September 07, 2022

Smart Manufacturing: A Linchpin in China’s Industrial Policy

Industrial capacity is not synonymous with technological prowess. A country’s industrial base includes not just its cutting-edge technologies and actors, but also its foundational capabilities that make up the base of its economic prosperity and competitive capacity. The People’s Republic of China’s (PRC) “smart manufacturing” policies are targeted at upgrading its foundational industrial capabilities and creating the conditions for technological breakthroughs. If the Chinese Communist Party (CCP) is successful at developing a self-reliant and high-value smart manufacturing sector, the productivity gains would better equip China to challenge the United States’ economic and national security interests.

If the U.S. government does not restrict its innovative firms from assisting China’s self-strengthening mission, Chinese firms could erode the competitiveness of American firms—which is already happening in certain industries.

What is smart manufacturing? Chinese policymakers conceptualize it as manufacturing integrated with information technology using advanced techniques—which drives data-driven production, generative digital operations, and the fortification of intelligent supply chains that are responsive to internal and external supply and demand. In China, smart manufacturing is as much of a buzzword—or an aspirational goal—as it is a declared path to national wealth and power. With concentrated state capacity and investment and knowledge transfer from international firms, China is positioning itself to upgrade foundational parts of its economic model and prepare for significant productivity advances in manufacturing. The near-term goal is to obtain the technology capabilities. The broader, and perhaps more strategically important, goal is to reduce reliance on foreign inputs.

Read the full article from Lawfare.

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