China’s Next-Generation Industrial Policy

A decade after Made in China 2025 (MIC25), China is entering a new phase of industrial policy. Rather than retreating in the face of mounting domestic and international pressures, Beijing is doubling down. State intervention across the economy is becoming broader and more consequential for global markets than ever.

China's Next-Generation Industrial Policy report assesses how China‘s industrial strategy is evolving and what it means for global competition. Two overarching conclusions emerge. First, China‘s industrial policy is becoming more systemic and pervasive, extending across all layers of production from upstream inputs and industrial equipment to downstream applications, services, and frontier technologies. Second, these domestic dynamics are ushering in a new phase of global impact, characterized by accelerating trade dominance, deepening foreign dependencies on Chinese supply chains, and the rapid global expansion of Chinese firms. Beijing also increasingly deploys policy tools to entrench its dominant position in global value chains and counter foreign diversification strategies.

These conclusions, while significant, are not without precedent, and the analytical foundation for understanding them was laid years ago, in large part by the business community itself.

In late 2015, the U.S. Chamber of Commerce identified and translated the foundational planning document—commonly referred to as the “Green Book“—that set out the localization targets and strategic roadmap underpinning Made in China 2025. That translation was shared broadly with companies, governments, and leading research institutions, and it served as the basis for a series of independent assessments that followed: most notably by the Mercator Institute for China Studies (MERICS) in 2016, the European Union Chamber of Commerce in China in 2017, and the U.S. Chamber of Commerce in 2017.

Published within months of one another, these three reports delivered a strikingly consistent message:

• MERICS (2016): “If China succeeds with ‘Made in China 2025,‘ foreign companies and industrial countries will find themselves confronted with a powerful competitor backed by massive state support across a wide range of advanced manufacturing industries.“
• EU Chamber of Commerce in China (2017): “If implemented as currently envisaged, China Manufacturing 2025 risks distorting markets, crowding out foreign competitors, and fundamentally undermining the principles of fair competition.“
• U.S. Chamber of Commerce (2017): “Made in China 2025 represents a decisive shift away from market-oriented reform toward state-directed economic outcomes, with profound implications for global competitiveness and US economic interests if left unaddressed.“

The analysis was clear. The evidence was made widely available. And the implications were articulated in direct terms across multiple credible, independent sources. One widely cited visual distillation was the 2016 MERICS Made in China 2025 Heat Map, which starkly illustrated the exposure of major manufacturing powers—South Korea, Japan, and Germany, along with other European industrial economies—to the blast radius of competitive pressure unleashed by China’s industrial push.

In the years that followed, China executed much—though not all—of the strategy it had outlined. A comprehensive assessment commissioned by the U.S. Chamber and prepared independently by Rhodium Group, Was Made in China 2025 Successful? (May 2025), confirmed that outcomes tracked the original ambitions to a striking degree. China made substantial progress in reducing import dependencies, displacing foreign firms in domestic markets, and building globally competitive positions in sectors ranging from new energy vehicles to information and communications equipment. At the same time, the Rhodium Group assessment found that significant vulnerabilities persist—particularly in high-end semiconductors, advanced aerospace, biomedicine, and other areas where Chinese firms have not yet closed the technological gap. The picture that emerges is not one of uniform success, but of a state-driven industrial campaign that achieved many of its core objectives while falling short in some of the most technologically demanding sectors. The competitive dynamics and supply chain shifts that were forecast a decade ago have, in large measure, become embedded features of the global industrial landscape. In hindsight, the early warnings were not alarmist—they were, if anything, measured.

It is worth acknowledging plainly that the challenge the world now faces is not the result of an intelligence gap. The translations existed. The reports were published. The warnings reached senior levels of government and industry across major economies. Yet in too many cases, the response was insufficient—whether due to competing priorities, political constraints, or a belief that market forces alone would provide an adequate counterweight. The costs of that delayed response are now visible in lost competitiveness, diminished industrial capacity, and strategic vulnerabilities that will require sustained effort to address.

This report is offered in the same constructive spirit as those earlier assessments: as a rigorous, evidence-based analysis of where China‘s industrial policy stands today and where it is heading. The Chamber‘s role is not to dictate policy, but to ensure that decision-makers in government, industry, and multilateral institutions have access to the clearest possible picture of the competitive landscape. The record of the past decade carries a straightforward lesson: When credible analysis is available and the trajectory is visible, the window for effective action is finite. What follows is an assessment of the next phase of China‘s industrial evolution—and of the strategic choices it presents.