Message from China's tech control plan

“Tit for tat”

Technology is at the heart of the US-China trade war. After the US imposed sanctions on Chinese tech giant Huawei in May 2019, Beijing has yet to launch any strong retaliatory measures.

However, many options have been considered by this country, mainly in the process of perfecting policies.

More than a week ago, Chinese authorities announced that they would create a list of “unreliable” foreign companies in retaliation for the US putting Chinese telecommunications giant Huawei and 68 other entities on a “blacklist” that bars them from buying parts and technology from US companies.

China is studying the establishment of a “national technology security management” mechanism in response to the US “ban” on Huawei. Photo: WSJ

Most recently, China's National Development and Reform Commission announced that it is studying the establishment of a "National Technology Safety Management List" mechanism, a form of technological control.

According to Chinese media, the technology control is aimed at preventing and limiting risks related to national security, similar to establishing a "firewall" to protect economic and technical security, as well as core technologies that China has achieved success in such as aerospace, high-speed train equipment, electronic payments by mobile devices, 5G or rare earth production technology.

China now sees rare earths as one of the “weapons” that could be launched in retaliation against the US.

The mineral is used as an input for a wide range of consumer products, from iPhones to electric cars, as well as jet engines, satellites and lasers that are in high demand by American companies.

Although rare earths are found in many parts of the world, very few countries mine or produce them. Meanwhile, China dominates the rare earth mining industry, supplying more than 70% of global production.

In the US alone, about 80% of rare earth imports come from China. Although Estonia, France, and Japan also supply processed rare earths to the US, the primary ore still comes from China. In a recent statement, the Chinese government left open the possibility of restricting rare earth supplies to the US.

Once the “National Technology Security Management List” mechanism is established, China will likely immediately tighten its rare earth exports to the US. Furthermore, Beijing may block unwanted US technologies from its market.

Looking at how China plans to respond to the US, it can be seen that this country is trying to “retaliate” in the same way that Washington has done. In other words, China wants to fight “one-on-one” with the US: wherever Washington “strike”, Beijing will respond.

China supplies more than 70% of global rare earth production. Photo: AP

China's "Dream"

The "dream" of becoming the world's number one technological power is something China does not hide, especially in the Made in China 2025 Plan.

The message from China's plan to establish a "national technology security management" mechanism is not simply a response to the US, but more deeply, it is an affirmation that China will be self-sufficient in technology to create an "equal" position in the competition with the US.

Currently, the country is still heavily dependent on foreign technology and cannot produce essential technologies on its own. Electronic chips - the core technology in everything from smartphones to cars - are a typical example.

China is currently heavily dependent on foreign chipmakers, having invested tens of billions of dollars in several domestic companies over the past few years in the hope of producing its own chips rather than using foreign technology.

Despite government subsidies, China still has a long way to go before it truly becomes a world-leading technology power, according to some experts.

It’s not just that China started later, but more importantly, that it’s adopting technology rather than starting from scratch. Many of the country’s tech success stories over the years have followed a formula that combines Western technology with an innovative business model to create a boom.

Workers inspect a robot arm at a factory in Nanning, eastern China. Photo: AP

Since the US imposed sanctions on China's second-largest telecommunications company ZTE last year and the successive "blows" aimed at Huawei this year, Beijing seems to have realized that technological autonomy is a way to "bargain" against external challenges.

A recent article on Bloomberg stated that the “cold war” in the technology industry has begun. China has no choice but to pursue technological independence and they will “burn money” to achieve it. They will strive to create their own smartphone operating system, their own semiconductor technology and their own technology standards.

China's current situation is similar to that of the United States more than 60 years ago when the Soviet Union launched the Sputnik satellite into Earth's orbit, opening the era of space conquest in 1957, shocking the United States and forcing it to invest financially in research on new space technology.

In this high-tech competition, it will be difficult for the US and China to coexist peacefully. Competition and conflicts between the two sides will certainly increase.

The world could go down the path of two separate “technological systems,” with China “crowding out” American companies and the United States “crowding out” Chinese companies. That is, the two sides’ technologies are in a state of “going their separate ways.” /.