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Introduction: Made in China 2025

With the "Opening of China" in 1978, China laid a new foundation for its rapid economic expansion. New incentives for the construction, improvement, and operation of industrial parks, in particular, played an important role. Such parks concentrate human and fiscal capital in order to help reduce the cost of transportation, communications, and logistics; thus, allowing for the free exchange of knowledge, leading to greater efficiency, and profits. Since the creation of its first industrial park in the mid-1980s, China has successfully built and operated over 1,400 large industrial parks. According to MIT analysis, these parks provide for over 40% of the country's manufacturing jobs and account for roughly 10% of China's GDP. China's industrial parks are a key aspect of its economy, and the government takes measures to ensure the competitive strength and capabilities of its domestic firms.

Introduced in 2015, the Made in China 2025 (MIC25) policy aims to further develop the manufacturing sector of the Chinese economy. This policy seeks to move China from the world's factory to a powerhouse of technology-intensive goods, specifically seeking to strengthen China's financial, education, healthcare, and manufacturing sectors by investing in technological innovation and smart manufacturing. This policy shift would reduce China's reliance on foreign technology imports, allowing the state to become more self-sufficient. So far, Chinese state-owned enterprises, domestic companies, and international companies have all invested in MIC25 industries in China. But, the plan's implementation relies on Chinese government policy including favorable taxes, market access to policies to incentivize foreign firms to move research and development effortsto China, forced joint ventures between foreign and Chinese domestic firms, government subsidies for domestic firms engaging in research and development, and talent recruitment for Chinese firms.

Figure Caption: The MIC25 Policy focuses on ten industries: advanced information technology, automated machine tools, and robotics, aerospace and aeronautical equipment, ocean engineering equipment and high-tech shipping, modern rail transport equipment, energy-saving and new energy vehicles, power equipment, resource extraction, medicine and medical devices, and agricultural equipment. Source of Figure: MERICS.

China aims to promote the industries included in MIC25 over the next 30 years through a comprehensive three-phased plan. This first phase, initiated in 2015, plans to "boost domestic manufacturing quality, innovation, and labor productivity; obtain an advanced level of technology integration; reduce energy and resource consumption, and develop globally competitive firms and industrial centers." The second phase concludes in 2035, with goals of reaching parity with global industry and setting global standards. The final phase concludes in 2049, the centennial of the founding of the People's Republic of China, and plans to set China to be the leader in global manufacturing and innovation. These policies have received considerable backlash from the international community, specifically the United States, for providing Chinese firms with an unfair advantage in global markets. China responded in 2018, downplaying its initial ambitions for global leadership. In 2019, in the opening session of the National People's Congress, Premier Li Keqiang did not mention MIC25 at all, this being the first time he left the policy out of his annual report to congress.

In this report, we explore the degree to which MIC25 influences industrial parks in China through a case study of the Beijing Economic-Technological Development Area. Using a mixed-methods approach (satellite imagery and text analysis), we explore the time period from 2016 to 2020, seeking to identify both where and to what degree physical construction or change may have taken place. We find significant signals of change, but note that the most clearly defined signals are associated with large-scale "low-tech" manufacturing. The radar satellite data easily picks up this larger, more traditional, "low-tech" activity in the zone, as opposed to identifying more "high-tech" development which MIC25 focuses on. However, radar imagery analysis alone has limited explanatory power which we will caveat and explain in the methodology section.

Methodology

Our team, based out of the geoLab at William & Mary, utilized Chinese government material for the policy information, online company profiles of businesses in the zone, open mapping services, and press reporting. Some of this information was geospatially evaluated utilizing geographical information systems (GIS) integrating both electro-optical commercial imagery and open synthetic aperture radar (SAR) data.

We created an activity and change alerting and detection service within Google Earth Engine, using open synthetic aperture radar (SAR) data collected by Sentinel-1. This SAR activity/change service works by detecting changes in radar backscatter over time caused by moving vehicles, construction activity, or natural phenomena. The change in backscatter over time was analyzed to identify areas of increased economic activity (for more details, you can read an earlier Tearline article that leveraged similar SAR techniques). In our images, the areas in bright reds signify the highest amount of activity that occurred over the five-year timeframe of 2016 to 2020.

Key Assumption

This article works under the assumption and defines "low tech" manufacturing as more traditional manufacturing such as car manufacturing where substantial activity can be measured throughout the facility, especially from our SAR detection service. In comparison, we define "high tech" as industries where more activity takes place under the roof of the facility and thus limits some measurements of activity from overhead imagery sources, especially our SAR detection service. For example, "high tech" would include chip manufacturing, biomedical research, and robotics where most activity takes place under the roof with light activity outside from parking.

Sample of the SAR script running inside Google Earth Engine.

Overview: the Beijing Economic-Technological Development Area

The Beijing Economic-Technological Development Area is located to the southeast of Beijing, approximately 16.5 kilometers from Beijing's city center. Since its founding in 1992, the Beijing Economic-Technological Development Area has transformed from a large plot of farming land into an innovative industrial zone - attracting investment from 4,000 companies from 30 different countries. Since 2015, following the direction of the MIC25 policy, public announcements suggest that the Beijing Economic-Technological Development Area has placed its full attention on advancing high-tech industries. Manufacturing of certain consumer products, printing, machinery, and chemical industries are being phased out making greater room for high-tech manufacturing.

In 2016, the Chinese Communist Party launched a new Action Plan for Faster Development in the Southern Part of Beijing (Action Plan), covering the Thirteenth Plan that established the MIC25 Policy. The Action Plan emphasizes development that improves the standards of living for the urban populace and strengthens China's technology commercialization, reform, innovation, and opening up of the economy. To support the Beijing platform, as well as the MIC25 plan, the Beijing Economic-Technological Development Area has formed a holistic industry ecology with four central industrial focuses:

  1. Next-generation IT
  2. New energy
  3. Intelligent vehicle, biotechnology and big health
  4. Robotics and intelligent manufacturing

The interactive map, shown in the image below and accessible via the link, shows the makeup of the zone. We highlight a number of key industrial clusters within the Beijing Economic-Technological Development Area, including the Hongda Industrial Park, which focuses on biomedical research, and the Aerospace Science and Technology Park Zone A, which focuses on aerospace. For more information about the analyzedindustrial clusters, see this downloadable file. Both of the two aforementioned industrial clusters have manufacturing concentrations which are emphasized by the MIC25 policy.

Other industrial clusters in the Beijing Economic-Technological Development Areacontain a large number of companies specializing in various areas such as electronics, biomedicine, real estate, robotics, investment management, etc. The Action Plan parallels the MIC25 policy by creating criteria for businesses to move into the industrial parks, including requirements on "industry types, investment intensity, output efficiency... innovation capacity, and energy conservation and environmental standards." Land use priority has been given to southern Beijing for new development projects, including within the Beijing Economic-Technological Development Area. Since information about companies and clusters in the Beijing Economic-Technological Development Area is incomplete, we cannot make a conclusion about which kind of industry is most prevalent. However, evidence from the text-based material supports the theory that MIC25, aided by the Action Plan, is - at least on paper - fulfilling its stated goal of upgrading Chinas manufacturing to more "high-tech" industries.

SAR data collected by the Sentinel-1 and analyzed with our SAR script allows for further analysis of change over time and can help to fill gaps when on-the-ground reporting is lacking or incomplete. By measuring the amount of radar backscatter, we can infer changes in activity on the ground. The below image compares backscatter levels from January 2016 to December 2020, or the first five-year period of the MIC25 plan. The bright red indicates that a significant amount of activity (i.e., a positive change in total backscatter) has occurred over the selected time period. As the below image shows, substantial changes and activity occurred throughout the zone during this time interval. This indicates an increase in the total amount of man-made items that are in the zone -- which also supports the MIC25.

High-Tech vs Low-Tech Manufacturing in the Beijing Economic-Technological Development Area

SAR data analysis indicates mixed construction and human activity throughout the park. Change did not happen at the same rate across the entire period explored. Contrasting to a baseline period of 2015, the 2016 SAR data analysis revealed minimal activity in the zone, potentially corresponding to MIC25 taking time to significantly impact construction timelines. The sole major cluster of activity is centered around the Beijing, Benz Automotive Co., Ltd. factory, a Mercedes factory inside the development area. This is reflected in electro-optical imagery as well, which reveals that the factory was only in the early stages of construction in 2015. For more context, the company itself was founded in 2005 and was operational at the time, just on a smaller scale.

The lack of satellite imagery evidence of high-tech industry growth is not in and of itself surprising. For example, refurbishing the interior of existing structures can be a cost-effective alternative to building from scratch. However, the dominance of low-tech industries in this analysis is of note - and is further reflected in official communications. Official Chinese government sources for the Beijing Economic-Technological Development Area highlight the number of non-Chinese top companies which operate in the zone, including the German Mercedes Benz, indicating that the economic success of the Beijing Economic-Technological Development Area is partially dependent on foreign investment and foreign firms. Further, the factory has increased its alignment with MIC25 over time as the factory, according to the company's webpage, focuses on "digital, flexible, efficient and sustainable" manufacturing and strives to transform China's domestic automobile industry. This is complemented by increased production output and statements on potential plans to focus primarily on electric cars.

The geographic regions of development within the Beijing Economic-Technological Development Area both increased and shifted over time. In 2016, we saw the most intensive material investments in a single location, with activity in the aforementioned Mercedes factory dominating new material events. The trend of growth in "low-tech" and infrastructure-heavy industries continued through 2017, though in 2018, further change was visible at both the Mercedes factory and the nearby highway, Boxing Road. However, the below satellite imagery shows minimal physical changes to Boxing Road. Instead, the activity change picked up by the SAR script is increased automobile traffic to and from reach the Mercedes factory while expanding.

In contrast to the bright red spots throughout these "low-tech" or infrastructure-heavy industries in the SAR data, the industrial clusters with more emphasis on "high-tech" industries showed muted activity under the roof but light activity adjacent to the facility. This visible activity in the SAR data around the "high-tech" industries is most likely due to routine car parking. In contrast, SAR data of the "low-tech" areas indicates activity throughout the majority of the area.

We analyzed all industrial clusters and each one showed this phenomenon. The Beijing Yizhuang Biomedical Park, located in the Northeast portionof the zone and shown in the below image, was chosen as the example because biotechnology and biomedicine are both at the heart of MIC25 and one the Beijing Economic-Technological Development Area's four pillars. We believe that most "high-tech" industry and activity emphasized by the MIC25 occurs indoors, which satellites cannot detect. Thus, our understanding of the role of these "high-tech" industrial clusters is mostly limited to text-based intelligence.

In 2020, based on analysis of SAR data, it does not appear that the park's construction or operation was significantly impacted by COVID-19 which forced Beijing into a months-long lockdown. No specific location in the zone stands out, indicating more construction and continued human activity in the park. The level of activity in 2020 is similar to that of 2019, as revealed by the SAR data.

Residential Changes in the Beijing Economic-Technological Development Area

In 2014, the Chinese Communist Party announced the policy of "new-type urbanization," or a more sustainable and balanced form of urbanization. According to press reporting, the Chinese Government has been pursuing policies that will move over 250 million rural citizens into newly constructed towns and cities. The ultimate goal of the government's policies is to fully integrate 70% of the country's population, or roughly 900 million people, into urban areas by 2025. Over time, as the planning theory goes, the rural population, through the urbanization of rural areas or resettlement to urban areas, will have access to greater educational opportunities and healthcare thus adding to the higher-skilled labor pool. In theory, creating such cities in conjunction with industrial parks allows for more local housing and public transport to better integrate the community and thus greater economic prosperity.

Industrial parks in China have become an important tool to promote greater economic development and urbanization. While MIC25 does not explicitly talk about increased urbanization, it does emphasize that industrial parks are interwoven with residential areas. This intermingling of land use is visible in the interactive map and downloadable data, which highlights residential zones in the Beijing Economic-Technological Development Area.

In the 2019 SAR data, a spot in the Eastern part of the park showed up in bright red. Upon further investigation with electro-optical imagery, we noticed high-rise apartments located in close proximity to industrial areas. Imagery analysis also showed evidence that a village was razed to make way for the companies and apartments. While there is no local press or social media information available regarding citizens reactions to these changes and forced resettlement, there has been widespread external reporting about this phenomenon in China.

Prior to MIC25 and the area's designation as an industrial park, the zone was mostlyfarmland. In line with China's urbanization and industrial policies, the zone has quickly developed, a change that has impacted those who previously occupied the zone. The New York Times reported that large-scale programs across China move farmers into housing towers, with the farmers' plots given to corporations or municipalities. For instance, the state-owned Beijing E-town International Investment & Development Co., Ltd. funded the Yongkang Apartment projectthat is set to house over 6,000 employees newly relocated to the Beijing Economic-Technological Development Area.

SAR data analysis shows that residential zones are changing in structure to allow for more urbanization since the announcement of the MIC25 and China's 2014 urbanization policy. These changes have the potential to impact the demographics of the Beijing Economic-Technological Development Area and uproot communities. While MIC25 focuses on industrial development, this is intertwined with urban development and demographic shifts because increased construction and new industries are both reliant on local workers.

Green Infrastructure and Spaces in the Beijing Economic-Technological Development Area

MIC25's core industrial focuses emphasize the need for clean energy and more energy-efficient technologies. Further, the MIC25 laid out targets for companies to have a 35%decline in energy and water consumption per unit of added value by 2025. This sustainability push is in line with China's policies and declarations against climate change as the nation recently announced its plan to be carbon neutral by 2060. In terms of environmental protection, industrial parks provide a setting for initiatives such as improved waste collection and treatment, research and development in water purification, and carbon emissions measurement and indicator systems.

In line with these policies, the Chinese governmenthas not only placed its interest in advanced high-tech industries that will provide long-term growth opportunities for the area, but also invested in the goal of becoming a sustainable city. Beijing's 2013 - 2017 Clean Air Action Plan cut the PM2.5 (particle pollution) by 38%. According to a private company working with the zone, the action plan has made progress in reducing emissions from coal, vehicles, industrial stacks, and dust.

Along with these strides, the Beijing Economic-Technological Development Area has made significant improvements to the local water system. By integrating the area's water flows by combining tap water, rainwater, underground water, sewage water, and already recycled water into a single system, the Beijing Economic-Technological Development Area has greatly improved cyclical water utilization and limited waste. According to a private company working with the zone, the development area has a 100% sewage water treatment rate and reclaimed water use is currently 30% of total water consumption. The conservation of water has allowed for greater green areas. According to a German state-owned funder involved in the Beijing Economic-Technological Development Area, seven large-scale green park projects have been completed, covering an area of 18,000 hectares.

The creation of these green spaces or wetland parks is visible in both the satellite imagery and SAR data. Located towards the center of the zone, SAR data analysis identified the Beijing Yizhuang Wetland Park as a major spot of activity and green space development. As demonstrated in the 2017, 2018, and 2021 images, the buildings located in the area were de-constructed so the land could be dedicated to this space.

To test whether this was a one-off occurrence or a trend, we analyzed global land use data. Utilizing 2015 land use data from the Global Land Use Database and 2020 land use data from ESRI, we determined that approximately 34.8984 square kilometers transitioned from built-up surfaces to green spaces. Further, 11.6379 square kilometers transitioned from other surfaces to water. This shows that the Beijing Yizhuang Wetland Park is part of a trend towards more green spaces due to the conservation of water in the park. Further, it exemplifies the significant impact MIC25 has had on the layout and activity occurring throughout the Beijing Economic-Technological Development Area.

To produce these statistics, we first standardized the two raster land cover datasets to both be a 30 square meter resolution and have the same values associated with land cover categories. The land cover categories were simplified to: water, impervious surfaces (representing built areas), bareland (usually representing land in transition), and green spaces (representing grass, forests, etc.). Utilizing the raster calculator in ArcGIS Pro we were able to analyze the land-use changes between the datasets, which is represented in the map above. The water statistic was the sum of counts of all surfaces becoming water (12,931), multiplied by 30 square meters (11,637,900), and converted to square kilometers (11.6379). The green space statistic was calculated by first subtracting the amount of green spaces which became impervious surfaces (81,827) from the amount of impervious surfaces which became green spaces (120,607). This statistic (38,780) was then multiplied by 30 square meters (34,898,400) and converted to square kilometers (34.8984).

Beijing Economic-Technological Development Zone Interactive Map

This interactive map (at source link) displays land designations, industrial clusters, and other urban features.

BDA Land Use Interactive Map

This interactive map (at source link) displays land use in the BDA. The land cover categories were simplified to: water, impervious surfaces (representing built areas), bareland (usually representing land in transition), and green spaces (representing grass, forests, etc.).