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22 views • May 17, 2018

How 'Made in China 2025' is Expansionary

Hongli Xu
MS. GAO: Some say, Made in China 2025 doesn't only seem to be a plan to grow the Chinese economy or making structural changes. It is expansionary in nature. Do you agree? MR. AUTRY: Oh, absolutely. It’s very expansionary in nature. It’s an intent to create a, I think, British imperialist sort of system where the rest of the world is a resource colony for the Chinese manufacturing base and that the wealth of the Chinese people and the geopolitical power of the Chinese government accelerates. Other countries will produce things like soy beans and send them to China, but not be allowed to produce things like manufactured goods or high-tech materials which will be the sole province of the Chinese government. And that, I think, should worry us all. MS. GAO: Since joining the WTO in 2001, what has China’s trade strategy been? MR. AUTRY: I think their fundamental strategy has been to target one strategic industry after another. And they’ve been very clear. Often these are explicitly called out in their five-year plans. And they go after that industry by subsidizing the manufacturing, very often with state-owned enterprises funded by state-owned banks. Then they lure in a great deal of Western capital to help them execute on that plan with promises of high returns. And they use that to produce massive overcapacity in that particular field, whether that’s steel or solar modules. This drives the price of the global commodity down to the point that American, European, Japanese companies can no longer afford to reinvest in their manufacturing facilities and keep themselves current and they lose their competitive advantage. This has worked brilliantly for the Chinese. So they end up capturing a monopoly stand in that category, and then they can begin to raise prices in order to bring the profits back to China while their competitors are out of the market.
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