China Study - Strategic Competitive Competence in Demand

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China is aiming for technological supremacy in various industrial fields by 2035. Moreover, China wants to assert this position not only locally but also internationally.

The VDMA, together with the Swiss mechanical engineering association Swissmem and the China consulting firm Sinolytics, has drawn up an interim assessment of the "Made in China 2025" strategy, and it is mixed from the perspective of the mechanical and plant engineering sector.

On the one hand, the government in Beijing is investing extensive resources in research and development, from which not only Chinese companies are benefiting, but also export-oriented companies from Europe.

On the other hand, Chinese policy is increasingly intervening in the market, for example through advantageous financing offers or restricted access to government tenders. This clearly leads to competitive disadvantages for foreign-invested companies. In addition, China has discovered the importance of standardization and is trying to increase its influence not only in international standardization bodies, but is increasingly relying on local industry standards.

The Corona pandemic gave China's rise as a machinery manufacturing nation a powerful boost because the country was hit very early and only for a very short time, while the European sales market was hit hard by the pandemic. As a result, China was able to increase its share of global exports in the mechanical engineering sector to just under 16 percent, surpassing Germany as the world's leading exporter for the first time. However, a strong economic recovery in the EU could ensure that machinery exports from Germany and other European countries grow more strongly again in 2021.

However, the long-term trend clearly favors China. Germany and the EU should not call for protectionism, however, but meet this challenge with market-based measures. To do so, Europe must improve its own competitiveness. At the same time, the EU should realign its trade policy instruments and, for example, protect the domestic market from subsidized competitors from China and take measures to open up Chinese markets for public procurement.

VDMA members can find the more detailed article on this study (after registering at myVDMA.org) HERE and can request the study from Dina Cabraja, VDMA Foreign Trade (dina.cabraja@vdma.org).

For further information on this topic, VDMA members can contact

Oliver Wack, VDMA, Foreign Trade
Tel.: +49 69 6603-1444, e-mail: oliver.wack@vdma.org