How to create a “Made in China 2025” **level demonstration zone?

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The General Office of the State Council recently issued the \"Notice on Establishing ‘Made in China 2025’ Pilot Zones\", which provides comprehensive guidelines for the creation of such pilot zones. The Notice states that by establishing demonstration zones, local areas are encouraged and supported to explore new paths and models for the transformation and upgrading of the real economy, particularly the manufacturing sector. This is of great significance for accelerating the implementation of \"Made in China 2025,\" promoting the transformation and upgrading of the manufacturing industry, improving the quality of development in the real economy, and strengthening the construction of a manufacturing powerhouse. The Notice specifies that municipal districts of direct-controlled cities, as well as cities at the sub-provincial and prefecture level, can apply to establish demonstration zones. Cities that are geographically close to each other and have high levels of industrial interconnection can apply jointly to set up such zones. Applicant cities (clusters) should have distinct characteristics in their leading industries, a relatively complete industrial support system, strong capabilities for industrial innovation and a well-developed collaborative innovation framework, a flexible micro-policy support system, and a favorable market development environment. The Notice emphasizes that when establishing demonstration zones, it is necessary to actively align with major strategies, earnestly implement the Provincial and Municipal Guidelines for Made in China 2025, make full use of the regional industrial advantages, scientifically determine the development direction of the manufacturing sector, and adhere to a customized approach and differentiated development for each zone. By closely integrating \"Internet+\" with mass entrepreneurship and innovation, boldly exploring new models for military-civilian integration, vigorously transforming and upgrading traditional industries, accelerating the development of large platform-based enterprises as well as small and medium-sized enterprises that are specialized, innovative, and high-quality, strengthening a number of new manufacturing enterprises with core competitiveness, and promoting coordinated development among large, medium, and small enterprises, it is possible to create several highly influential hubs for collaborative innovation as well as advanced manufacturing clusters with distinct advantages. Efforts should be made to stimulate innovation, establishing a technology innovation system that is market-oriented, enterprise-centered, and features close integration of industry, academia, and research. Investment in scientific and technological development must be increased, and efforts should be focused on overcoming challenges related to core, key, and common technologies, in order to break through the bottlenecks that hinder the development of the manufacturing sector. Promote industry-financial cooperation to enhance the capacity and efficiency of financial support for the development of the manufacturing sector. Deepen opening-up and cooperation to create new international competitive advantages for Made in China. The Notice requires that the people’s governments of various provinces (regions, municipalities) attach great importance to the establishment of demonstration areas, strengthen overall coordination, guidance, and supervision to ensure steady and orderly progress. Relevant departments of the State Council should extend the policies related to market access reform, fiscal and financial measures, land supply, and talent development, which are currently in effect in areas such as **independent innovation demonstration zones, to these demonstration zones as well. **The Office of the Leading Group for Building a Strong Manufacturing Nation should take into account the foundations and characteristics of manufacturing development in the eastern, central, western, and northeastern regions; it should advance the development of those areas that are ready for it, address the major issues arising in the establishment of demonstration zones, strengthen summarization and exchange of experiences, improve assessment and management methods, and establish a dynamic adjustment mechanism that fosters healthy competitive incentives. The various policies and measures formulated and implemented in the demonstration area should treat all types of enterprises equally, thereby motivating all parties to work together to promote the transformation and upgrading of the manufacturing sector. Original text of the document: Notice from the General Office of the State Council on Establishing “Made in China 2025” Model Zones (Guo Ban Fa [2017] No. 90) To the people’s governments of all provinces, autonomous regions, and municipalities directly under the Central Government, as well as to the various ministries and commissions of the State Council and its directly affiliated agencies: In order to accelerate the implementation of “Made in China 2025” and to encourage and support local areas in exploring new paths and models for the transformation and upgrading of the real economy, particularly the manufacturing sector, the State Council has decided to initiate the establishment of “Made in China 2025” model zones (hereinafter referred to as model zones). With the approval of the State Council, the relevant matters are notified as follows: 1. Entities eligible to apply: Municipal districts of directly-administered cities, as well as cities at the sub-provincial and prefecture level, may all apply to establish demonstration zones. Cities that are geographically close to each other and have high levels of industrial interconnection may apply jointly to set up such zones. The applicant city (cluster) should meet the following conditions: (1) It should have distinct characteristics in its key industries, a relatively complete industrial support system, and clear advantages in developing industrial clusters such as **-level new districts, **-level development zones, and **-type industrial demonstration bases for modernization. (II) It has a strong capacity for industrial innovation, with a concentration of research institutions and innovative talents. It boasts a number of high-level innovative enterprises, platforms, and infrastructure, as well as a relatively well-developed system for collaborative innovation. (III) The micro-policy support system is relatively flexible, the market development environment is favorable, and it can effectively play a role in setting examples and driving progress. The applying city (group) shall formulate a plan for establishing a demonstration area based on the actual development conditions of the region; after being reviewed and approved by the provincial people’s government, it shall be submitted to the State Council. II. Requirements for Establishment: The demonstration zones should make full use of the regional industrial advantages, proactively align with major strategies, scientifically determine the development direction of the manufacturing sector, create an ecological environment in which the industrial chain, innovation chain, talent chain, and policy chain are interconnected, and build an advanced manufacturing system. By closely integrating \"Internet+\" with mass entrepreneurship and innovation, boldly exploring new models for military-civilian integration, vigorously transforming and upgrading traditional industries, accelerating the development of large platform-based enterprises as well as small and medium-sized enterprises that are specialized, innovative, and high-quality, strengthening a number of new manufacturing enterprises with core competitiveness, promoting coordinated development among large, medium, and small enterprises, and creating several highly influential hubs for collaborative innovation as well as advanced manufacturing clusters with distinct advantages, China can advance its industries to higher levels within the global value chain. Efforts should be made to stimulate innovation, establishing a technology innovation system that is market-oriented, enterprise-centered, and features close integration of industry, academia, and research. Support for the development of common and general-purpose technologies should be increased, while efforts to overcome core technical challenges should be intensified in order to break through the bottlenecks that hinder the development of the manufacturing sector. Actively promote industry-financial cooperation, establish industry-financial information exchange platforms, innovate financial support methods, and enhance the capacity and efficiency of financial support for the development of the manufacturing sector. Deepen opening up and cooperation with the outside world, gradually ease restrictions on foreign investment, guide domestic enterprises to raise their technical standards and management capabilities in line with international high-end standards, and create new competitive advantages for Made in China. Accelerate the implementation of **relevant support policies, innovate institutional mechanisms, improve implementation measures, achieve breakthroughs as soon as possible, and explore the development of replicable and scalable best practices. III. Organization and Implementation: The people’s governments of various provinces (regions, municipalities) must attach great importance to the establishment of demonstration zones, earnestly implement the \"Made in China 2025 Provincial and Municipal Guidelines,\" adopt a tailored approach for each zone, and ensure differentiated development ； Strengthen the overall guidance and supervision of the application and construction processes for demonstration zones in this region, to ensure that the establishment of such zones progresses in a solid and orderly manner. **The Office of the Leading Group for Building a Strong Manufacturing Nation, in conjunction with relevant departments, should focus on **major regional strategic plans, take into account the foundations and characteristics of manufacturing development in the eastern, central, western, and northeastern regions, and consider the presence of areas such as comprehensive innovation and reform pilot zones, free trade pilot zones, **independent innovation demonstration zones, **level new districts, and **level development zones. By doing so, it is possible to encourage different regions to explore paths and models for the transformation and upgrading of their manufacturing sectors, thereby creating advanced manufacturing systems with distinct features. Carry out the work of establishing demonstration zones in a proactive and prudent manner, strengthen overall coordination for this effort, and develop and build batches of such zones as they become ready. Strengthen summary and exchange, use key cases to drive broader progress in a step-by-step manner, and fully leverage the role of demonstration and leadership. Refine and improve support policies, coordinate the resolution of major issues in the establishment of the demonstration areas, and strengthen the evaluation of this process; continuously improve the assessment and management methods to create a dynamic adjustment mechanism that fosters healthy competition and incentives. All relevant parties should continue to deepen reforms aimed at streamlining administration and delegating powers, combining regulation with supervision, and improving services, while providing strong support for the innovative development of the demonstration areas. The relevant departments of the State Council should extend the policies related to market access reform, fiscal and financial measures, land supply, and talent development, which are currently in effect in areas such as **independent innovation demonstration zones, to these demonstration zones as well, and further refine these measures. It is necessary to increase support, make optimal use of various types of **funds and industrial funds, improve the coordination among different funding initiatives, and ensure greater efficiency in order to encourage more private capital to support the transformation and upgrading of the manufacturing sector. Accelerate the implementation of inclusive financial services; the inclusive finance departments established by state-owned commercial banks should focus on gaining experience through trials in demonstration areas ； Leverage the role of the financial guarantee system to better support the innovative development of private enterprises and small and medium-sized enterprises. Pilots are being launched to convert old commercial facilities, warehousing facilities, and unused buildings into entrepreneurship incubation centers. Implement policies such as equity incentives and preferential measures for talents to fully motivate research institutions and universities. The provincial people’s government where the demonstration zone is located may delegate approval powers related to foreign investment management, economic and trade cooperation, and investment approvals to the demonstration zone, and allow it to develop policies and measures to foster innovation and development in the manufacturing sector, as well as to explore new mechanisms, models, and approaches. The various policies and measures formulated and implemented in the demonstration area should treat all types of enterprises equally, thereby motivating all parties to work together to promote the transformation and upgrading of the manufacturing sector, improve the quality of the real economy’s development, build **core competitive advantages, and lay a solid foundation for achieving the goal of becoming a manufacturing powerhouse. General Office of the State Council, November 20, 2017