Chinese officials are revising a controversial government program aimed at securing global technology dominance in a bid to address one of President Trump’s chief complaints about China’s trade practices, according to two individuals briefed on the plans.
China unveiled the 10-year strategic plan in 2015 with a goal of achieving global primacy in 10 advanced technology industries, including robotics, quantum computing and artificial intelligence.
The road map, a signature element of President Xi Jinping’s tenure, sets specific goals for reducing China’s dependence on foreign sources of critical materials such as semiconductors. By 2025, China aims to be 70 percent self-sufficient in key high-tech industries, according to the Council on Foreign Relations.
The individuals spoke on the condition of anonymity because they were not authorized to discuss the potential change in plans.
Trump administration officials have zeroed in on “Made in China 2025” as a key irritant in the ongoing trade dispute between Washington and Beijing. The two sides are conducting talks aimed at resolving U.S. complaints about such structural elements of China’s economic model under a March 1 deadline.
The program represents a “top-down state-directed approach to technology development” that is at odds with genuine market competition and unfair to foreign companies, according to a March report by the office of U.S. Trade Representative Robert E. Lighthizer, who leads the U.S. negotiating team.
“We don’t object to them trying to become more involved in high tech,” Commerce Secretary Wilbur Ross told CNBC on Wednesday. “We do object to using inappropriate methods like stealing secrets, like forced technology transfers, that sort of thing. We’re perfectly happy to compete with them toe to toe as long as it’s a level playing field.”
If Xi endorses significant changes to the program, it could help pave the way for a trade deal. But some analysts remain skeptical.
“I’m still not convinced the replacement will be any less interventionist,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies. “It’s a positive sign, but it doesn’t guarantee that China will fundamentally change the role of the state in the economy.”
The Chinese government engages in a variety of economic planning via other channels, including the 13th Five-Year Plan. The planning document, which covers 2016 through 2020, emphasizes innovation as the key to converting Chinese manufacturing to higher-value production by setting goals for increasing the number of patents and research spending.
Chinese authorities also direct generous lending by government banks to favored state-owned industries.
Jake Parker, vice president of China operations at the U.S.-China Business Council, which represents multinationals such as PepsiCo, Apple and General Motors, said he hopes for real change.
“Reforms to Made in China 2025 that address subsidies, preferential government procurement, increase transparency and offer national treatment to foreign firms will be welcome by the business community,” he said in an email. “But these changes need to be measurable and implemented in a brief defined timeline.”
Proposed revisions in the centerpiece of China’s industrial policy could be discussed at the upcoming annual Central Economic Work Conference expected later this month. Xi also is expected to give a major speech this month marking the 40th anniversary of China’s reforming and opening.
As U.S. complaints escalated, some economic reformers in China also began criticizing the program. This summer, Chinese authorities sought to reduce the program’s high profile.
“Do not make further use of ‘Made in China 2025’ or there will be consequences,” censorship officials ordered, according to China Digital Times, a California-based online publication.
In early November, Trump said China already had scrapped the program “because I found it very insulting.”