Xi’s Gambit: China Plans for a World Without American Technology

China is freeing tens of billions of dollars to borrow its tech industry. It is listing areas where it may cut access to the United States or other important technologies. And when its leaders released their most important economic plans last week, they fulfilled their ambitions to become an innovation superpower.

Given the efforts by the Biden administration to challenge China’s technological rise, the country’s leaders are accelerating plans to go it alone, trying to address weaknesses in the country’s economy, which smartphones Can thwart their ambitions ranging from jet engines. .

China has made audacious and ambitious plans before 2015 – but is falling short of its targets. With more countries being wary of China’s behavior and its growing economic impact, Beijing’s campaign for technological freedom has led to a renewed urge. The country’s new five-year plan, Made public on friday, Technological development the issue of national security, not just economic development, a break from the previous plan.

The plan promised to increase spending on research and development by 7 percent annually, including in the public and private sectors. The figure was higher than the budget increase for China’s military, which is expected to grow 6.8 percent next year, increasing the likelihood of an era of Cold War-like competition with the United States.

The spending vows follow four sharp years during which President Donald J. Trump hastened – and enraged – the Communist Party leadership under Xi Jinping, restricting access to American technology to 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 curtail the country’s progress and China no longer trusts the West for a steady supply of those technologies Can help drive its economic development.

“The United States, which has already climbed the summit, wants to kick up the ladder,” Zhang Xiaojing, an economist at the Chinese Academy of Social Sciences wrote Now on the eve of legislative meetings in Beijing.

Mr. Xi has paved the way for the “global peaks of technology”, describing China’s aspirations. The government had planned to spend 2.5 percent of GDP on research and development in the last five years, but the actual expenditure failed to reach that goal.

One area that China has struggled with is microchips, with much of its electronics production dependent. The spectacularly complex production has given momentum to Chinese businesses, who instead import the majority of the semiconductors they need. Despite tens of billions of dollars of investment, China Domestic chip production Only 15.9 percent of chip demand was met in 2020, which is more than the 15.1 percent share It was accounted for in 2014According to IC Insights, an American semiconductor research firm.

The head of China, Li Keqiang, last week made a detailed proposal 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 Aresati, a technology Analyst With the Merchant Institute for China Studies in Berlin. “They know that without access to those technologies, they would not be able to reach their goals.”

The new strategy, to an extent, reconstructs the country’s previous Made in China 2025 campaign, which was sought Carry it on In a range of cutting-edge technologies. Roughly determined to produce 70 percent of the core components that Chinese manufacturers needed by 2025. The plan intimidated trade partners and contributed to a punishing trade war with the United States.

“China wants to reduce its dependence on the world – not to reduce its trade and interaction but to ensure that it is vulnerable to the kind of strategic blackmail against China that has historically been against others Uses, “Daniel Russell, a former American diplomat who is now a vice president at the Asia Society Policy Institute.

There has been a state of confrontation for over a decade. Long-standing Chinese policies to rely on foreign technology received a boost in 2013 following revelations by Edward Snowden about the hack of the National Security Agency dependent on US technology.

US companies have long complained about policies mandating technology transfer. Chinese government-backed hacks aimed at American intellectual property have further increased tensions. China Have used corporate espionage in the past The government is now prioritizing the government to support economic interests in high priority areas.

Latest intrusion The Microsoft email system was used against business and government agencies and was discovered last weekend. Allegedly linked to Chinese hackers, it is likely to intensify a divide that could divide the tech world.

In recent weeks, Chinese authorities have repeatedly emphasized the danger of “choke points”, where the United States controls key basic technologies. At a news conference in Beijing, Xiao Yangqing, who led the Ministry of Industry and Information Technology, announced a review of 41 areas for “empty spaces” that could cause the technical supply chain to break down “during critical times”.

Beijing is supporting the effort with money and rhetoric.

China Development Bank, the country’s policy lender, Said last week It was preparing more than $ 60 billion in loans to more than 1,000 firms for strategic innovation and invested $ 30 billion for a new government-backed microchip investment fund.

A Chinese Academy of Engineering officer, Ni Gunnan, wrote Recently The country should create a “Chinese system” that can suppress the combined systems of Intel, Microsoft, Oracle and others that have historically dominated computing. He said China should increase its dependence on telecommunications infrastructure technology “as a powerful deterrent” against future threats.

The technological supply chain remains highly complex and completely global, and too much recession in markets can have unexpected consequences, experts warn. Top-down jockeying on microchips triggered by USA and China Lack of a chip That recently hit the auto industry.

Neither country can achieve true self-sufficiency imminently in the modern economy and the state-of-the-art techniques required to run a military. In place of overreaching policies, a sporadic battle is emerging, with both sides working to secure missing pieces coming from other countries.

Many American partners are happy to see their companies taking advantage of the rapid evacuation of American companies by Chinese companies.

Earlier this month, ASML, a Dutch company that makes the necessary equipment to make microchips on a large scale, It was expanded A contract to provide equipment to China’s largest semiconductor manufacturer, even though Washington saw the firm on a blacklist last year known as SMIC. The expansion did not break any restrictions, but showed how the limits of the United States’ ability to cut supplies.

Such decisions may continue to disappoint President Biden, who has challenged China for the country’s most important foreign policy. China hopes to curtail American efforts to isolate it by associating itself with those major economies politically affiliated with the United States.

“They are definitely speaking and acting with the aim of discouraging the US from joining the United States to discourage third countries,” said Mr. Russell of the Asia Society Policy Institute. The goal is to buy “the time needed by China to overcome the remaining weaknesses in its armor”.

Whatever expectations the Chinese leaders had about a diplomatic reset after Trump’s years had already ended.

Mr. Biden’s first conversation with Mr. Xi lasted for about two hours and included “discussions about Beijing’s coercive and unfair economic practices,” according to the White House.

At home, Mr. Biden warns that the United States needs to put infrastructure in place with China on investment, including electric vehicles in support of some tech industries. “If we don’t go ahead, they’re going to eat our lunch,” he said, making the case $ 1.9 trillion economic stimulus plan.

The phrase echoed what he had created as a candidate only two years earlier – to dismiss the challenge presented by China. “China is going to eat our food?” He said while stumping in Iowa in 2019. “come on guys!”

Chris buckley Contributed to reporting. Claire fu And Lin Qingk Contributed to research.

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