Updated December 22, 2022
“Made in China 2025” Industrial Policies: Issues for Congress
The People’s Republic of China (PRC or China) aims to
Specific goals include:
gain a global economic and technology leadership position
By 2025. Boost manufacturing quality, innovation, and
through a range of state-led industrial and related science
labor productivity; obtain an advanced level of technology
and technology (S&T) policies. These policies feature a
integration; reduce energy and resource consumption; and
heavy government role in directing and funding PRC firms
develop globally competitive firms and industrial centers.
to acquire foreign technology and related capabilities—
By 2035. Reach a level of development that is on par with
including basic and applied research and talent—in areas
global industry at “an intermediate level,” improve
where the United States has long been a global leader and
innovation, make major technology breakthroughs, lead
has strong comparative advantages. Many Members of
innovation in specific industries, and set global standards.
Congress have expressed concern that China’s policies, if
By 2049. Lead global manufacturing and innovation with a
successful, could undermine U.S. technological leadership,
competitive position in advanced technology and industrial
further shift advanced production and research to China,
systems. (This date coincides with the 100th anniversary of
and support a wide range of China’s advancements,
the founding of the PRC.)
including in defense. The scope and scale of China’s efforts
are evident in the amount of state direction and support
Figure 1: China’s Industrial Priorities (2015-2025)
devoted to them; PRC ambitions to lead across the entire
value chain, rather than just segments of it, in key advanced
and emerging technologies; and the range of tactics China
uses use to target and acquire U.S. and allied capabilities.
Overview
In November 2022, at its 20th Party Congress, the
Communist Party of China (CPC) reinforced its focus on
technological innovation as the core driver of China’s
development. The CPC initially set that focus in its
Medium- and Long-Term Plan for Science in Technology
(MLP) (2006-2020). The MLP calls for more assertive
efforts to acquire foreign technology and for PRC firms to
lead such efforts. In support of the MLP, in 2015, China’s
State Council issued Made in China 2025 (MIC2025)—a
broad set of industrial plans that aim to boost
competitiveness by advancing China’s position in the
global manufacturing value chain, “leapfrogging” into
emerging technologies, and reducing reliance on foreign
firms. MIC2025 stresses “indigenous” innovation, but this
process often involves the acquisition, absorption, and
adaptation of foreign technology by PRC entities, that
recast these capabilities as their own. The MLP promotes
diverse forms of state ownership and control of PRC firms

and increases firms’ flexibility to operate overseas, which
Source: “Notice of the State Council on Issuing Made in China 2025,
May 8, 2015, Guofa [2015] No. 28.”
may obscure the full extent of the PRC state’s role in
business actions.
MIC2025 calls for technological breakthroughs in 10
sectors, supports a range of sector-specific plans (Figure 1),
and sets goals for each sector to increase the share of
production by PRC firms. (Figure 2). It calls for China to
lead in each part of the value chain. In semiconductors, for
example, this includes design, operating systems,
production, packaging, testing, equipment, and materials.
MIC2025 is focused on advanced manufacturing and seeks
to transform China’s economy from one that assembles
goods to one that invents the products it makes.
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“Made in China 2025” Industrial Policies: Issues for Congress
Figure 2: Select MIC 2025 Domestic Content Goals
U.S. and International Concerns
MIC2025 has been a major U.S. policy focus because of the
tactics it has intensified, such as technology transfer,
licensing and JV requirements, PRC state-directed IP theft,
and PRC state-funded acquisitions of firms in strategic
sectors. PRC officials say that MIC2025 policies are fair,
but many in the U.S. and foreign business and policy
communities assess the risks and distortions differently.
- A 2017 study by the U.S. Chamber of Commerce concluded
“MIC 2025 aims to leverage the power of the state to alter
competitive dynamics in global markets in industries core to
economic competitiveness. By targeting and channeling capital to
Source: U.S.-China Business Council.
specific technologies and industries, MIC 2025 risks precipitating
Note: Dates for domestic content goals range from 2020 to 2030.
market inefficiencies and overcapacity, globally.”
China’s 14th Five-Year Plan (FYP) for 2021-2025
- A 2016 study by the Mercator Institute for China Studies warned
promotes MIC2025 goals in several respects. It seeks to
that China’s acquisitions aim “to systematically acquire cutting-
develop PRC-controlled supply chains to secure key inputs
edge technology and generate large-scale technology transfer. In
that MIC2025 industries need. Similarly, the FYP calls for
the long term, China wants to obtain control over the most
an expanded use of antitrust, IP, and standards tools—in
profitable segments of global supply chains and production
networks.”
China and extraterritorially—to set market terms and
promote the export of MIC2025 goods and services now
- A 2019 study by the Organisation for Economic Co-operation
coming to market. The FYP also emphasizes the value of
and Development found that PRC semiconductor firms over-
China’s foreign research ties in developing China’s own
whelmingly benefitted from below-market government equity
injections as compared to other firms. It found the state’s role in
competencies in a range of MIC2025 technology areas.
China’s industry to be more pervasive than formal ownership
China’s Approaches to Implement MIC2025
reflects, due to the opacity of state shareholding and funding.
Tax, trade, and investment measures. China uses tax
U.S. Policy Response
preferences to incentivize foreign firms to shift production and
The Trump Administration sought to address MIC2025 and
research and development (R&D) to China. It uses standards, IP,
related PRC practices that it assessed unfairly advantaged
competition, and procurement policies, and other terms that
China, distorted trade, and strengthened China’s technology
seek to transfer foreign know-how to PRC entities and use PRC
and military capabilities. In 2018, it invoked Section 301
suppliers for key components.
authorities and imposed tariffs on most imports from China,
Forced joint ventures (JVs) & partnerships. China’s formal
in response to findings that China’s policies harmed U.S.
regulations and informal practices require a foreign firm to
stakeholders. A January 2020 bilateral economic and trade
partner with a PRC entity and drive foreign firms into JVs. In
many sectors (e.g., aerospace), China leverages its role as a major
agreement resulted in some IP and technology transfer
purchaser to press for JVs and technology transfer in order to
commitments by China but left most U.S. concerns
develop indigenous capabilities. In most cases, the foreign firm’s
unresolved. The U.S. government has ramped up law
partner is a state firm or the PRC government.
enforcement to counter China’s theft of U.S. IP, restricted
Government subsidies. PRC government guidance funds
certain PRC firms from U.S. infrastructure, and started to
(GGFs) channel state funding to PRC firms in support of domestic
scrutinize China’s role in federally-funded research. A June
R&D and overseas acquisitions. Almost 1,800 GGFs tied to
2021 U.S.-EU deal restricts U.S. and EU aerospace
MIC2025 together registered a capital target of $1.5 tril ion and
technology transfer to China. Congress passed legislation in
had raised $627 bil ion toward this target as of early 2020. GGFs
2018 to strengthen foreign investment review (P.L. 116-
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often take a stake or board seat in firms they fund and can
801P.L. 116-801) and export control authorities (P.L. 115-
influence corporate decision making.
232P.L. 115-232). In 2022, Congress passed the CHIPS and
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Foreign acquisitions. GGFs target and fund acquisitions of
Science Act (P.L. 117-167P.L. 117-167) to support U.S.
foreign firms and build China’s capabilities through foreign firms’
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capabilities in semiconductors and other technologies.
expertise, IP, talent pools, and ties to suppliers and customers.
Issues for Congress
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Technology licensing & equipment. Foreign technology and
The Executive Branch to date has not sought to enforce
equipment fil key gaps in China’s current capabilities. PRC firms
China’s
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are members of U.S.-led open source technology platforms (e.g.,
commitments on IP and technology transfer even as
RISC-V, the Open Compute Project, and the ORAN Alliance).
the PRC government expands its statist practices. The
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Since 2014, U.S. semiconductor equipment exports to China have
USTR to date has kept tariffs, saying it is difficult to justify
increased nearly five-fold as China seeks to make its own chips.
lifting them when the PRC government has not changed its
Talent recruitment and training. China encourages the
practices of concern. Some Members have sought to restrict
return of PRC expatriates and the hiring of foreign talent. Many
investment, trade, technology, and research ties that support
PRC technology firms (e.g., Alibaba, Baidu, Tencent, and TikTok)
MIC2025, diversify critical supply chains away from China,
have U.S. R&D centers that often partner with U.S. universities.
and prohibit China from participating in U.S. infrastructure
Many PRC nationals participate in U.S. federally-funded research
and federal procurement. Congress might examine:
in areas that overlap with MIC2025 technologies.

The efficacy of U.S. tools and policies in practice
(e.g., export control, foreign investment, and
antitrust) in countering China’s industrial policies;
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“Made in China 2025” Industrial Policies: Issues for Congress

Implementation of recent agreements and

How China’s reliance on certain U.S. capabilities
negotiation of new rules;
strengthen U.S. leverage and create U.S. options to

Whether the PRC state’s growing role in business
counter PRC industrial policies.
calls for treating PRC firms differently;

The future trajectory of U.S.-PRC technology ties
Karen M. Sutter, , Specialist in Asian Trade and
and how current trade, investment, and technology
Financeksutter@crs.loc.gov, 7-8638
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transfer might affect U.S. competitiveness; and
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