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Home / US / China hopes to reduce its dependence on the United States.This is a very high requirement

China hopes to reduce its dependence on the United States.This is a very high requirement



As the Central Committee of the Communist Party of China formulated its latest five-year plan, Beijing outlined its goals for economic independence this week. The 14th iteration of the huge policy framework will cover the period from 2021 to 2025, which is essential for setting the country’s political and economic agenda.

The full scope of the plan may not be known in a few months, but a statement issued on Thursday said China wants to focus on economic self-reliance and technological independence. Doing so will save the country from attempts by the United States to restrict its access to key technologies.

“[We will] The statement said: “Cultivate a strong domestic market and establish a new development pattern. Domestic consumption will be a strategic focus.”

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The statement has not outlined any specific goals. However, news from Beijing is being closely watched.

As the coronavirus pandemic prevents growth elsewhere, the world’s second-largest economy is likely to be the only world expansion power this year. China’s future is also closely related to the ever-developing trade and technological wars with the United States, and tensions between the two are increasing.
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Han Wenxiu, a senior financial official of the Communist Party Central Committee, said at a press conference on Friday: “Economic globalization is now facing headwinds.” Han added that the pandemic and rising protectionism have weakened international economic cooperation.

Emphasizes the need for home innovation Wang Zhigang, Minister of Science and Technology of China.

Wang said: “Technological self-sufficiency is the strategic pillar of national development.” “We must promote independent innovation and do our own work. This is because we cannot purchase or require key technologies. [from others]. “

easy to say, hard to do

China’s desire to achieve economic self-sufficiency is not new. Many of the country’s five-year plans prioritize sustainable growth and the expansion of domestic industries. An ambitious 10-year plan “Made in China 2025” was recently formulated to promote China’s manufacturing industry into more advanced technological fields.

However, achieving economic independence is easier said than done.

Julian Evans-Pritchard, a senior China economist in capital economics, wrote in a research report late last week: “There is no guarantee of efforts to increase self-sufficiency in specific sectors Will succeed.”

Evans-Pritchard pointed out that unforeseen events may undermine China’s plans. For example, the outbreak of African swine fever last year cast a shadow over the country’s pork industry. The disease has wiped out a third of China’s pigs, causing shortages and forcing China to import large amounts of meat.
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For advanced industries, it is more difficult to get rid of foreign independence. China is very dependent on other countries to build the chipsets needed for next-generation technologies. Last year, China imported more than US$300 billion worth of chips, which is US$64 billion more than its spending on crude oil.

“Made in China 2025” aims to help China reduce its dependence on such products, and has set a goal of 40% domestic production of chips by 2020. By 2025, this share should increase to 70%.

But the country seems to be far from achieving these goals. According to estimates released by IC Insights earlier this year, less than 16% of the chips needed by China were produced in China last year.

Zhu Chaoping, global market strategist at JPMorgan Chase Asset Management, said: “In view of the huge gap between China and the US in the semiconductor industry, China will have to make huge investments over the long term to catch up with substantial progress.” In Shanghai.

He wrote in a report on Friday that he doubted whether China could achieve self-reliance in various fields, and the bargaining chip was at the top of the list.

Evans-Pritchard said that economic self-sufficiency is not always good for economic development. He pointed out that when companies are free to choose domestic or imported products without political interference, productivity is highest.

He wrote: “The pursuit of self-sufficiency (literally) is a textbook way of reducing productivity.”

Beijing’s hands may be tied

However, China may have no choice when it comes to pursuing further economic independence.

The battle between Washington and Beijing over technology, trade, and national security continues to escalate. Since the beginning of this year, tensions will only intensify as they accuse each other of starting and dealing with the coronavirus pandemic, the conflict against Hong Kong and alleged human rights violations in Xinjiang.
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The dispute led the United States to impose severe sanctions on Chinese companies that rely on American technology to survive, including technology company Huawei. Other technology champions, including SMIC, China’s largest chip manufacturer, have also entered Washington’s sight.

“Faced with the risk of expanding restrictions, it has become increasingly important for China to develop domestic capabilities and reduce dependence on foreign technology,” wrote Zhu Wrote. From JP Morgan.

Evans-Pritchard said that China still needs to find solutions to its biggest problems, including over-reliance on infrastructure investment to protect growth and population aging.

He said: “No faster progress has been made in solving structural problems. We believe that growth may slow to only 2% by 2030.”


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