I've hit the main points and omitted the data to shorten the article. China is following the highly successful South Korean development model.
"Made in China 2025," the program launched by China's government to establish the country as a global high-tech manufacturing economy, is the strategic key to China's development. An analysis of why this is the case also highlights the key overall challenges facing China's economy.
The specific aims of "Made in China 2025" are to emphasize innovation-driven, high-quality manufacturing and to raise the domestically-produced proportion of key manufacturing components to 70 percent by 2025. The program highlights 10 key manufacturing sectors for radical upgrading, including information technology, mechanized tools and robotics, aerospace, railways, power equipment, biotechnology and high-end medical products. But the program's most crucial aim of all is to create an advanced manufacturing industry to support China's overall development.
The most fundamental development issue facing China is simple. China is now either the world's second-largest economy as measured at current dollar exchange rates, or the world's largest economy as measured by purchasing power parity, or PPP. But China's per capita GDP still lags far behind that of developed economies, particularly the United States, the world's most advanced economy.…
As living standards are approximately proportional to per capita GDP, and as the latter also reflects productivity, China's key task in ensuring its prosperity is to reduce the gap in per capita GDP between itself and the world's most advanced economies.…
To summarize, the truly outstanding successes in development strategy over the past three decades have been in South Korea and China, while the development strategies of most advanced economies during this period have largely been a failure.
Turning from the data to its explanation, the feature that distinguishes China and South Korea from the world's other economies is clear: Both focused on the development of the manufacturing industry. China has become the world's largest industrial producer, overtaking the U.S., while key South Korean manufacturing companies such as Samsung and Hyundai have become major global brands. International data shows that large companies have higher productivity on average than small companies….
It is also striking that the two advanced economies that have lost the least ground relative to the U.S. (with the exception of the U.K.) are Germany and Japan, both of which are dominated by the manufacturing industry. More recently, the U.S. itself has been the only major advanced economy in which manufacturing output has exceeded levels seen before the international financial crisis.
This data clearly shows why "Made in China 2025" is the decisive strategic initiative for China. It also corrects a frequent misunderstanding of the process of global economic development. The data clearly shows that the decreasing prevalence of manufacturing and the rise of service industries in most advanced economies has been a sign of economic failure, not success.…
Globally, the two economies that have concentrated the most on developing their manufacturing industries - South Korea and China - have been the most successful in terms of relative economic development. India's recent shift toward emphasizing manufacturing with its "Make in India" campaign follows the same logic. Manufacturing is clearly key to the most successful economic development. This is the context of "Made in China 2025."
But while manufacturing will be strategically decisive for China for an entire era, the type of manufacturing which has to be undertaken needs to radically change. Numerous studies confirm economic theory's prediction that industries dependent on low wages - various types of textile or toy production, for example - or dependent solely on assembly cannot provide a strategic way forward for China at its present level of development.…
Global trends clearly show that increasingly advanced manufacturing will be the key to the overall success of China's economic development. This is why "Made in China 2025" is so crucial.
China.org.cn
'Made in China 2025' key to China's development
John Ross
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