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China says it won’t back down on plans to dominate Tech

Beijing’s plan to pump billions of dollars into areas like microchips and robotics to shed its dependence on foreign technology — known as “Made in China 2025” — has come under fire from the US government. And Washington is waging a campaign against Huawei, a Chinese tech champion that hopes to build the world’s 5G mobile networks.

Under pressure from US tariffs on exports and a deepening economic slowdown, China’s leaders are looking for ways to avoid further confrontation without putting those longer-term strategic goals at risk.

The Chinese government has moved to slash its tariffs on American-made cars, started buying more soybeans from US farmers again and shown signs its willing to rethink “Made in China 2025.”

The steps follow a truce in the trade war agreed by President Donald Trump and his Chinese counterpart Xi Jinping over dinner earlier this month. They’ve raised hopes of a deal of some kind that could include significant changes to allow a greater role for foreign companies in China’s economy. Trade experts are skeptical.

“Beijing is not going to give up its plans for becoming a dominant industrial and technological power simply to please Washington,” said Kristen Hopewell, a senior lecturer in international political economy at the University of Edinburgh. “Any changes are likely to be superficial, not substantive.”

In 2015, China announced a 10-year plan to transform its vast manufacturing sector by pushing it into high-tech industries including electric cars, aerospace and advanced medical devices.

The Communist Party views the strategy as essential to ensuring China keeps developing. But the plan’s aggressive goals to dominate supply chains for entire industries have fueled concerns among foreign businesses, who fear losing out in favor of Chinese companies, and governments, who see a potential security threat.

“These are things that if China dominates the world, it’s bad for America,” US Trade Representative Robert Lighthizer said in March. His report alleging unfair Chinese practices, which laid the foundation for Trump’s trade war, mentioned or cited “Made in China 2025” a total of 116 times by one count.

Since “Made in China 2025” became a focal point in the trade war, the Chinese government has started playing it down.

A list of priorities that Beijing issued to local governments last week made no mention of “Made in China 2025,” even though it was included in the previous version two years ago. And The Wall Street Journal reported that Chinese officials are drafting a replacement plan that’s more open to foreign companies and could be rolled out early next year.

“What has been seen as an exclusionary policy can now become a positive vehicle for China’s future development,” said Harley Seyedin, president of the American Chamber of Commerce in South China.

Experts who have studied China’s role in global trade are less optimistic, saying change is likely to be cosmetic.
“Heavy subsidies and other forms of state intervention are at the core of China’s development strategy,” said Hopewell. “China is trying to manage the external optics of its economic policies, but it is highly unlikely to undertake the kind of deep, structural reforms towards a more market-based economy that the US is seeking.”

The Chinese government is pumping billions of dollars into areas like microchips and robotics, part of an effort to slash its dependence on foreign technology.
Potential changes to “Made in China 2025,” along with Beijing’s placatory moves following the Trump-Xi meeting in Argentina, are being widely interpreted as attempts to make progress toward defusing the trade war.

Xi has some political cover to make changes. Tuesday is the 40th anniversary of the start of China’s “Reform and Opening” that launched the country’s rapid leap from a largely rural economy into an industrial juggernaut.

But any measures Xi might announce are expected to be a continuation of the gradual changes it has been introducing in recent years to open more of its economy to the world.
“China is accelerating a series of economic reforms, many of which it would have enacted eventually anyway, and attempting to package it as a major concession to US demands,” said Mark Wu, an international trade professor at Harvard Law School.
Trump administration officials are still taking a wary approach to what China’s offering.

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