A man examines a semiconductor wafer at the 2020 World Semiconductor Conference in Nanjing city. Photo: AFP

China has seen bottlenecks in some of its high technology sectors, including artificial intelligence (AI), semiconductors and aircraft engine industries, after the United States started decoupling from it a few years ago, according to a report published by a research team at Peking University.

The report pointed out that China would face a lot more difficulties obtaining key technology equipment, introducing advanced technologies and retaining talent as the US would create a “Democratic Technology Alliance” with technology-leading countries including the European Union, Japan, Taiwan and South Korea.

An academic report published by Peking University’s Institute of International and Strategic Studies Photo: iiss.pku.edu.cn

The report, released at a sensitive time when the US was reviewing China’s commitment to the 2020 trade deal, was removed from the internet on Thursday after media from Hong Kong, Taiwan and the US reported it.

Some commentators said Beijing did not want to see any publications saying China would lose in a technology war with the US.

Since the Trump administration took office in early 2017, the US government has launched restrictions and imposed sanctions against Chinese technology companies.

The so-called US-China technology war escalated as Huawei’s chief financial officer Meng Wanzhou was arrested in Canada in December 2018 for allegedly breaking American sanctions on Iran.

Although Meng was released last September, the technology war between the two powers has not ended.

On September 29 last year, US Trade Representative Katherine Tai and Secretary of State Antony Blinken, together with European Commission executive vice-presidents Margrethe Vestager and Valdis Dombrovskis, held the first meeting of the EU-US Trade and Technology Council in Pittsburgh.

The council aims to protect EU-US businesses, consumers and workers from unfair trade practices, in particular those posed by “non-market economies” that are undermining the world trading system.

The US also planned to set up a Democracy Technology Alliance with key democratic allies amid China’s rise in high-technology sectors. Last December, US President Joe Biden hosted a democracy summit with more than 100 countries and places, including Taiwan, Japan and South Korea, but did not invite China, Russia or Singapore.

On January 30, Peking University’s Institute of International and Strategic Studies published a research report titled The strategic competition between the US and China in technology areas: analysis and outlook.

The drafting of the report was planned by Wang Jisi, the head of Peking University’s Institute of International and Strategic Studies and a professor at the university’s School of International Studies, and done by five other researchers and PhD students.

One of Peking University’s science buildings. Photo: WikiCommons

According to the report, in recent years China has caught up with the US in terms of the number of scientific papers, but has significantly lagged behind the US in terms of the number of citations and originality.

China’s investments in fundamental scientific research have also been far lower than those of the US.

By 2025, the number of PhD students who studied science, technology, engineering and mathematics (STEM) subjects in China will be double that of the US, but many of the Chinese graduates will choose to stay and work in the US, said the report.

China has only started catching up in the AI sector over the past three years, while the US has already become a top education hub for those who want to study AI. At present, 34% of China’s top students in AI subjects have been staying in China, while 56% have moved to the US.

Also, 88% of Chinese students who studied AI subjects in the US have chosen to stay in America, while only 10% have returned to China.

The report said China had surpassed the US in terms of the number of patent applications, but the country’s patents had lower quality and transformation efficiency and narrower coverages across different areas than those in the US.

It said China had an advantage in 5G, harbor machinery and transportation industries, but lagged behind the US in the biotechnology, agricultural science, fine chemicals, industrial software, semiconductors, medical equipment and aircraft engine sectors.

It said the two powers had their own advantages in the computing, quantum information and AI sectors.

“The current US administration has not yet fully defined how the US will decouple from China, but it has formed some consensus on this topic in the semiconductor manufacturing and AI sectors. The US will only link with China in low technology and low value-added industries,” said the report, adding that the establishment of the Democratic Technology Alliance would further suppress China’s development.

“Both the US and China will be hurt by the decoupling, but now it looks like China will lose more.”

Taiwan’s newspapers were quick to jump on the report. Photo: WikiCommons

In conclusion, the report said China should continue to encourage international academic exchange and technology cooperation, boost investments in research and development and retain professionals in order to catch up with the US and maintain advantages.

On Thursday, the report was removed from the website of Peking University’s Institute of International and Strategic Studies after media from Hong Kong, Taiwan and the US started reporting about it on Tuesday and Wednesday.

It was widely cited by Taiwanese media on Friday, which marked the opening of the 2022 Winter Olympics in Beijing.

It has remained unclear why Wang, who has in previous articles called for more dialogue between the US and China, published the report and removed it a few days later.

Some commentators said usually academic reports about technology sectors did not need to be approved by the Publicity Department of the Central Committee of the Communist Party of China (CPC) before publication.

They said the release of the report showed that some top-tier Chinese academics felt the pressure of the US-China decoupling, but were not listened to by Beijing.

On Tuesday, Deputy US Trade Representative Sarah Bianchi told a virtual forum hosted by the Washington International Trade Association that China had failed to meet its commitments under a two-year “Phase 1” trade deal that expired at the end of 2021.

Bianchi said discussions were continuing with Beijing on the matter.

On January 27, the Federal Communications Commission (FCC) voted to revoke the operating license of China Unicom Americas under its Section 214 authority. It claimed the Chinese government could use the state-owned company to “access, store, disrupt, and/or misroute US communications, which in turn allow them to engage in espionage and other harmful activities against the United States.”

The move came after the license of China Telecom Americas was revoked last October.

“The FCC’s latest move is an unreasonable suppression of Chinese companies by further generalizing national security and abusing state power, seriously damaging the US business environment and harming the legitimate rights and interests of Chinese companies and global consumers, including US users,” China’s Ministry of Industry and Information Technology said in a statement on Thursday.

“China is firmly opposed to this.”

On November 18 last year, Party General Secretary Xi Jinping said at a meeting of the CPC Central Committee’s politburo that an advisory group called the National Science and Technology Advisory Committee (NSTAC) was established in 2019 and had provided advice on the technological developments, human resources planning, carbon neutrality directions and even anti-epidemic measures.

The NSTAC last year submitted a secretive report focused on technology self-sufficiency to the central government.

Read: China defiant amid new US trade war threats

Read: China’s secret plan to become tech self-sufficient

Follow Jeff Pao on Twitter at @jeffpao3