China’s new five-year plan has an ambitious aim: to become a self-sufficient, global tech superpower

October 30, 2020, 10:51 AM UTC

China’s political leaders have endorsed a five-year growth plan focused on reducing the economy’s reliance on foreign investment and technology.

A communiqué released Thursday, following a four-day meeting of the Communist Party’s Central Committee, sketched the broad contours of that plan, the 14th since the establishment of the People’s Republic, and outlined a grand “vision” for the economy as far off as 2035. Party leaders are expected to issue more detailed proposals in weeks to come, but the measures described so far share a common objective: lessening China’s dependence on technology developed by other nations, especially the United States, to achieve economic growth.

“It is the first time ever in the history of our party’s five-year plans…that [China] is placing the plans on science, technology, and innovation before all other sectors,” Wang Zhigang, China’s minister of science and technology, said at a press conference on Friday. “We need to improve our ability to create things independently because we cannot ask for or buy the core technologies from elsewhere.”

The communiqué does not mention the U.S., but China’s drive for technological autonomy comes as the Trump administration has ratcheted up pressure against Chinese tech giants such as Huawei Technologies, the nation’s largest telecommunications equipment manufacturer, and Semiconductor Manufacturing International Corp., China’s largest semiconductor maker. Now, with the U.S. election just days away, China is steeling itself for future conflict with America no matter who becomes the next President.

Chips are on the table

Semiconductors are likely one area where China will want to reduce reliance on foreign tech.

Earlier this year, the Trump administration issued an executive order against Huawei, saying that foreign chip manufacturers would have to apply for a license to continue suppling the company with semiconductors.

The order threatened to become a “death sentence” for Huawei, as the chips form the backbone of Huawei’s tech capabilities in making telecom equipment, smartphones, and smart cities.

Huawei’s vulnerability to U.S. technology restrictions highlighted China’s long-standing inability to build a globally competitive semiconductor manufacturer.

But even with the Chinese government squarely focused on building up China’s technological might, true self-reliance may remain a difficult goal to achieve.

“China [is facing] a real uphill battle” in making advanced semiconductor chips, Paul Triolo, geotechnology practice head at the political risk consultancy Eurasia Group, told Fortune in September. “These are tough technologies to master. It’s not really a function so much of funding as it is of talent and technology know-how. That’s going to take time.”

U.S.-China relations

China’s long-term focus on reducing the country’s reliance on foreign technology suggests China does not expect an end to U.S. attacks against its tech companies under a new administration.

At the Friday press conference, government ministers explained that China’s moves to increase its technological self-reliance and to promote more domestic consumption are related to an international “backlash against globalization.”

“Given new changes in the domestic and international environment…We need technological solutions more than ever, and we need to strengthen innovation more than ever before,” said Wang, the government minister, at the press conference.

Experts and analysts in China and elsewhere share that pessimistic assessment.

“As far as I can tell, the Democrats and Republicans in Congress are very united on holding China to account,” Dan Wang, analyst at Gavekal Research, told Fortune. “At least in Congress, there is a united sense that China is now a strategic adversary.”

Wang argues that, should Trump’s Democratic rival, Joe Biden, prevail next Tuesday, his administration may be more calculated in its approach to dealing with China. Biden’s advisers have said that, unlike Trump, Biden would consult with U.S. allies before taking further actions in regard to China.

On Friday, Chinese government ministers also stressed that amid China’s moves toward self-reliance, China hopes to continue cooperating with the U.S. and other countries.

“China increasingly needs the world, and the world increasingly needs China,” Wang, the government minister, said at Friday’s press conference of why countries across the world should work with China.

But the new five-year plan makes clear China hopes it will need the world less than it does now.