Made in China 2025: Menace or model for U.S. industry?

American voices have been quick to denounce China’s ambitious Made in China 2025 manifesto, but would manufacturers here benefit from a national manufacturing strategy?

Made in China 2025 is a sweeping plan designed to transform the nation’s sector from the global epicenter of low-tech manufacturing to a self-sufficient, high-tech behemoth, where Chinese computer chips, aircraft, and automobiles compete with American and European counterparts in a global market. It’s also centralized planning, powered by $300 billion in low-cost loans, research funds, and other government aid.

The Trump administration is focusing on taxes and regulation as a means to improve the competitive standing of American companies, a carrot-and-stick approach of import tariffs, corporate tax reform, and regulatory relief with an occasional dressing-down of U.S. corporations moving jobs offshore.

Early returns suggest big U.S. manufacturers like the Trump approach. Regulatory reform was the big ask coming out of the Obama administration, and Obama’s loudest critic, the National Association Manufacturers (NAM), reports optimism at a 20-year high among its members.

Government oversight is never a good idea, but Made in China 2025 gets two things right, both important, and both potentially lacking in America’s new approach to sustain manufacturing.

The Chinese understand what’s at stake here, that global economic leadership depends on a healthy domestic manufacturing sector and supply chain. 2025 is a comprehensive upgrade to Chinese industry. Scott Kennedy from the Center for Strategic & International Studies notes that the plan “focuses on the entire manufacturing process and not just innovation” as it “promotes the development of not only advanced industries, but traditional industries and modern services.”

It’s an innovation boost for low-tech manufacturing while targeting “priority sectors” like automated machine tools and robotics, aerospace and aeronautical equipment and biopharma and advanced medical products.

We’re less committed, not so sure that economic security starts with a capacity to produce goods and services for consumption and export. We’re just not.

One example: Beholding to budget hawks who should know better, allocation for the NIST Manufacturing Extension Partnership (MEP), a nationwide network of public-private organizations like the MEP Center at the University of Utah, and Colorado’s Manufacturer’s Edge, was zeroed out in President Trump’s budget. The MEP program is responsible for tens of thousands of jobs nationally, carries local manufacturing voices to national policymakers, funnels federal dollars into targeted local initiatives, and costs U.S. taxpayers about the same as a single F-35 fighter jet its programs help build.

If the MEP system was provided a fraction of the $300 billion Chinese planners will make available in low-cost loans, America’s industrial base would be transformed overnight. $300 billion is implausible, absurd to consider here, but connecting early-stage and middle-market manufacturers with more capital is also critical to U.S. competitiveness.

If $300 billion is too much, how much is too little? In its annual report of per-capita manufacturing investments by state, Conway Analytics ranked Utah 41st and Colorado last in the nation, tied with Hawaii. NAM and its membership of influential large manufactures are confident. Earlier-stage manufacturers, at least in the West, are far less sanguine. And why not?

President Trump’s regulatory actions are a meaningful step if other initiatives in workforce development remain funded. A U.S. blueprint would also prioritize access to capital but immigration reform, compromise on healthcare, and supply chain investments cooked into the budget and not negotiated — outcomes that today seem elusive. Lifestyle manufacturers would also be assured support and not face new ideological headwinds.

A national strategy would have good company. We’ve supported the development of a national energy policy, a national framework to keep the internet accessible and open, and national health care legislation even as we disagree on its construct. Today, without a comprehensive plan to support the sector, U.S. manufacturing is in danger of becoming a sector of haves and have-nots, of large, capable exporters and a middle-market lacking a diversified, domestic supply chain.

In that case, Made in China 2025 will be much more than the object of U.S. scorn, but the source of a new global manufacturing hierarchy.

Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.