How China secured its place as global manufacturing and exports hub

The NITI Aayog last week published a paper looking into the success of the 'Made in China (MIC) 2025' initiative, launched a decade ago, in driving technological innovations. It then listed strategic lessons that India can take from MIC 2025, surprisingly making no mention of the 2014 Make in India initiative.

Part 1: What Make in India should quickly learn from Made in China

As mentioned in the first part of the series, the NITI Aayog listed six strategies China adopted to boost technological innovations and breakthroughs. A 2025 study commissioned by the US Chamber of Commerce added two more to those:

7. China leveraged its position by “acquiring foreign companies” to enable large-scale technology transfers.

8. It imposed stringent restrictions on foreign participation but managed to (i) develop its own technologies to boost cloud services, new energy vehicles, components, and power generation equipment, and (ii) replace foreign firms in areas such as remote sensing technology (LiDAR), automotive sensors, and high-speed rail brakes.

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Industrial momentum through synergy

More studies revealed a few other strategies:

9. Another 2025 study points out that China has created a “system of interlocking industries” or “industrial coevolution” by developing multiple tech–industrial ecosystems that overlap in terms of firms and technologies, generating compounding or spillover effect. For example, an advance in lithium batteries produces spillover effects in consumer electronics, EVs, and energy storage, allowing all the interlinked sectors to scale up and giving China strong industrial momentum. This study provides a graph of this overlapping tech-industrial ecosystems – the image of which is reproduced below.

10. Yet another 2025 study points to China building “process knowledge” and “hands-on experience” to create structural advantage. Key elements of this structure include suppliers and manufacturers co-locating and collaborating, R&D and manufacturing working together and people moving from one area (say, design) to another (say, production) to have hands-on experiences.

11. Contrary to perceptions, in many sectors like EVs, solar panels, robotics and AI, the most successful companies have “learned to thrive with minimal state support”, like EV firms BYD (overtaken Tesla), Xpeng and NIO, as they invested in R&D, took advantage of the ecosystems China built and marched ahead.

How did MIC 2025 help boost exports?

12. A few studies focused on the link between the MIC 2025 and growth in exports. One of those, published in 2025, found “synergy” between the MIC 2025 and China’s FTAs, and said the MIC 2025 product exports saw marked growth in intensive and quantity margins. For example, the China-Korea FTA significantly improved the quality or price margins of China's MIC 2025 exports to Korea. The increase in price margins was “notably higher in FTA-partner countries” – indicating that “FTAs enhance industrial policies by bettering market access and reducing costs for high-quality MIC 2025 products”. That is, the MIC 2025 helped moving exports up the value chain.

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13. A 2022 study on how China tackled some of the challenges of hyper-globalisation had said China’s strategies included supporting domestic companies to (i) “upgrade” their production capabilities in value chains and (ii) promote “extra-territorial linkages”, particularly building “regional supply chains” that provide needed inputs for its export success. It gave the example of the East Asian supply base associated with the electronics inputs needed for Chinese smartphone exports. When the foreign market is less attractive, the study concluded, China can “count on the domestic market”.

14. Another 2025 research into China’s green energy policy and exports noted that China had recognised the “immense economic opportunities in green energy” and made initial forays into it for exports. Its massive subsidies led to persistent overproduction and excess supply in global markets. In 2023, the number of EVs exported was seven times higher than in 2019, forcing the EU to impose countervailing duty (CVD) for five years. The same strategy had worked for its steel and aluminium industries also.

The following strategy doesn’t flow directly from the MIC 2025 (hence, not counted as next) but holds important strategic lesson for India.

Beginning December 1, 2024, China granted zero-tariff to all least developed countries (LDCs) with which it has diplomatic relations “including 33 African nations, on 100 per cent of their products”. It is also “actively” supporting the development of local value chains in Africa.

‘Make in India’ manufacturing woes

The ‘Make in India’ was launched in September 2014. It entailed FDI liberalisation, single-window clearances, ease of business moves like decriminalisation of corporate crimes (Jan Vishwas Act of 2023 and Jan Vishwas Bill of 2025 is pending with a select committee). But its impact remains unstudied.

There have been other big-ticket initiatives to boost manufacturing and exports, like the corporate tax cut of 2019, production linked incentives (PLIs 1.0) for 14 manufacturing sectors launched in 2021, PLI 2.0 launched in 2025 for electronic components, design linked incentive (DLI) scheme of 2021 to boost semiconductor (separate from the PLIs) etc.

But the manufacturing sector has failed to produce results.

Instead of rising up towards the ‘Make in India’ goal of 25 per cent of the total GVA, it has nose-dived to 13.9 per cent – from 16.3 per cent in FY15 and 17.4 per cent in FY12 (current prices).

Indian manufacturing is actually dragging down economic growth. The manufacturing GVA growth averages 8.6 per cent during FY15-FY25 – against the total, GVA’s 10.7 per cent.

Export lessons for India

Initially, when the ‘Make in India’ was launched in 2014, it didn’t set a goal for exports. But, in 2020, the prime minister made “vocal for local” and “local to global” the aims of the “Atmanirbhar Bharat” mission launched then. In 2021, raising exports became a part of the PLI’s goals (the other being raising local manufacturing).

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So, when electronics exports (assembled products, not manufactured) go up, as in the past couple of years, the government claims success for the ‘Make in India’. So is the case with defence exports. On August 26, the prime minister announced a plan from Gujarat to export EVs to 100 countries, giving a call for “Make in India, make for the world”.

But just like manufacturing, goods exports have fallen and is dragging down growth – its growth averages 6.8 per cent during FY15-FY25, against the GDP’s 10.4 per cent (current prices).

Here is an interesting graph to mull over.

India began its post-independent journey ahead of China in goods exports – its global share at 2.2 per cent in 1948, against China’s 0.9 per cent.

But as time went by, China surged ahead (14.6 per cent share in 2024) while India went down and down (1.8 per cent in 2024).

Ideally, India should draw ‘strategic lessons’ from its own failures or from China’s successes. The question is: will it?