Focus on Xi Jinping’s technology policy

Chinese President Xi Jinping proposes a toast at a welcome banquet for leaders attending the Belt and Road Forum at the Great Hall of the People on April 26, 2019 in Beijing, China.

Nicolas Asfouri | Getty Images

Xi Jinping China once declared that it should “prioritize innovation” and be in “the latest technology, modern engineering techniques and disruptive technologies”.

Since that speech in 2017, Beijing has talked about technologies it wants to boost its prowess in, from artificial intelligence to 5G and semiconductor technology.

Five years after Xi’s speech at the last National Congress of the Communist Party of China, the global reality of the world’s second largest economy has changed. It comes amid an ongoing trade war with the United States, challenges from Covid and a change in political direction at home that have hurt some of Beijing’s goals.

On Sunday, the 20th National Congress – held once every five years – will begin in Beijing. The high-level meeting is expected Paving the way for Xi to continue to lead the Communist Party An unprecedented third term of five years.

Xi will evaluate China’s achievements in science and technology, which have produced mixed results.

“I agree it’s a mixed bag,” said Charles Mok, a visiting scholar at the Stanford University’s Global Digital Policy Incubator.

Explained the economic legacy of the Communist Party of China

He said China sets “noble” goals because it aims to be the best, but is “politically and ideologically limited in terms of strategies to reach them.”

Private tech companies are faltering under tighter regulation and a slowing economy. China is far from self-sufficient in the field of semiconductors, a task that is becoming more and more difficult Recent US export controls. Oversight has also been tightened on the mainland.

But China has made some notable progress in areas such as 5G and space travel.

Technology war between the United States and China

“Xi appears to have downplayed the challenges China has faced in overcoming its dependence on foreign companies, mostly American companies…”

Paul Triollo

Technology Policy Leader, Albright Stonebridge

Zero Covid

Semiconductor self-sufficiency

Beijing has focused a lot on self-sufficiency in various areas of technology, but especially on semiconductors. The impetus to boost China’s domestic chip industry was given further impetus as the trade war began.

in her The fourteenth five-year development plan of its kindBeijing said it would make “self-reliance in science and technology and self-improvement a strategic pillar of national development.”

One area he hoped to do this was in semiconductors.

But a number of restrictions imposed by the United States affected those ambitions.

“Xi appears to have underestimated the challenges China has faced in overcoming its dependence on foreign companies, mostly from the United States, for major ‘core’ or ‘hard’ technologies such as semiconductors,” said Paul Triulo, head of technology policy at consultancy Albright. Stonebridge, he told CNBC.

“It also did not take into account the United States’ growing concern about semiconductors as a basis for key technologies.”

Looking ahead, the latest batch of US controls will make a huge impact on China’s technology ambitions.

Paul Triollo

Technology Policy Leader, Albright Stonebridge

Triollo said things didn’t look as “bleak” for China’s semiconductors in 2017 as they do now.

“Looking back, Xi had to redouble his efforts to boost China’s domestic semiconductor manufacturing equipment sector, but even there, the heavy reliance on inputs such as semiconductors has made it difficult for Chinese companies to reproduce all elements of those complex supply chains.”

The Biden administration unveiled a slew of restrictions last week aimed at isolating China from key chips and manufacturing tools for making those semiconductors. Washington is looking to stop supplying chips to critical areas such as artificial intelligence and supercomputing.

Analysts previously told CNBC that this will Likely to disrupt China’s domestic technology industry.

That’s because part of the rules also require some foreign-made chips that use US tools and software in the design and manufacturing process, to get a license before they can be exported to China.

Domestic chipmakers and Chinese design firms still rely heavily on American tools.

Chipmakers – like the Taiwanese company TSMC, the world’s most advanced semiconductor manufacturer – also based on American technology. This means that any Chinese company that relies on TSMC may be cut off from supplying chips.

Meanwhile, in China, there is no domestic equivalent of TSMC. The leading chip manufacturer in China, SMIC, still generations behind TSMC in its technology. And with the latest US restrictions, it may make it difficult for SMIC to catch up.

So China is still far from being self-sufficient in semiconductors, although Beijing places a heavy emphasis on it.

“Looking into the future, the latest package of US controls will make a huge impact on China’s technology ambitions, because restrictions are placed on advanced semiconductors,” Triollo said. The restrictions will spread across many related sectors, and make it impossible for Chinese companies to compete in some areas, such as high-performance computers, and AI-related applications such as self-driving vehicles, that rely on hardware developments to make headway.

China’s crackdown on technology

Looking at Xi’s 2017 speech, there were hints that regulation was coming.

“We will provide more and better content on the Internet and set up an integrated Internet management system to ensure a clean cyberspace,” Xi said at the time.

But the pace at which regulations were passed and the scope of the rules took investors by surprise, and billions were wiped out from the share prices of China’s largest tech companies – including Alibaba and Tencent – in 2021 and 2022 losses.

Analysts noted that while there were signs of cleaning up the internet, the rapid nature of the regulation that subsequently swept China was not expected – even by Xi himself.

“While I believe that in 2017, Xi focused entirely on strengthening platform regulation, I highly doubt that the nature of… [the regulation] “It was pre-planned,” Kendra Schaefer, partner at consulting firm Trivium China, told CNBC.

Five years ago, Xi said the government would “get rid of regulations and practices that hamper the development of a single market and fair competition, support the growth of private enterprises, and stimulate the vitality of various market entities.”

This is another pledge that appears to be unfulfilled. China’s tech giants are also posting their slowest growth in history, in part due to tighter regulations. Analysts say part of the story has to do with Xi exerting more control over powerful tech companies that were seen as a threat to China’s ruling Communist Party.

“Obviously they are not supporting the growth of private companies,” Mock said. “In my view, they didn’t work.”

“Think of it that they put the party’s agenda and complete control at the top of their priority…No one can succeed unless the party succeeds in maintaining its dominance and complete control.”

China’s successes from the fifth generation to space

Despite the challenges, China has had success in science and technology since 2017. Space exploration has been a major focus.

In 2020, the Chinese lunar mission concluded with A spacecraft returns to Earth with lunar samplesIt is the first of its kind in the country. In the same year, China completed its own year The satellite navigation system is called BeiDoua competitor to the US government-owned GPS.

last year, China has landed an unmanned spacecraft on Mars and planning it The first manned mission to the red planet in 2033.

China has also been one of the world’s leading countries in Introducing the next generation of 5G mobile networkswhich promises breakneck speeds and the ability to support new industries such as self-driving.

In the field of electric cars, China has also moved forward. The country is the world’s largest electric vehicle market and home to CATL, the world’s largest EV battery maker, a Looking to expand abroad.

What next for Shi’s technology policy?

The regulatory assault on the domestic tech sector, which has slowed in recent months, will not go away entirely.

Mok said that even if the regulatory actions were “moving into a new phase” in Xi’s third term, companies like Alibaba and Tencent would not necessarily see the exponential growth speeds they experienced in the past.

“Even if they find their feet, it’s not the same floor. They won’t see that growth, because if China’s GDP and economy growth is like what people are talking about now in the next several years…why then? They even outperform the entire China market. ?” said Mok.

There is no doubt that technology will continue to be Xi’s main focus for the next five years, with an emphasis on self-sufficiency. China is likely to continue to seek success in areas Beijing considers “leading” technologies such as artificial intelligence and chips.

But Shi’s job in technology is now much more difficult.

“As the United States continues to tighten controls in other areas of technology, and put pressure on technology investments in China through external investment reviews, the engine of public innovation in China, so far driven by the private sector, will begin to fade, and the government will have to increasingly intervene in the financing”.

“This is not necessarily a recipe for success, except for the heavy manufacturing sectors, but not for advanced semiconductors, software, and artificial intelligence.”

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