, and food production. In 2024, the Cyberspace Administration of China released guidelines for using AI, big data, and other digital technologies to promote green initiatives and apply green tech to digital hardware and the facilities in which it is housed. This so-called “greening” has increasingly turned into a driver of economic growth, with the country’s clean energy sectors accounting for more than 10 percent of China’s GDP for the first time in 2024.

But Beijing’s push for industrial upgrading, smart manufacturing, and the localization of value chains does not mean that it will abandon traditional lower-end industries by letting them relocate to lower-wage countries with cheaper labor, a shift often seen as economies mature and wages rise. As Xi Jinping has said, “Developing new productive forces does not mean abandoning traditional industries.” Instead, his vision of “Chinese-style modernization” seeks to integrate emerging high-tech sectors with long-established industries into a holistic manufacturing ecosystem. This vision is defined by the widespread use of cutting-edge automation, digital R&D tools, computer numerical control (CNC) machines, AI, the linked devices of the “Internet of Things” and cloud computing.

In late 2023, the Ministry of Industry and Information Technology (MIIT) reinforced this approach by publishing a plan to upgrade key traditional industries, including petrochemicals, iron and steel, nonferrous metals, building materials, machinery, automobiles, light industry, and textiles. It followed up by inviting companies to participate in a program to identify and promote model technologies aimed at revitalizing five traditional manufacturing industries. These model technologies spanned four categories: high-end technology such as industrial software, smart technology for optimizing data processing, green technology to improve carbon reduction and resource efficiency, and foundational industrial technology.

While this range of technologies suggests that Beijing has yet to find a single general-purpose revitalizing technology, its continued focus on traditional industries signals a clear intent: the government is not prepared to let go of these sectors lower down the economic value chain. Viewed in the context of economic security, this approach is logical. If China wants to maximize self-reliance across its supply and value chains, it would be self-defeating to allow even low-end production to move abroad. This is especially true for industries such as steel and aluminum, which are essential pillars of the industrial base because they deliver critical inputs for many downstream sectors. Traditional industries remain essential for China’s push for self-sufficiency.

Shaoxing, a city in Zhejiang Province, is an example of how the government’s commitment to preserving traditional industries works in practice. As the People’s Daily reported in 2024, the city’s textile printing and dyeing industry had long struggled with high energy consumption, significant pollution, low profit margins, and subpar quality. In response, officials pushed for the adoption of advanced technologies and for consolidation. They reduced the number of companies from 212 to 108 and moved those into a single industrial zone – which now accounts for an estimated 40 percent of China’s printing and dyeing production capacity.

Industrial parks that integrate various companies in different ways are a cornerstone of China’s industrial policy. They act as focal points for the government’s “matchmaking” efforts, aimed at generating synergies from better integration of different parts of China’s innovation chain. An April 2025 notice from MIIT called for the deeper integration of the industrial internet into these parks. By matching industrial software developers with manufacturing companies, Beijing hopes to create a virtuous cycle in which now centralized demand drives improvements in software, which in turn enhances factory performance, creating yet more demand for better software. If it can no longer rely on the traditional advantages of low costs and globally integrated supply chains, Beijing appears to believe this feedback loop will boost economic productivity and China’s global competitiveness.

Toward “Made in China 2035”?

China’s leaders are pressing ahead with a vision of technological self-reliance and industrial dominance. Following Trump’s return to the White House, the escalation of the trade war and renewed decoupling efforts are all but certain to convince Xi that China is on the right path with its current economic and industrial strategy. In May, Chinese officials were reportedly drafting something like a Made in China 2035 plan to push key technologies such as chip-making equipment, which is still a critical bottleneck.

What remains uncertain is how this trajectory will affect China’s broader international relationships. For example, China’s relationship with the EU remains strained despite shared frustrations over Trump’s tariff measures. Points of contention include the wave of Chinese exports driven by its manufacturing overcapacities and limited market access for EU companies – issues that continue to hinder closer cooperation.

When Made in China 2025 was launched 10 years ago, it galvanized deep concerns abroad about the consequences of China’s industrial strategy for other economies. As a result of the backlash, China effectively removed the slogan from its public discourse within a few years – yet the project continued. Even if China’s leaders choose a less conspicuous name for a possible Made in China 2035 strategy, it will likely strain the country’s relationship with the EU and other trade partners even further.