Made in China 2025 is a comprehensive techno-industrial policy toward revamping the Chinese manufacturing sector and fostering technological progress. This strategic initiative was taken to curtail China’s reliance on foreign technology imports, enhancing its self-dependence and global competitiveness. As Pakistan is economically challenged by high trade deficits, exacerbated by hefty technological imports and low value-added exports, it stands to gain a lot by learning from the Chinese model.
The persistent decline in Pakistan’s exports is a dominant factor contributing to its widening trade deficit. According to a World Bank report, over the past two decades, the export contribution to GDP has dwindled from 16 to 10 percent, trailing behind its regional counterparts like Bangladesh (27.72%), Vietnam (92.7%), and Malaysia(68.84%). The report further highlights that Pakistan’s poor performance is due to exporting conventional products with no value addition. Moreover, Pakistan does not have export potential in machinery, transport equipment, commodities, chemicals, and related products that are high revenue generators. Given Pakistan’s abundant resources, workforce, and strategic geographical positioning, it is imperative for Pakistan to indigenise its manufacturing technology for improved trade performance. For that, Pakistan could take lessons from its immediate neighbour, China.
As the Chinese economy surged in 2015, it expanded investments into ten pivotal sectors, including information technology, numerical control tools, aerospace equipment, high-tech ships, railway equipment, energy saving, new material, medical devices, agriculture machinery, and power equipment. Notably, these sectors are instrumental in augmenting the value chain of the products. This strategic focus on affordable energy, efficient transportation, and advanced industrial machinery underscored China’s intent to enhance its manufacturing power.
One key takeaway from Made in China 2025 is the emphasis on investing in research and development to foster innovation and technological advancement. This highlights the need for Pakistan to prioritise education and skill development in STEM fields to augment its industrial capabilities. Additionally, China’s focus on creating a conducive environment for entrepreneurship and small business growth can offer valuable lessons for Pakistan in nurturing a vibrant and dynamic industrial ecosystem.
Pakistan should also focus on establishing strong public-private partnerships to support the transfer of technology and knowledge from more advanced economies. This approach has been instrumental in China’s rapid industrial development and can serve as a model for Pakistan to accelerate its own progress. One of the biggest successes of China’s industry is its command on reverse engineering. Pakistan should also invest in learning this methodology to indigenise the world’s best technologies and produce value-added cheaper products. Pakistan’s geo-strategic location connects it to the Gulf, Asia, and Africa. Having lower transport charges will further reduce the cost-price of Pakistan’s commodities, making them globally more competitive.
Additionally, the Made in China 2025 policy adheres to the ‘one city, one case’ principle. Each city formulates a tailored implementation plan covering industrial growth, technology innovation, and talent incentives. Additionally, supply-side policies are being enacted jointly by central and provincial authorities to facilitate the development of the manufacturing process. This includes the establishment of 40 national and 48 provincial innovation centres, enabling local governments to negotiate with private R&D investors autonomously. Pakistan could also adapt this policy line, targeting small cities and local resources. For instance, Faisalabad and Karachi are textile hubs. These innovation centres could be established there to produce more textile variants. Similarly, in Sialkot research centres for pharmaceuticals and surgical instruments could be established to improvise these commodities for modern demands. Nevertheless, Special Economic Zones could be used for this purpose. It would not only serve the manufacturing needs but also reduce geographical disparities.
Furthermore, a skilled workforce is essential for driving technological advancements and innovation. Made in China 2025 acknowledges this imperative by extending its focus beyond the industrial sector alone. To address the workforce needs according to regional characteristics, the Urban Pilot Model Work Plan was devised. This plan, developed in collaboration between the Ministry of Education and the All-China Federation of Trade Unions, aimed to upgrade education and skill acquisition among rural migrants. Initially, 1.5 million individuals with secondary education were given skill development opportunities, demonstrating a bottom-up approach aimed at poverty alleviation and supporting manufacturing objectives. While initiatives like the Technical Education and Vocational Training Authority (TEVTA) had been initiated in Pakistan, their efficiency remains slow due to a lack of target orientation. Despite receiving training, individuals often lack specific industrial opportunities to collectively contribute their skills, highlighting a gap in alignment between training programmes and industrial needs.
In conclusion, Pakistan has much to learn from China’s Made in China 2025 initiative. By adapting and implementing pertinent strategies and best practices, Pakistan can steer its industrial development towards a more competitive and sustainable future. It needs a bottom-up approach prioritising investments in critical sectors. Additionally, Pakistan needs to upgrade its workforce with international standards. Although achieving this vision will likely span decades, Pakistan must start taking proactive measures in this direction today.
Naba Fatima
The Writer is a researcher at the Centre for Aerospace and Security Studies (CASS), Lahore. She can be reached at info@casslhr.com