[Economics] Fortress China: Xi Jinping’s plan for economic independence

[FazzNoth]

Beijing wants to become less dependent on the west and especially on its technology. But how realistic is this self-sufficiency goal in a connected world?

Tianjin Saixiang’s “nanoknife” may be a form of precision surgery, but it is indicative of a broad trend that is reshaping China’s economic relationship with the rest of the world.

Made by a little-known Chinese company, it is designed to target prostate cancer without invasive surgery. Tianjin Saixiang was given the official imprimatur of “little giant” in 2020, meaning it qualifies for preferential treatment in return for helping China to climb the technology ladder.

According to an executive at the company, who declined to be named, this Chinese version of a cutting-edge treatment is part of a drive to reduce the need for imported medical technologies. The government “requires local hospitals to, where possible, replace foreign medical equipment with domestic ones,” says the executive. “That is a boon for us.”

This month, Xi Jinping gave a speech about the urgent need for breakthroughs in domestic technology in order to outcompete the west and bolster national security. The experience of Tianjin Saixiang is one small example of the scale of the Chinese leader’s ambition.

Under Xi who appears all but certain to secure another term in power next month China is seeking to become a state-led and self-sufficient techno-superpower that will no longer rely so much on the west.

 

The underlying objective, say analysts, is to build a “fortress China” re-engineering the world’s second-largest economy so it can run on internal energies and, if the need arises, withstand a military conflict. While many in the US want to “decouple” their economy from China, Beijing wants to become less dependent on the west and especially on its technology.

The strategy has several constituent parts and if successful will take several years to realise, the analysts say. In technology, the aim is to spur domestic innovation and localise strategic aspects of the supply chain. In energy, the objective is to boost the deployment of renewables and reduce reliance on seaborne oil and gas. In food, the path to greater self-reliance includes revitalising the local seed industry. In finance, the imperative is to counter the potential weaponisation of the US dollar.

Such changes represent a clear challenge for many multinational companies, some of which derive the lion’s share of their global growth from China’s market.

China’s self-sufficiency drive has been building for a number of years but has been accelerated since Russia’s invasion of Ukraine and the subsequent western sanctions on Moscow.

 

Many of the changes being signalled as China prepares to host the 20th National Congress of the Chinese Communist party in mid-October have been foreshadowed or in train for some time. But the party congress appears likely to reaffirm and accelerate the pace of several such developments.

Xi’s remarks as he presided this month over a meeting of the Central Commission for Comprehensively Deepening Reform, one of the party bodies he uses to rule China, set out a clear vision for technology.
https://www.ft.com/content/0496b125-7760-41ba-8895-8358a7f24685