The race for tech ascendancy between China and the U.S. is climbing new heights. The Americans want the Chinese to be dragged backwards, trying to keep them away from the crown jewels of digital technology — the tools for a new age of smart industrialisation, driven as much by data as by an army of clever robots.
At the heart of the seething competition between the world’s largest and second-largest economies is the race for ever-powerful computer chips. The U.S. has been a leader in the domain of silicon wafers. But driven by massive state support that is tangibly benefiting both start-ups and established titans, or anything in between, China is also on its way, ready to catch up.
China has couched its lofty aspirations, which range from mastering Artificial Intelligence (AI) to making driverless cars, under its Made-in-China 2025 plan. Unsurprisingly, U.S. officials have raged against the Made-in-China 2025 project, which, if it succeeds, can topple the Americans from their perch on the top of the world’s hi-tech tree.
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Consequently, with so much bad blood flowing, a war to hurt China’s tech advancement is turning nasty. The Chinese have been furious at the arrest in Canada of Meng Wanzhou, at Washington’s behest. Ms. Meng is the daughter of the founder of Huawei. Her detention, and possible extradition to the U.S., have been widely interpreted in China as an assault on Huawei, which is widely seen as a global frontrunner in 5G technology.
In a move widely seen as a retaliatory measure, Beijing earlier this month sentenced to death Canadian national Robert Lloyd Schellenberg for drug-related crimes. This has embroiled Ottawa in ruthless proxy combat between Beijing and Washington over cutting-edge technology. The Chinese have so far shown the gumption to stand up to the fire and brimstone flaming from Washington.
In October, Chinese President Xi Jinping delivered a famous mantra of technological self-reliance during a visit to Guangzhou, an icon in China’s vast industrial heartland. “Manufacturing is a key to the real economy, and the core strength of manufacturing is innovation, or the control of core technologies,” Mr. Xi said. China, so far, is pursuing guerilla tactics to fight its tech war. Chinese officialdom and media have been instructed to drop Made-in-China 2025 terminology from their lexicon, in order not to provoke Washington. Also, the state media has been asked to avoid references to China’s 1,000 talents programme. This has been a successful scheme, where China’s brightest graduates in foreign universities have been lured to return home, with offers of high salaries and a conducive environment for research and business.
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State support
But beneath the radar, state-backed support for hi-tech development, especially advanced computer chips, has been relentless. The Asian Nikkei Review reported that an entrepreneur participating in this year’s Consumer Electronics Show in Las Vegas had received $1.5 million last year in government subsidies for his chip-making start-up. Even Foxconn, well known as a giant iphone assembler, apparently benefited from China’s hi-tech largesse, with a $9 billion local government infusion for its upcoming chip factory in Zhuhai. Some of big guns in China’s private enterprise universe are in the fray in developing silicon chips. They include Alibaba, the e-commerce goliath, which has set up an AI chip unit.
It appears to be only a matter of time when China’s hit-and-run tactics of the tech war give way to decisive pitched battles with the U.S., whose results, at this time are hard to predict.
Atul Aneja works for The Hindu and is based in Beijing