Chinese gambit: China has a new plan to dominate the US in the technology race
US, WASHINGTON (ORDO NEWS) — Beijing is stepping up efforts to become a leader in key technologies, planning to inject money to develop everything from wireless networks to artificial intelligence.
According to a plan approved by Secretary General of the CPC Central Committee Xi Jinping, over the course of six years, China will invest approximately $ 1.4 trillion in the development of fifth-generation wireless networks, the installation of cameras and sensors, and the development of artificial intelligence software, which will become the basis for self-driving cars. automated factories and mass tracking systems, Bloomberg reports.
It is expected that the development of the new technological infrastructure will mainly involve local giants – Alibaba, Huawei, SenseTime Group Ltd. etc. Forced technological nationalism, coupled with an investment drive, will reduce China’s dependence on foreign technology, which echoes the goals set earlier in the Made in China-2025 program. Such initiatives have already sparked fierce criticism from the Trump administration, as a result of which measures have been taken to block the growth of Chinese technology companies such as Huawei.
A massive technology investment decree is expected to be approved by the Chinese legislature this week. The government is expected to announce $ 563 billion in infrastructure financing this year. The largest suppliers of cloud computing and data analysis in the country are Alibaba Group Holding Ltd. and Tencent Holdings Ltd. – will be the main participants in the upcoming project. China has already trusted Huawei with 5G deployment.
According to Bloomberg, there is no guarantee that this program will provide the economic rejuvenation promised by its supporters. But unlike previous attempts to revive the economy, this recently laid digital infrastructure will help national players develop advanced technologies.
China’s new incentive plan is likely to lead to a consolidation of industrial Internet service providers and could lead to larger companies competing with global leaders such as GE and Siemens, said Nannan Coe, Bloomberg’s senior NEF researcher in Beijing.
China is not alone in pouring money into the technology sector as a way out of the post-viral economic downturn. Earlier this month, South Korea announced that AI and wireless would be at the center of its new job creation and growth promotion program.
According to the China Information Industry Development Center, the 10 trillion yuan ($ 1.4 trillion) that China expects to spend by 2025 covers areas that are generally considered advanced, such as AI and the Internet of Things, as well as objects such as super-high voltage and high speed railways. More than 20 of the 31 provinces and regions of mainland China announced projects totaling more than 1 trillion yuan with the active participation of private capital, a state newspaper reported on Wednesday.
According to some estimates by Morgan Stanley, over the next 11 years, new infrastructure will be built annually in the amount of about $ 180 billion, or $ 1.98 trillion in total. These calculations also include power lines and railways. This annual figure is almost double the average for the past three years, according to the March report of the investment bank, which lists the main beneficiaries of the shares, including companies such as China Tower Corp., Alibaba, GDS Holdings, Quanta Computer Inc. and Advantech Co.
Beijing’s vision is already affecting the stock market. So, 5 of the top 10 Chinese stocks this year are from technology companies such as network equipment manufacturer Dawning Information Industry Co. or an Apple supplier, GoerTek Inc. Even the draft drafts were enough to push the shares of all kinds of companies involved in the technological field – from satellite operators to providers.
It is unlikely that US companies will benefit greatly from technology incentives, and in some cases they risk losing their existing business. Earlier this year, when China Mobile’s largest telecommunications operator signed 37 billion yuan contracts for 5G base stations, the lion’s share went to Huawei and other Chinese companies. Swedish Ericsson received only a little over 10% of the business in the first four months. In one of the projects in the northeastern city of Changchun, the local company Digital China will replace the products of American IBM, Oracle and EMC with Chinese technology.
It is in the data centers that a significant amount of work will be done to develop the new infrastructure. More than 20 provinces have launched a policy to support enterprises using cloud computing services, according to a March note from UBS Group AG. Tony Yu, CEO of the Chinese server manufacturer H3C, said his company has seen a significant increase in demand for data center services from the country’s leading Internet companies. “Rapid growth in promising industries will bring new strength to the Chinese economy after the pandemic passes,” he told Bloomberg News.
According to estimates by the Chindata Group data center operator, supported by Bain Capital, for every dollar spent on data centers, there will be another $ 5 to $ 10 investment in related sectors, including networks, electricity and the production of modern equipment. “A number of supply chain companies will benefit from this,” the company said in a statement.
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