Xi’s gambit: China plans for a world without tech from US
China is freeing up tens of billions of dollars for its tech industry to borrow. It is cataloging the sectors where the United States or others could cut off access to crucial technologies. And when its leaders released their most important economic plans last week, they laid out their ambitions to become an innovation superpower beholden to none.
Anticipating efforts by the Biden administration to continue to challenge China’ s technological rise, the country’s leaders are accelerating plans to go it alone, seeking to address vulnerabilities in the country’s economy that could thwart its ambitions in a wide range of industries, from smartphones to jet engines.
China has made audacious and ambitious plans before — in 2015 — but is falling short of its goals. With more countries becoming wary of China’s behavior and its growing economic might, Beijing’s drive for technological independence has taken on a new urgency. The country’s new five-year plan, made public March 5, called tech development a matter of national security, not just economic development, a break from the previous plan.
The plan pledged to increase spending on research and development by7% annually, including the public and private sectors. That figure was higher than budget increases for China’s military, which is slated to grow 6.8% next year, raising the prospect of an era of looming Cold War-like competition with the United States.
The spending pledges follow four tumultuous years during which former President Donald Trump rattled — and angered — the Communist Party leadership under Xi Jinping by restricting access to U.S. technology for some of its corporate giants, including Huawei.
The experience has hardened a view that the United States, even under a new administration, is determined to under cut the country’s advancement and that China can no longer rely on the West for a stable supply of the technologies that help drive its economic growth.
“The United States, which has already climbed to the summit, wants to kick away the ladder,” Zhang Xiaojing, an economist with the Chinese Academy of Social Sciences, wrote recently.
One sector that China has struggled withis microchips, which much of its electronics production relies on. Bewilderingly complex production has stymied Chinese businesses, which instead import the majority of the semiconductors they require.
Despite tens of billions of dollars invested, China’s domestic chip production met only 15.9% of its chip demand in 2020, barely higher than the 15.1% share it accounted for in 2014, according to IC Insights, a U.S. semiconductor research firm.
China’s premier, Li Keqiang, last week detailed proposals to accelerate the development of high-end semiconductors, operating systems, computer processors, cloud computing and artificial intelligence.
“I think they’re really worried,” said Rebecca Arcesati, a tech analyst with the Mercator Institute for China Studies in Berlin. “They know that without access to those technologies, they won’t be able to reach their targets.”
The new strategy, to a degree, rebrands the country’s previous Made in China 2025 campaign, which sought to propel it to the lead in a range of cutting-edge technologies.
“China wants to reduce its dependency on the world — not to reduce its trade and interaction but to ensure that it is not vulnerable to the kind of strategic blackmail against China that it has historically used against others,” said Daniel Russel, a former U.S. diplomat who is now a vice president at the Asia Society Policy Institute.