Edge in high tech key for China to weather trade war

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With no immediate end in sight to the China-US trade war, China needs to boost its domestic economy to withstand the negative impact of the feud. The key is to retain the vigor and capability of China’s high-tech sector.

The recent ups and downs in China-US relations show that the trade war is much more than a trade imbalance between the two countries. Analysts believe that the trade is only a sideshow.

The real intention of the US is to squeeze China’s space in new technologies, as we have seen from the intense US political pressure on Chinese tech giant Huawei.

James Andrew Lewis, senior vice president and director of Technology Policy Program at the Center for Strategic & International Studies, noted that the modern levers of power are no longer territory or resources that empires of the past times engaged in battles to vie for. Nowadays, it is all about rules, standards and technology.

China has laid out its high-tech ambitions and aims to support cutting-edge industries such as AI, 5G communications and clean energy vehicles, which can be new sources of growth for an economy driven by the spirit of entrepreneurship and innovation. As Lewis pointed out, “A country’s ability to innovate and produce advanced technologies provides economic strength, military power and an intangible benefit of perceived leadership.”

China still lags behind the US in many technology fields including manufacturing, new materials and chips, but China is catching up and closing the gap. That is perhaps what the US, for so long enjoying supremacy, fears. Last year a poll by Axios showed that 51 percent of Americans are concerned by China’s technological advancement.

That the US counters China’s growing influence is becoming a regular strategy. It remains uncertain how long the fully fledged competition between China and the US will last, but what is for sure is that China must keep on with its high-tech momentum and take the initiative in innovation and competition.

China’s system enables the country to concentrate on and prioritize national interests. China should make use of its institutional advantages and mobilize its resources to make breakthroughs in key areas such as AI, 5G and aerospace. More research funds and personnel can be ploughed into these fields. Simply being defensive is not enough for China to safeguard its interests anymore. By improving its competitiveness in the high-tech sector, China can switch from being defensive to active.

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