China wants to insulate itself against Western sanctions - an article for the Economist - 19.02.22

This article assesses China's progress in six critical technologies


A STRIKINGLY HARSH appraisal of China’s ongoing technological battle with America appeared on the website of a prestigious Beijing-based think-tank on January 30th. The paper, published by the Institute of International and Strategic Studies (IISS) at Peking University, found that China is likely to be the bigger loser from the technological and economic decoupling under way between the two world powers. China lacks control over core computing systems, the paper stated, and is far behind America in a number of important areas such as semiconductors, operating systems and aerospace. Within a week of its posting, the document vanished.


The circumstances around its removal are unclear. Communist Party bosses may have decided it signals weakness at a time when Xi Jinping wants to project strength—his country’s, the Communist Party’s and, as he prepares to be anointed president for life later this year, his own. The report’s conclusions are indeed inconvenient for Mr Xi. He has been talking up “self-strengthening” against what his government calls “chokeholds” that the West exerts over access to critical technologies, from seeds to semiconductors. The power of the West to hobble its adversaries with sanctions may be about to be tested in Russia if it invades Ukraine—a military and economic confrontation that China’s rulers will be watching closely because it may illuminate their own vulnerabilities. China’s 14th five-year plan, a strategic blueprint published in 2021 that covers the years until 2025, makes self-reliance in science and technology a cornerstone of economic policy.


The plan’s deadlines for China to break free from existing techno-dependence are fast approaching. The government is pouring billions into the effort, and cajoling Chinese companies to do the same. Combined public and private research-and-development spending soared to a record 2.8trn yuan ($440bn) in 2021 in a bid to catch up with foreign rivals. That is equivalent to 2.5% of GDP, still far from America’s 3% or so but up a fifth in the past five years (see chart 1). On February 11th SMIC, China’s biggest chipmaker, said that it would invest some $5bn in 2022 in new semiconductor factories.


To see how much all this adds up to, The Economist has surveyed six areas in which China’s reliance on the West has been of particular concern to the party and Mr Xi. We looked at mRNA vaccines, agrochemicals, civilian aerospace, semiconductors, computer operating systems and payments networks. Our conclusions mirror those of the IISS paper: although there has been some self-strengthening, self-reliance is some way off.


Chinese progress has been most pronounced in fields that, though themselves technologically sophisticated, require less extended and complex supply chains. Start with the vaccines. Much of China’s progress in mRNA technology used in Western jabs such as Pfizer-BioNTech or Moderna has been linked to one man, Ying Bo. For several years Mr Ying worked on mRNA at Moderna, before returning to China from Boston at the start of the pandemic. His homecoming was hailed by state media as a patriot answering the call of the motherland. His company, Abogen Biosciences, has worked with the People’s Liberation Army to develop the country’s most advanced mRNA shot, and was part of a programme that has invested at least $2.3bn in developing local vaccines.


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