One sector that China has struggled with is microchips, which much of its electronics production relies on. Bewilderingly complex production has stymied Chinese businesses, which instead import the majority of the semiconductors they require. Despite tens of billions of dollars invested, China’s domestic chip production met only 15.9 percent of its chip demand in 2020, barely higher than the 15.1 percent share it accounted for in 2014, according to IC Insights, an American semiconductor research firm.
China’s premier, Li Keqiang, last week detailed proposals to accelerate the development of high-end semiconductors, operating systems, computer processors, cloud computing and artificial intelligence.
“I think they’re really worried,” said Rebecca Arcesati, a tech analyst with the Mercator Institute for China Studies in Berlin. “They know that without access to those technologies, they won’t be able to reach their targets.”
The new strategy, to a degree, rebrands the country’s previous Made in China 2025 campaign, which sought to propel it to the lead in a range of cutting-edge technologies. It broadly set out to produce 70 percent of the core components that Chinese manufacturers needed by 2025. The plan scared trade partners and contributed to a punishing trade war with the United States.
“China wants to reduce its dependency on the world — not to reduce its trade and interaction but to ensure that it is not vulnerable to the kind of strategic blackmail against China that it has historically used against others,” said Daniel Russel, a former American diplomat who is now a vice president at the Asia Society Policy Institute.