China’s Trillion-Dollar
Campaign Fuels a Tech Race With the U.S.
Beijing plans to spend $1.4
trillion in the next five years in sectors including 5G, artificial
intelligence and data centers
Chinese Premier Li Keqiang
delivered a report last month during the country’s annual legislative meeting
calling for a ‘new-style infrastructure.’
By
Liza Lin
June 11, 2020 12:27 pm ET
China has embarked on a new
trillion-dollar campaign to develop next-generation technologies as it seeks to
catapult the communist nation ahead of the U.S. in critical areas.
Since the start of the year,
municipal governments in Beijing, Shanghai and more than a dozen other
localities have pledged 6.61 trillion yuan ($935 billion) to the cause,
according to a Wall Street Journal tally. Chinese companies, urged on by
authorities, are also putting up money.
Under a plan outlined earlier
this year by China’s Ministry of Industry and Information Technology, these
efforts would contribute to at least $1.4 trillion in investments during the
next five years in artificial intelligence, data centers, mobile communications
and other projects.
At China’s annual legislative
meeting last month, China’s Premier Li Keqiang said the campaign was a top
priority of the Communist Party and would give the country a “new-style
infrastructure.”
That marked a subtle shift from
months earlier, when Chinese leaders played down their previous industrial
policy, known as Made in China 2025. The Trump administration has pointed to
that previous policy as evidence of Beijing’s intent to subsidize national
champions and tilt the playing field against foreign companies.
Shanghai says it will pump
money into artificial intelligence, the industrial internet of things and other
advanced technologies. Shanghai’s new international expo center last month.
A key aspect of Made in China
revolved around replacing foreign tech components with local products,
said Caroline Meinhardt, an analyst at the Mercator Institute for China Studies
in Berlin. That goal hasn’t changed, even though the new plan doesn’t
explicitly call for a similar push, she said.
China’s program is likely to
add heat to the U.S.-China technology race as Beijing seeks a global edge in
construction of superfast cellular networks known as 5G. It could also serve as
an important source of economic stimulus to cushion the impact of the
global coronavirus-related slowdown.
“China is still a heavily
planned economy,” said Lester Ross, policy committee chairman at the American
Chamber of Commerce in China. “Such plans are a significant driver of economic
policies.”
The new campaign has
a similar thrust to Made in China 2025, but is both more targeted at
cutting-edge technologies and broader in its ambitions. It focuses on upgrading
technology throughout the Chinese economy and relies mostly on investment from
the private sector and local governments instead of national government
spending.
Unlike utilities and roads,
new-style infrastructure investments such as vehicle charging stations offer
better returns for private investors, Sun Guojun, a senior official with
China’s cabinet, the State Council, said at a news conference in late May. The
central government would provide policy support to the campaign, partly as a
bid to increase domestic demand, Mr. Sun said.
Guangzhou has announced new
spending toward the next-generation campaign. A couple stands along a street in
the city.
This week, Chinese cities
Beijing and Guangzhou announced new spending and projects related to the plan.
Beijing aims to build 13,000 new 5G base stations by the end of 2020, while
Guangzhou officials said they would increase spending to 500 billion yuan, up
from 180 billion yuan announced previously, according to the city’s government
work report.
The government is pushing
hardest for investment in building new 5G networks. Supercharged 5G mobile
connections are expected to underpin a whole new world of next-generation
connected devices, collectively known as the internet of things, that
businesses believe could revolutionize daily life and manufacturing alike.
China hopes to more than triple
the number of 5G base stations to 600,000 by the end of the year, according to
the state-run Xinhua News Agency. In 2019, Bernstein Research said the U.S. was
on pace to install 10,000 5G base stations by the end of that year.
In March, China’s three
national telecom carriers collectively promised to invest about 220 billion
yuan to build 5G base stations.
The rest of the money is slated
to flow into the building of new data centers and intercity rail networks,
development of homegrown artificial intelligence chips, smart factories,
electric-vehicle charging stations and ultrahigh-voltage power facilities.
Local governments have rushed
to announce their investments. Shanghai’s government said this April it would
pump 270 billion yuan on artificial intelligence, the industrial internet
of things and other advanced technologies. Neighboring Jiangsu province said it
plans to invest 182 billion yuan in its own new infrastructure projects.
A new Huawei 5G station was
installed on a tower in a business district in Beijing on April 23.
Tencent, which runs China’s
popular do-everything app WeChat, said last month it would invest 500
billion yuan during the next five years in new infrastructure technologies like
cloud computing and cybersecurity. Its rival, e-commerce giant Alibaba, pledged
200 billion yuan in similar outlays over three years.
In his work report last month,
Mr. Li said the government planned to issue 3.75 trillion yuan in bonds and
spend another 600 billion yuan to support the digital infrastructure push, as
well as accelerate urbanization and upgrade traditional infrastructure like
roads and bridges.
Preferential policies favoring
Chinese companies mean foreign companies are unlikely to see much of a windfall
from the campaign, foreign business groups said.
“Such an unfair playing field
may exacerbate the current trend of global decoupling of supply chains and
increase protectionism,” the European Union Chamber of Commerce in China said
in a statement.
Continuing trade friction with
the U.S. could hinder the rollout of the new Chinese plan, at least in the
short term, as many of the Chinese companies involved still rely on the U.S.
for critical components. That includes China’s dominant maker of 5G equipment,
Huawei Technologies Co., which has been placed on a U.S. export blacklist.
Chinese leaders also have a
track record of allowing political goals to skew industrial plans, leading to
overspending in areas where there’s little demand, according to analysts.
“Demand for 5G in China isn’t
quite there yet,” said Dan Wang, a technology analyst with research consultant
GaveKalDragonomics in Beijing. “For now, it remains a solution looking for a
problem.”
#پیش بسوی قیام سراسری #ما بر اندازیم# کانونهای شورشی #Iran
#سال_سرنگونی #ایران #کروناویروس #قیام_تا_پیروزی #coronavirus
#شورش زندانیان #تيك_تاك_سرنگوني #COVID2019 # اتحادوهمبستگی
# مرگ_بر_دیکتاتور #مجاهدین_خلق ایران #IranRegimeChange
ما را در توئیتر با حساب توئیتری 7 @Bahar iran دنبال کنید
