China eyes resumption of drive to become technology leader

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Chinese leaders are shifting focus from the coronavirus disease 2019 (Covid-19) back to long-term goals of making China a technology leader at this year’s highest-profile political event, the meeting of its ceremonial legislature, amid tension with Washington and Europe over trade, Hong Kong and human rights.

The National People’s Congress, which opens Friday, has no real power. But the ruling Communist Party uses the gathering of 3,000-plus delegates to showcase economic and social plans. The party-appointed delegates, who don’t represent the public, endorse decisions already made by party leaders.

The NPC usually focuses on domestic issues but those increasingly are overshadowed by geopolitics, including a feud with Washington over technology and security. In October, party leaders declared that making China a self-reliant “technology power” is this year’s economic priority.

Chinese leaders were rattled after Washington cut off access to US processor chips and other inputs needed by telecom equipment giant Huawei and some other companies. That threatens fledgling industries seen by Beijing as a path to prosperity and global influence.

“China is moving from fighting the coronavirus to returning to long-term development objectives,” said Citigroup economist Li-Gang Liu.

During the congress, leaders will announce closely watched spending plans for the People’s Liberation Army. Last year’s official budget was $178.6 billion, the second-largest after the United States, but outside experts say total spending is up to 40 percent more than the reported figure.

This year’s session comes amid repeated clashes between President Xi Jinping’s government and Washington, Europe, Japan, India, Australia and others over trade, technology, Hong Kong, human rights, the coronavirus and territorial claims.

Xi’s government also is encouraging Chinese exporters to focus more on domestic markets in response to Washington’s tariff hikes on goods from China.

Legislators are due to endorse the party’s latest five-year development blueprint, which takes effect this year.

The ruling party has spent heavily over the past two decades to build up China’s fledgling suppliers of semiconductor, solar, aerospace and other technology. But its smartphone manufacturers and other industries still need US, European, Japanese and Korean processor chips and other advanced components.

 

That campaign took on added urgency after then-President Donald Trump slapped sanctions on Huawei Technologies Ltd. and some other companies starting in 2018.

China is evolving from lower-value manufacturing to “technology intensiveness,” said Zuo Xiaolei, an economist in Beijing. She said that, coupled with stronger consumer spending, could help foreign economies by boosting imports.

On Monday, the industry minister, Xiao Yaqing, called for efforts to “effectively safeguard China’s economic security” in the face of “fierce international competition.”

China needs to develop an “independent and controllable” supply chain, Xiao said, a reference to official pressure on manufacturers to use more domestically produced components and technology, even if they cost more.

Xiao cited integrated circuits, next-generation telecoms and electric cars as priorities, according to the Shanghai news outlet The Paper.

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