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Xi’s Gambit: China Plans for a World Without American Technology

Beijing’s leaders plot a path to go it alone, vowing to spend big to fill gaps in innovation and avoid dependence on the United States and others.

China is freeing up tens of billions of dollars for its tech industry to borrow. It is cataloging the sectors where the United States or others could cut off access to crucial technologies. And when its leaders released their most important economic plans last week, they laid out their ambitions to become an innovation superpower beholden to none.

Anticipating efforts by the Biden administration to continue to challenge China’s technological rise, the country’s leaders are accelerating plans to go it alone, seeking to address vulnerabilities in the country’s economy that could thwart its ambitions in a wide range of industries, from smartphones to jet engines.

The plan pledged to increase spending on research and development by 7 percent annually, including the public and private sectors. That figure was higher than budget increases for China’s military, which is slated to grow 6.8 percent next year, raising the prospect of an era of looming Cold War-like competition with the United States.

The spending pledges follow four tumultuous years during which President Donald J. Trump rattled — and angered — the Communist Party leadership under Xi Jinping by restricting access to American technology for some of its corporate giants, including Huawei.

The experience has hardened a view that the United States, even under a new administration, is determined to undercut the country’s advancement and that China can no longer rely on the West for a stable supply of the technologies that help drive its economic growth.

The road to the “global peaks of technology,” as Mr. Xi has described China’s aspirations, is decidedly uphill. The government had previously set out to spend 2.5 percent of gross domestic product on research and development in the last five years, but actual expenditures failed to reach that target.

China’s premier, Li Keqiang, last week detailed proposals to accelerate the development of high-end semiconductors, operating systems, computer processors, cloud computing and artificial intelligence.

“China wants to reduce its dependency on the world — not to reduce its trade and interaction but to ensure that it is not vulnerable to the kind of strategic blackmail against China that it has historically used against others,” said Daniel Russel, a former American diplomat who is now a vice president at the Asia Society Policy Institute.

A confrontation has been brewing for more than a decade. Long-held Chinese policies to winnow reliance on foreign tech got a boost in 2013, after disclosures by Edward Snowden about National Security Agency hacks that relied on American firms.

In recent weeks, Chinese officials have repeatedly emphasized the danger of “choke points” where the United States controls key foundational technologies. At a news conference in Beijing, Xiao Yaqing, who leads the Ministry of Industry and Information Technology, announced a review of 41 sectors for “empty spots” that could cause the tech supply chain to break “during crucial times.”

Beijing is backing this effort with money and rhetoric.

Neither country can imminently attain true self-reliance in the myriad cutting-edge technologies required to run a modern economy and military. In place of overarching policies, a proxy fight is emerging, with both sides working to secure missing pieces that come from other countries.

Many American allies have been happy to see their companies take advantage of a Chinese market increasingly emptied of American companies.

Decisions like that could continue to frustrate President Biden, who has cast China as the country’s most significant foreign policy challenge. China hopes to undercut American efforts to isolate it by entwining itself with major economies, including those politically allied with the United States.

“They’re certainly speaking and acting with a view of discouraging third countries from joining any posse the United States might organize against China,” Mr. Russel of the Asia Society Policy Institute said. The goal is to buy “time needed by China to seal up the remaining vulnerabilities in its armor.”

Whatever hopes Chinese leaders had about a diplomatic reset after the Trump years appear to have already waned.

Mr. Biden’s first conversation with Mr. Xi lasted about two hours and, according to the White House, included discussions about “Beijing’s coercive and unfair economic practices.”

The phrase echoed one he had made as a candidate only two years before — to dismiss the challenge posed by China. “China’s going to eat our lunch?” he said while stumping in Iowa in 2019. “C’mon, man!”

Category: Technology

Source: New York Times

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