Xi's Call To Win Tech Race Points To New Wave of Chinese State-led Spending

President Xi Jinping's call for China to "win the battle" in core technologies could signal an overhaul in Beijing's approach to advancing its tech industry, with more state-led spending and intervention to counter U.S. pressures, analysts say. From a report: Achieving self-reliance in technology featured prominently in Xi's full work report to kick off the once-every-five-years Communist Party Congress, with four mentions versus none in 2017. The term "technology" was referred to 40 times, up from 17 times in the report from the 2017 congress. While the report did not mention any other countries or specific sectors for that goal, it comes days after Washington imposed sweeping new regulations aimed at undermining China's efforts to develop its own chip industry. HSBC analysts said their takeaway was that increased spending in China, particular in STEM (science, technology, engineering and maths) fields, and policy support was likely. Iris Pang, chief economist for Greater China at ING, said Xi's remarks addressed "the urgent need for talent and promoting self-sufficiency in technological advancement." "We believe that this echoes to the U.S.'s CHIPS Act," Pang said, referring to the U.S. regulations. "As such research spending on semiconductor technology should increase. Typically, policies are released after such important events in China." In his speech, Xi listed a slew of industries where he described China as having achieved breakthroughs over the past decade, including large aircraft, space flight, satellite navigation - all of which rely on copious state support. No mention was made of semiconductors, an area where China has funnelled billions of dollars in government funds but was also seen to have been given more lee-way in using market-led approaches versus other sectors.

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