China's Obsession with Technological Self-Reliance and Focused Investment... A Warning to Korea [The Reality of China's Technological Capability?]⑥

"While the limitations of Chinese manufacturing are clear, its potential cannot be ignored. What we need to focus on is not the achievements so far, but the direction moving forward."

In 2015, the Chinese government ambitiously announced 'Made in China 2025' with the goal of elevating its manufacturing sector to a global top level. At that time, China clearly aimed for technological self-reliance and expansion of global market share in key industries such as New Energy Vehicles (NEV), semiconductors, aerospace, robotics, and Artificial Intelligence (AI). Nearly a decade later, the reality of Chinese manufacturing shows stark differences across industries. Despite remarkable achievements in some fields, clear limitations remain in core advanced technologies. However, the policy obsession and concentrated investment toward technological self-reliance may continue to be a variable factor going forward.

Significant achievements in industries such as electric vehicles, new energy, and robotics

On the 25th, experts pointed to the new energy vehicle industry as the most outstanding achievement under Made in China 2025. China has already established itself as the absolute leader in the global electric vehicle market. In the first half of 2024, China's electric vehicle sales surpassed 5 million units, accounting for more than 65% of the global market?an overwhelming achievement. In particular, BYD has built a perfect vertical supply chain from batteries to electric vehicle assembly, surpassing Tesla to become the world's largest electric vehicle manufacturer. Kim Jae-deok, head of the Beijing branch of the Korea Institute for Industrial Economics and Trade, analyzed, "The success of China's electric vehicle industry is thanks to the government's strong policy support, securing raw materials, and the establishment of a perfect ecosystem based on its own technological capabilities."

Additionally, China's rapid growth in the robotics industry, especially in humanoid robots, is notable. Han Jae-kwon, CTO of Airobot and professor of robotics at Hanyang University ERICA, stated, "China has recently completed an overall technological ecosystem in the humanoid robot field to the extent that it closely follows the United States," adding, "In the past, South Korea was a global leader in humanoid robots, but while industrialization was delayed and stagnated, China and the U.S. rapidly grew to dominate the market and technology." Professor Han emphasized, "The impact of humanoid robots could surpass that of smartphones, and technological competition in this field is highly likely to be connected to a nation's future sovereignty and hegemony."

Industries such as semiconductors and aerospace face advanced countries' technological barriers

However, Made in China 2025 has not been successful in all fields. The semiconductor industry, in particular, painfully exposes China's limitations. China aimed for a 70% semiconductor self-sufficiency rate by 2025 but remained at about 30% as of 2023. Strong U.S. technological sanctions and investment delays due to the pandemic are major causes.

The aerospace sector is similar. Although China has recently made advances in rocket technology, a significant gap remains compared to the U.S. Kim Seung-jo, emeritus professor of aerospace engineering at Seoul National University, said, "Ultimately, everything comes down to technological capability. To secure profitability in the space industry, technology to produce satellites and launch vehicles cheaply is essential, but China still lacks sufficient capabilities in private companies to drastically reduce costs." He added, "Especially since the U.S. continuously checks China's space industry development, China's satellite launch vehicle development is expected to face significant constraints." He further evaluated, "To put a satellite with decent performance into orbit, U.S. technology is inevitable, and China has yet to move beyond the Soviet-style space development level, so full-scale competition with the U.S. is unlikely in the near term."

Thus, while China has dominated the global market in some industries, the fact that it still faces technological barriers from advanced countries like the U.S. in core advanced technology fields offers important implications. In the technological hegemony competition with the U.S., China struggles to secure core fundamental technologies, which could act as a constraint on future growth.

Nevertheless, the overall growth trend of Chinese manufacturing is an undeniable threat and a clear warning to South Korean manufacturing. China has nurtured a self-sustaining industrial ecosystem by leveraging its vast domestic market and continuously enhanced its technological innovation capabilities based on highly skilled talent. It has moved beyond merely importing and utilizing foreign technology to focus on independent technology development and fostering high value-added industries, thereby improving the overall industrial structure.

South Korea must also achieve technological self-reliance, ecosystem creation, and infrastructure development

Experts emphasize that for South Korea to leap forward again, it is essential to achieve self-reliance in core technologies, create an innovation ecosystem centered on small and medium-sized enterprises, and build national infrastructure to respond to population decline and aging. They warn that without a comprehensive transformation of the industrial structure, South Korea's position in the global market could further narrow.

Kim, head of the Beijing branch, evaluated, "South Korea has lagged behind in competition with China due to inconsistent policy directions, a large enterprise-centered industrial structure, and excessive export dependence," adding, "There are many shortcomings, especially in the continuity of industrial policies and strengthening the SME ecosystem." He further pointed out, "The system for nurturing highly skilled personnel is also weakened by low incentive structures and the fragility of the startup and venture ecosystem, which ultimately leads to the weakening of the manufacturing base."

A senior executive of WPG Holdings, a Chinese semiconductor agent company, warned, "China's manufacturing development has been achieved through massive government investment, continuous policy support, a huge domestic market, and a perfect value chain," while "South Korea is losing competitiveness due to insufficient R&D investment, simplicity of industrial structure, and a conglomerate-centered economic structure."

Professor Han Jae-kwon also said, "South Korea initially had global competitiveness in the humanoid robot field, but missed industrialization due to government and corporate indifference and reduced investment," adding, "Even now, the government and companies must actively invest and innovate to narrow the technological gap with the U.S. and China."

Ultimately, South Korean manufacturing needs a strategic transformation that accurately recognizes China's realities and limitations and leverages them as opportunities. Policy and corporate-level responses are urgently needed to secure practical and sustainable competitiveness through technological innovation, expanded global cooperation, and diversification of industrial structure. To survive competition with China, South Korean manufacturing must enhance global competitiveness through clear goals and active investment starting now.

On the 16th, the BYD Sealion 7 was unveiled at the 'BYD Brand Launch Media Showcase' of the Chinese electric vehicle brand held at Incheon Sangsang Platform. Incheon - Photo by Kang Jin-hyung