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China’s low growth target reflects tech war drag

China’s 2021 modest growth target of just 6%, well below the International Monetary Fund’s 8.1% forecast, factors in the enormous cost of finding substitutes for key components blockaded by the Biden administration.

China’s leadership has bet the country’s economic future on a productivity surge driven by 5G mobile broadband and its downstream applications, and Washington’s ban on exports of high-end computer chips threatens to slow China’s planned $200 billion 5G rollout. 

Western analysts diverge widely in their estimates of how fast China can create homemade substitutes for the sophisticated semiconductors that the Trump administration withheld from China under “entity list” rules imposed last year. Some high-profile failures, including last week’s suspension of an $18.5 billion chip fabrication plant in Wuhan, show that China’s path to semiconductor self-sufficiency will be costly at best.