The leaders of China are busy finalizing their political and economic agenda for the rest of 2021 and afar. The two most prominent points of planning will be the country’s strategies to achieve technological independence and tackling the climate crisis.
After shirking a recession last year, Beijing on Friday said that it presumes the world’s second largest economy to develop by more than 6% in 2021. If this is achieved, it will keep China on pace to match US GDP as soon as 2028. President Xi Jinping desires the economy to double in size by 2035.
However, due to the bruising trade war with the United States, China has already pointed out self-reliance and technological independence as their major goals. Also with climate change fast-tracking, Xi took a pledge last September that coal-guzzling China will come across as carbon neutral by 2060.
While these have been supercilious ambitions so far, with no exact clarity on how Beijing planned to achieve them, the world got more evidences last week when Premier Li Keqiang drew some aspects of the country’s agenda, and Beijing shared a draft of the five-year plan.
Detaching reliance on foreign tech
One important goal that Xi has already shared is a desire for China to loosen its reliance on the United States for prime technology, such as parts that power smartphones, computers, telecommunications gear and next-generation gadgets.
Li highlighted the need of technological development and innovation during his speech on Friday. He mentioned that China will upsurge spending on research and development by more than 7% annually. The Chinese government has earlier marked semiconductors, 5G networks and cloud computing as important areas, among others.
But, China as of now has a long way to go to end its dependency on foreign tech. In 2019, the country imported $306 billion worth of chips, which was 15% of the value of its total imports.
State & private sector
State-owned companies such as SMIC are the core companies to Beijing’s drive for self-sufficiency. Nevertheless, private firms also have a crucial role to play. This includes tech giants from Alibaba (BABA) to Tencent (TCEHY) which have driven much of Chinese innovation in the field in the previous decades.
The recent months made it quite clear by the government and in its new five-year plan as well that such companies will be expected to toe the Chinese Communist Party line if they want to thrive.
“As Xi pursues ambitions for China at the cutting edge of technology, Beijing recognizes that a top-down approach has limits,” Eurasia Group analysts wrote in a recent research report. “But Beijing’s willingness to leave more to the market will be challenged by Xi’s sense of urgency and frequent preference for a strong hand for the [Party] and state.”
The government has also expressed a desire to reinforce its influence over the economy by creating its own digital currency and outspreading a trial version to major cities including Beijing and Shanghai.
Realizing carbon neutrality
As China plans out its economic trajectory for the upcoming years, it will also need to consider the urgent need to tackle the climate crisis.
Xi released a bold plan last year for China to attain carbon neutral by 2060. It’s a huge target for a country that consumes more coal than the rest of the world combined, and changing it will mean nothing short of an economic revolution.