US China Deal: The Honeymoon Will Not Last Long

January 17, 2020

DarkCyber spotted a write up called “China Bracing for US Tech War with Plan to Cut Reliance on Imports of Key Components to Just 25 Per Cent.” If the information in the write up is accurate, the implications for certain countries and companies selling to China could be interesting. We noted this statement in the article:

China is aiming to increase its reliance on domestic production for key components, including chips and controlling systems, to 75 per cent by 2025, according to a former minister.

So a dollar spent by China to shore up its Great Firewall will allegedly become $0.25 in 60 months or less.

This statement seemed to more of a warning and less of an olive branch extended to the US:

The move, which includes a series of plans to improve weak links in the areas of hi-tech research and crucial component development “one by one”, is seen as part of China’s preparation for a intensifying technology war with the United States.

(“China Must Rein in SOEs to Gain Upper Hand in Tech War, Help Private Firms like Huawei to Innovate” provides some color on China’s desire to become the dominant technology player in the future.)

To support the knowledge sector, the write up reveals:

China will also increase the number of “national manufacturing innovation centers” to 40 by 2025 from 11 at the end of 2019 “to cover all major industries”. China’s first national manufacturing innovation centre was launched in 2016, focusing on making and researching electric vehicle batteries.

The concluding section of the write up states the obvious:

is increasingly clear that a technology rivalry between China and US is set to deepen…with competition in next generation communication, 5G and artificial intelligence key areas of contention.

Net net: A calm before the storm.

Stephen E Arnold, January 17, 2020

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