China is looking inward to counter US bans on chip making equipment. Image: iStock

Technology is cloaked in many guises. But not, it appears, in the form of the “Made in China 2025” masterplan.

A close inspection of Premier Li Keqiang’s annual Government Work Report showed there was no mention of the controversial program in the 35-page document.

Remarkable, when you consider that this is one of President Xi Jinping’s seminal policies, which is geared to turning the world’s second-largest economy into a technological superpower.

Instead, the words “smart plus” were used to describe China’s high-tech development in the 21st Century. And only briefly.

“One of the most significant row backs has been the government’s softening of its ‘Made in China 2025’ initiative,” Audrey Jiajia Li wrote on openDemocracy, a nonprofit political website based in the United Kingdom. “The policy provoked alarm in the West, particularly in Washington, and was subsequently downplayed by [China’s] state-run media.

“The state news agency Xinhua referred to the policy more than 140 times in the first half of 2018, but abruptly stopped doing so after June 5. A propaganda directive ordering [the] media to stop using the term was leaked later that month,” she added.

Breathtaking in scale, the policy was rolled out in 2015, four years after Germany’s Industrie 4.0 initiative, which was launched at the influential Hanover Fair.

Array of industries

The blueprint encompasses an array of industries, from chips, computers and the cloud to smart cars and smart cookers. In fact, hardly a single sector in China’s economy will escape the effects of this multibillion-dollar project.

Renewables, railways and robotics are other vital areas earmarked, along with the Internet of Things, and interconnected smart technology linked through artificial intelligence, or AI, for the biopharmaceutical and manufacturing sectors.

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But this is just part of the “Made in China 2025” brief, which has called for at least 70% of related high-tech materials and products, such as semiconductors, to be made domestically by 2030.

Indeed, the sheer depth of the scheme has triggered a technological arms race, with US President Donald Trump insisting that China’s state subsidies for these industries should be curtailed amid rising trade tensions.

During the three rounds of talks between Beijing and Washington in the past six weeks, this became a major sticking point.

‘Strategic rival’

The European Union has also voiced concerns about illegal central government support which could threaten the bloc’s tech industries such as telecoms and aerospace.

“Nobody in the EU wants to isolate China, but we need to equip ourselves better against a country that in some areas is becoming a strategic rival,” a senior EU diplomat said last week.

While China’s relationship with two of its biggest trading partners has deteriorated during the past 12 months, this will not derail its high-tech ambitions.

A separate report released earlier this week revealed that Beijing will increase science and technology spending by 13% to 354.31 billion yuan (US$52.88 billion) this year, despite the economy showing signs of stress.

Putting that into perspective, Huang Shouhong, the director of the research office of the influential State Council and a National People’s Congress delegate, said:

“There is limited space in the [annual government work] report and there’s nothing unusual about certain policies being mentioned last year but not this year.

“Yet facilitating the high-quality growth of China’s manufacturing sector is a must to upgrade and transform the Chinese economy.”

Still, technology is now the new battlefield in the rivalry between the world’s two largest economies with Huawei, the “Made in China 2025” poster child, targeted by US crossfire.

The telecom giant has become associated with the perceived “security dangers” of Beijing’s state-backed model when it comes to 5G. Australia, New Zealand and the US have already announced plans to ban it from their super-fast networks.

Technology theft

In December, the US Justice Department announced sweeping charges against the group, including bank fraud, obstruction of justice and technology theft.

Key accusations revolve around violations of US sanctions on Iran, an allegation which has been leveled against Chief Financial Officer Meng Wanzho, the daughter of the company’s billionaire founder Ren Zhengfei.

She was arrested in Vancouver more than three months ago and could still face extradition to the US.

Meng and Huawei have categorically denied the charges. But the saga continues within a broader tech conflict with no ceasefire in sight.

“The current trade war between the United States and China is not about trade,” Yukon Huang, a senior fellow at the Carnegie Endowment and the author of Cracking the China Conundrum: Why Conventional Economic Wisdom Is Wrong, said.

“This war is about protecting the technological edge that has made the United States the world’s dominant economic power,” the former World Bank director for China added.

Needless to say, those comments also failed to make it into Li’s 35-page report.

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