How China is dealing with US ‘catch-up’ efforts in tech


The US is engaged in what it calls “strategic competition” with China, an all-out campaign to keep the world’s No. 2 economy from catching up on cutting-edge technology that could threaten jobs and national security. On one track, President Joe Biden is using massive subsidies to support domestic industries seen as drivers of growth and innovation. Meanwhile, the administration is working to thwart China’s efforts with trade restrictions, blacklisting and investment bans. In response, Chinese President Xi Jinping is rolling back the country’s tradition of central planning, leveraging private companies and trillions of dollars in public funds to conduct research and development. For Xi, who has stressed national security more than his predecessors, it is important to resist what he sees as a “holdover” of self-sufficiency in critical technology as tensions with the US rise.

The Biden administration has pursued an industrial strategy aimed at building domestic manufacturing capacity and expanding supply chains in areas such as clean energy, electric vehicles, semiconductors and high-performance computing. Similarly, it is restricting not only chips but also chip-making equipment and design software from being shipped to China. In the Netherlands, suppliers such as ASML Holding NV and Japan’s Nikon Corporation have enlisted partner countries to join the export controls. U.S. National Security Adviser Jake Sullivan said the U.S. and its allies want to maintain “as big a lead as possible” to ensure “technology that could tip the military balance isn’t used against us.”

2. Where does China stand in terms of technology?

China is rapidly shifting from imitator to innovator in advanced industries from supercomputers to EVs to smartphones, threatening US market share and national security, according to a report released this year by the Information Technology and Innovation Foundation, a Washington-based think tank. Tank. It controls the global processing of critical minerals such as solar panels and lithium batteries. China completed its own space station last year and plans to build a lunar base. According to the US Defense Intelligence Agency in March, China is leading the development of hypersonic weapons that can fly at high and low speeds and carry nuclear warheads. But its ambitions to become a true technology rival to the US have faced serious challenges. Chief among them: the country has no control over the supply of the advanced semiconductors that are the brains of modern electronics. In the year By 2021, Chinese companies will spend more than $400 billion buying chips — mostly based on Western technology — more than the country spends on oil. Building a domestic manufacturing capacity for advanced chips is extremely difficult not only because of the cost but also because of the speed of the technology.

The Communist Party has this year co-opted private capital into government initiatives in areas of weakness, such as robotics, quantum computing and chips, rather than the “soft” internet. It created a Central Technology Commission to strengthen oversight and empowered the Ministry of Science and Technology to support basic innovations. The party established a national agency to develop policing and intelligence as a strategic resource. All those policies feed into the “whole nation” strategy. In March, then-premier Li Keqiang described it as encouraging private capital to collaborate on key government initiatives aimed at addressing areas of weakness. For example, cities and state-owned telecommunications companies have awarded private companies such as Huawei Technologies Co. and Hangzhou Hikvision Digital Technology Co., Ltd. an estimated $1.4 trillion to deploy and develop fifth-generation (5G) wireless networks by 2020, installing and developing cameras and sensors. Artificial intelligence software. The aim was to promote self-driving, automated factories – and mass surveillance. China has several programs that collectively cost trillions of dollars.

So far, the Chinese government’s investment has paid off, with state champions including Huawei, Semiconductor Manufacturing International Corp and Yangtze Memory Technologies struggling to advance their products in the face of gradually tightening US sanctions. An anti-corruption probe targeting people linked to the state’s secretive investment vehicle known as Big Fund last year reflected public dismay. This year, China is said to be looking for alternative ways to grow the industry, such as reducing the cost of materials. It is not clear that Beijing is ready to completely abandon the investment-heavy approach that has worked so well in expanding its manufacturing sector over the past decade. For example, Yangtze secured $1.9 billion in state capital to help it expand its capacity to make micro-advanced memory chips.

Signs of China’s increasingly opaque system have been somewhat mixed: newly appointed Premier Li Keqiang has expressed his “unwavering support” for the private sector and the central bank has announced that it is looking for ways to support tech companies – a “golden stake” in the media business after China made more of an effort. Controlling Alibaba by taking the so-called. Meanwhile, China’s production of key electronics has slowed in the first quarter of 2023, a situation that could be exacerbated by the Biden administration’s ban on semiconductor chips. In April, Xi again urged companies to break down technological barriers, saying innovation was the key to realizing “high-tech self-sufficiency.” That speech came shortly after China opened a new front in the war, announcing a cybersecurity review of exports from the largest U.S. memory chips maker, Micron Technology Inc. The agency said in May that the products had safety concerns and moved to ban them from critical events. Infrastructure – the first significant response to US export controls

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