China 3.0: The Shift Toward Advanced Industries and Implications for the West


Faculty member Ravi Madhavan

China is facing massive pressures – internal and external – regarding environmental issues, resource availability, social and economic inequality and more. In many ways, the People’s Republic is facing an imperative to change its economic model and advance not only its methods of production, but what it’s producing. Two examples are China’s foray into nuclear energy and its imminent entry into the commercial aerospace sector.

If Mao’s China was China 1.0 and today’s low-cost manufacturing powerhouse is China 2.0, this new China will be China 3.0. As Chinese policy-makers confront the prospect of slowing growth and the middle-income trap, more business leaders and policy makers are noting everything China buys is becoming more expensive and everything China sells is becoming cheaper. This is one reason why the imperative to master advanced industries is gaining strength: the promise of higher value addition combined with the desire to demonstrate national capability. These developments are significant in their respective industries, but in a more fundamental sense, they are symbolic of a new emerging China – one that is focused on mastering advanced industries that embody complex technology and systems integration. Continue reading