China’s most recent 5 year plan shows what industries the Communist Party of China has decided to focus upon. I say Communist Party of China because the party makes the decisions, the party runs the government, so the government carries out the plan. From a report by King & Spaulding:
The seven “strategic emerging industries” are (1) energy-saving and environment protection, (2) new-generation information technology, (3) biology, (4) high-end equipment manufacturing, (5) new energy, (6) new materials, and (7) new-energy cars.
This means that the full force of government, government owned entities, government controlled entities, subsidies, low price inputs, talent, free credit, free land, etc. will be focused in these areas. They will subsidize exports. Prohibit certain exports so they keep the products in country for adding value downstream. They will export and set predatory prices to drive domestic competitors in the U.S., Europe and elsewhere out of business.
Goal: To create globally dominant industries in those sectors.
They have a plan. Any U.S. companies competing in these fields could plausibly be the best in the business, but they will fail anyway because a company cannot compete with the full force of the Chinese government.
That is why state capitalism is kicking our butts. Our politicians refuse to neutralize the predatory impact. They have a strategy. We don’t. We have rhetoric.
When the U.S. built itself into an economic and production powerhouse, we had a strategy. We executed it.
The full King & Spaulding article is below:
China Takes Further Steps To Boost Strategic Emerging Industries
As reported in the January 2011 Issue of the Trade & Manufacturing Alert, in October 2010, China unveiled its determination to develop seven strategic emerging industries in the State Council’s Decision to Accelerate the Development of Strategic Emerging Industries. The seven “strategic emerging industries” are (1) energy-saving and environment protection, (2) new-generation information technology, (3) biology, (4) high-end equipment manufacturing, (5) new energy, (6) new materials, and (7) new-energy cars. Recently, China made an important step to further the 2010 Decision. The State Council approved the 12th Five-Year National Development Plan of Strategic Emerging Industries (the “12th Five-Year National Plan”) at a standing meeting held on May 30, which is a detailed national plan designed to implement the supporting policies for the development of the seven industries over the 12th Five-Year period, i.e., 2011 to 2015.
The 12th Five-Year National Plan clarifies the priority development directions and tasks of the seven industries. In particular, the energy-saving and environment protection industry should (1) make breakthroughs in efficient energy utilization, pollutant prevention and safe disposal, and resources recycling technologies; (2) develop new and efficient energy saving, advanced environment protection, and resources recycling equipment and products; and (3) promote clean production and low carbon technologies. The new-generation information technology industry should accelerate the construction of next-generation information networks and make breakthroughs in new-generation information technologies. The biology industry should strengthen the development of biological resources utilization technologies and equipment and accelerate the construction of a modern biology industry. The high-end equipment manufacturing industry should give priorities to developing modern aviation equipment, satellites, modern railway transportation equipment, offshore engineering equipment, and intelligent manufacturing equipment. The new energy industry should promote the industrialization of renewable energy technologies. The new materials industry should give priorities to developing new functional materials, advanced structural materials, and composite materials, and engage in the R&D and industrialization of common basic materials. And the new-energy cars industry should accelerate the R&D and industrialization of the core technologies of key parts and materials. The Plan also singles out 20 major projects for government support.
A number of local governments also have formulated detailed plans to cultivate and promote these industries in their jurisdictions. For example, Guangdong Province, one of the largest provinces in terms of the scale of strategic emerging industries, promulgated its provincial 12th Five-Year Development Plan of Strategic Emerging Industries on March 6, 2012, targeting a 127 percent growth of gross output value by 2015. To accomplish the target, Guangdong Province declares that it will employ a series of subsidy measures to support the strategic emerging industries, including but not limited to loan interest subsidies, grants, tax exemptions and reductions, and equity infusion.
Chinese companies in the strategic emerging industries can expect significant subsidies from both the central government and local governments during the 12th Five-Year period. As reported, the central government has set up a 7.5 billion RMB investment fund this year for the strategic emerging industries. Along with the approval of the 12th Five-Year National Plan, the central government launched the first batch of the Strategic Emerging Industry Development Special Fund for new-energy cars, new materials, and high-end equipment manufacturing companies, providing funds equal to 15 percent of investment in fixed assets, up to 40 million RMB for a single project. Subsidy contributions from local governments are also substantial. As of the end of 2011, approximately 24 provinces/municipalities established special funds to support the strategic emerging industries. For example, Beijing municipal government has set aside a 20 billion RMB special fund to support technological development and industrialization, and a 20 billion RMB government procurement fund to procure products of these industries over the 12th Five-Year period. Similarly, the provincial government of Guangdong Province has pledged to input 22 billion RMB in subsidies over the 12th Five-Year period for these industries.