Published on: Sept 30, 2020

Launch of new SEI plan (Strategic Emerging Industries)

Industry Blogs

Last week China has issued an ambitious plan to boost the development of “strategic emerging industries” (SEIs). Industries targeted range from the buildout of 5G mobile networks to industrial robotics, vaccine applications and chip manufacturing. South China Morning Post (SCMP) writes that this plan is China’s “latest move counter Washington’s expanding technological embargo while elevating the national economy.”

Guidelines issued by four government departments, including the National Development and Reform Commission (NDRC) and the Ministry of Science and Technology (MOST) reveal that China will expand investment in eight SEIs. These SEIs, that should foster new growth drivers, include new-generation information technology industry, bio industry, high-end equipment manufacturing industry, new material industry, new energy industry, intelligent and new energy vehicle industry, energy conservation and environmental protection industry, and digital creative industry. According to the guidelines, China will build a complete strategic industrial system via state planning and state investments.

A similar strategic plan was launched in 2009, also including state support and investments, but this resulted in several cases of duplicated construction. In 2015, the “Made in China 2025” (MiC 2025) initiative was released. MiC 2025 is seen as a key industrial policy for industrial development in China through which China aims at becoming a major manufacturing power by the year 2025. According to the SCMP, China was forced to put its “Made in China 2025” plan on hold because it sparked complaints from Washington and Brussels. While the Chinese government is already planning on publishing its next economic, industrial program, namely China Standards 2035, these eight SEIs will already get a new boost through the just released guidelines. Compared with the previous plans, SCMP notes, these guidelines are more detailed and targeted and even name specific products that the country should develop. For instance, China will pour resources into developing energy-saving motors and five-axis machine tools and it will look into the development of new materials such as heat- and corrosion-resistant components for planes.

While not mentioning the United States, the plan made clear that it was designed to help China avoid being “strangled” by its dependence on imports for key technologies and components and instead relying on its own technological breakthroughs.

Following official statistics, SEIs accounted for 11.5 per cent of China’s gross domestic product last year – an increase of 3.9 percentage compared to 2014. As already became evident through the country’s previous industrial programs, China is pinning its hopes on new areas for growth, while increasingly discouraging traditional labor-intensive manufacturing.

To encourage the development of the targeted areas, SCMP writes that “central government authorities will ask local governments to play a bigger role in “guiding” funds into strategic emerging industries, while encouraging banks to lend more.” Besides a focus on funding, state-owned enterprises are ordered to play a leading role, and a variety of enterprises is encouraged to undertake research, innovation and industrialization of national strategic projects.