HAI'AN, CHINA - JULY 7, 2021 - The production lines in the intelligent manufacturing workshop of Junfeng Solar Energy (Jiangsu) Co., Ltd., located in the Haian High-tech Zone in Jiangsu Province
MERICS Briefs
MERICS China Industries
13 min read

Software industry + Labor gap + Big data

In this issue of the MERICS China Industries we cover the following topics:

  1. Software industry plan to reduce reliance on foreign technology
  2. Crisis management: Industry overhaul to boost productivity and tackle labor gap
  3. China intends to triple its big data industry size by 2025
  4. R&D on maglev and vactrains to fast-track China’s rail technology upgrades
  5. Industrial green development plan promotes clean tech manufacturing

You can read a free excerpt of our latest MERICS China Industries below. 

To get full access to this product, you can subscribe to this publication on an individual basis. For more information, click here

MERICS members also have privileged access to this product. If you want to learn more about our membership model for institutions and businesses, please click here.


1. Software industry plan to reduce reliance on foreign technology

At a glance: The Ministry of Industry and Information Technology (MIIT) released a 14th Five-Year Plan (FYP) for the software industry. The document underlines the importance of the software sector for China’s pursuit of an innovation-driven economy. Key targets for 2025 listed in the policy include:

  • Raise the software industry’s total annual revenue to CNY 14 trillion, up from CNY 8.16 trillion in 2020; support 15 enterprises to reach revenue of over CNY 100 billion
  • Achieve breakthroughs in the supply of software kernels (a core element of an operating system), development frameworks and other basic components
  • Increase the number of indigenous industrial apps to over one million and promote their application in sectors such as shipbuilding, electronics, machinery and finance

MERICS comment: China’s self-reliance push increasingly prioritizes closing the technology gap in software, adopting a similar approach to semiconductors. Officials are mobilizing human and financial resources to accelerate local capabilities. For example, on December 6, 2021, the Ministry of Education released a list of specialized software colleges to be established at China’s top universities, as has been done for integrated circuits. In August 2020, the State Council released supportive measures granting tax concessions and other benefits to both industries. By the end of this year, it is reported China will have removed all foreign hardware and software from the IT systems of government offices and public institutions.

Leaders aspire to integrate software into all aspects of industry, to create a data-driven, high value-added manufacturing system. Yet as it stands, China’s capabilities in industrial software are weak and concentrated in low value-added segments. For instance, Germany’s SAP and the US’ Oracle account for over 90 percent of the high-end market of production management industrial software, thanks largely to their experience, brand recognition and full suite of service offerings. Foreign enterprises also dominated in R&D and design software. Even though Chinese software providers lag well behind established foreign players, they are likely to win more public as well as private customers as supporting local providers becomes an increasingly important political mission.


Article: 14th Five-Year Plan for Software and Information Technology Services  (工业和信息化部关于印发“十四五”软件和信息技术服务业发展规划的通知) (Link)
Issuing body: MIIT
Date: November 30, 2021 

2. Crisis management: Industry overhaul to boost productivity and tackle labor gap 

At a glance: The MIIT released another FYP that aims to advance China’s industry through comprehensive informatization of the economy. Specifically, the document outlines several key missions for 2025: 

  • Boost the adoption of digital services and tools across the economy, including digital business management, R&D and design tools, numerical control (automated machine production) of essential processes, etc.
  • Transform manufacturing by upgrading industrial supply chains, interlinking equipment, building informatization and industrialization into standards development, etc.
  • Prioritize industries like steel, petrochemicals, coal, aviation, shipping, automotive, raw materials, equipment manufacturing, and green manufacturing
Author(s)