China’s ‘Made in China 2025’ strategy to strengthen high-end tech manufacturing

BEIJING, CHINA: President Xi Jinping’s government is considering a new version of its master plan to boost production of high-end technological goods, signalling its intention to keep a firm grip on manufacturing as President Donald Trump looks to bring more factories back to the US.

Officials are drawing up plans for a future iteration of Xi’s flagship “Made in China 2025” campaign. The plan over the next decade would prioritise technology including chip-making equipment, one of the people said, adding that it may not carry a similar name to avoid drawing criticism from Western countries.

Policymakers who are separately preparing Beijing’s next Five-Year Plan starting in 2026 are looking to maintain the share of manufacturing in gross domestic product at a stable level over the medium to long-term, underlining how to rebalancing of China’s economy sought by the US may prove elusive.

As part of deliberation, officials have discussed whether the next Five-Year Plan should include a numerical target for consumption in terms of its share in China’s GDP. They are currently learning against that, as authorities are concerned they lack effective tools to spur spending by households and are reluctant to commit to a specific number, said Bloomberg.

The content of these plans is still being debated and could undergo substantial changes before they are released. The Five-Year Plan will be made public at the next annual legislative session in March 2026, while the next manufacturing blueprint could be unveiled at any time, either before that meeting or afterward.

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The current discussions in Beijing indicate that China plans to largely stick with an overall strategy criticised by the US and Europe for fuelling trade imbalance. That has been a feature of trade talks with the US, which hiked tariffs on China to 145 percent in April before lowering the average rate to roughly 40 percent following talks in Geneva earlier this month.

The Trump administration is seeking to both push China toward more consumption while also using export controls and tariffs to undertake a “strategic decoupling” as part of efforts to mark the US self-reliant in areas like steel, medicine and semiconductors. Beijing’s resistance to those demands – including by maintaining controls on rare-earth supplies – reflects its own concerns about national security and US efforts to block China from receiving advanced chips and other technology.

“We could conceivably, away from strategic materials, do this together,” Treasury Secretary Scott Bessent told CNBC on May 12. “We need more manufacturing, they need more consumption. So there is a chance to rebalance together so we’ll see if that’s possible.”

Chinese leaders have spoken of the need to spur more consumption as they look to avoid a deflationary spiral and offset an anticipated drop in exports from Trump’s tariffs. At this year’s session of the National People’s Congress in March, Premier Li Qiang said that “vigorously boosting consumption” was the government’s top priority this year and urged officials to do more to “make domestic demand the main engine and anchor of economic growth.”

Yet since then, officials have taken few new concrete steps to lift consumption as they wait to see if their spending plans are sufficient to hit a growth target of “about 5 percent” for this year.

Chinese policymakers continue to see the manufacturing sector as core to national security and job creation, and DeepSeek’s breakthrough in artificial intelligence earlier this year has lifted confidence that their strategy is working.

“We must keep strengthening the manufacturing sector, adhere to the principles of self-reliance, and self-improvement, and master key core technologies,” Xi said on May 19 during a visit to a ball bearing factory in the inland province of Henan.

Consumption makes up about 40 percent of China’s gross domestic produt, compared with 50 percent to 70 percent in more developed economies, leading to persistent imbalances and trade tensions. Investment, including in the manufacturing sector, also makes up about 40 percent of the economy – roughly twice as much as in the US, and at a historic level compared with the rest of the world.

Xi’s government released the “Made in China 2025” plan in 2015, focused on making China a leader in everything from electric vehicles and commercial aircraft to semiconductors and robots. The State Council, essentially China’s cabinet, set a goal at a time of transforming the nation into a “medium level” world manufacturing power by 2035, and a “major manufacturing power” by 2049 – centenary of the founding of the People’s Republic of China.