- April 13, 2021 Technology
Beijing’s Tech Ambitions: What Exactly Does It Want?
It’s no secret that China has big ambitions for technology. But the exact contours of those ambitions are less clear, often obscured behind vague labels like “tech superpower.” So what does the Chinese government actually want from its tech industry over the next five years?
China’s broader technology aims can be broken down into three buckets: self-reliance, fundamental breakthroughs, and economic upgrading (see Figure 1). As much as the three goals overlap, they also present Beijing with tradeoffs. A billion yuan put toward fundamental breakthroughs might have no real economic impact in the near term. And using tech to upgrade China’s industrial economy requires continuing usage of foreign chips, undercutting China’s quest for technological self-reliance.
The Chinese government of course also places heavy emphasis on using technology for surveilling its population, imprisoning ethnic minorities, and upgrading its military. Still, understanding the tradeoffs between the three economic and “deep tech” goals listed above remains crucial to anticipating China’s tech trajectory.
Figure 1. Three Buckets of China’s Tech Ambitions Note: The items placed in each sub-section are intended to illustrate either present or future technologies that would fit in each bucket. The technologies listed here are in no way exhaustive, and their exact placement is, of course, up for debate.
Self-Reliance: Protecting China’s Soft Underbelly
For China, self-reliance is less about supremacy and more about survival.
China’s long pursuit of “indigenous innovation“ took on existential urgency in 2018, when the US government cut off the supply of semiconductors to ZTE and then Huawei. With that act, Washington showed its hand—both its ability and willingness to destroy leading Chinese tech companies with the stroke of a pen.
Weeks after the ZTE blacklisting, President Xi Jinping delivered a speech calling self-reliance and indigenous innovation “the only way for us to scale the world’s technological peaks.” Two years later, the 14th FYP enshrined “technological self-reliance“ as a key strategic pillar for China.
Today, self-reliance is relatively narrowly focused on semiconductors and the semiconductor manufacturing equipment (SME) needed to produce them. Despite pouring hundreds of billions of dollars into its chip industry, China still lacks access to key SME like EUV photolithography.
China’s efforts here are all about mitigating downside risks from supply disruptions and sanctions. In the medium-term, homegrown SME will do little for China’s economy. And even major advances will still be catch–up work, not global breakthroughs. But given the stakes, these limited goals remain a top priority.
Fundamental Breakthroughs: Prestige Over Profits
While self-reliance is about hedging against downside risks, fundamental breakthroughs aim to advance the technological frontier and create new opportunities for China.
Quantum technology is representative of such an ambition. It aims to harness quantum physics—the ability of a particle to exist in multiple states at the same time—to carry out computations that would take today’s computers centuries.
In the 14th FYP‘s priority technologies, quantum information is listed second behind only artificial intelligence (AI). But the plan itself emphasizes how nascent the field is, focusing primarily on foundational research needed to inch toward eventual applications.
Most projections see a small global market for quantum technologies for the next five years—less than $1 billion. And while the long-term upside may be huge, quantum computers aren’t replacing current computers any time soon, meaning China still needs to solve its chip problem to become self-reliant.
Instead, the push for fundamental breakthroughs can win China some much-desired prestige and generate major strategic advantages, particularly if quantum’s potential in cybersecurity is realized. But those gains are still speculative, and less conducive to the funding-driven development Beijing favors.
Economic Upgrading: Tech for the Factories
Economic upgrading is mainly about leveraging emerging technologies to turbocharge industries like manufacturing and agriculture. China faces major structural economic headwinds from declining productivity growth, and the government is again looking to technology as the deus ex machina to resolve those issues.
Take China’s campaign to advance the “industrial internet,” its term for applying emerging technologies like AI to increase productivity at China’s factories. The hope is to prepare China’s industrial base for a new phase in which it still competes despite rising wages. True success will require widespread private adoption, but the Chinese government has tools to kickstart that process: subsidies, public-private partnerships, and demonstration projects.
Self-reliance issues can impact China’s economic upgrading agenda, like when foreign controls on chips slowed China’s 5G rollout. But by and large, economic upgrading can be achieved with existing technologies and domestic tools.
The Chinese government faces real resource constraints—funding, talent, and bureaucratic energy—that will force it to prioritize between these goals.
Self-reliance will likely continue to be the highest priority of the three. The US government‘s ability to kneecap leading Chinese companies is not something China will tolerate any longer than it has to. Indigenizing chip fabrication might be painfully slow, but it won’t lack government support or resources.
Fundamental breakthroughs are clearly desired, but outside of security-relevant technologies, these are more often a “nice to have.” China may meet its new goals for funding basic research, but don’t expect this to come at the expense of other priorities.
Economic upgrading will remain a very high, but not quite existential, priority. Importantly, the policy approach needed for economic upgrading—a “spend money to make money” mentality—is also a natural fit for the Chinese bureaucracy.
With a clearer sense of China’s ambitions, the prospects for success in each of these buckets will be explored in future analyses.
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