The Atlantic Council has released research into China’s use of money to buy dominance. Insights from the report:
China’s yuan suffered its sharpest weekly drop in nearly three years, with the dollar surging to a nine-year high against it. This picture illustration taken May 31, 2017, shows a Chinese 100 yuan banknote featuring Mao Zedong.
On October 7, the Biden administration issued a new regulation governing the export of advanced-computing semiconductor chips to China. As the United States works to cut off technology and capital flows to China, Xi Jinping’s commitment to technological self-sufficiency is greater than ever. During the 20th Party Congress the following week, Xi Jinping further pledged self-reliance in technology to gain a competitive advantage in the technology race against the United States.
China has sought to create an innovation infrastructure that supports its economic, societal, and geostrategic objectives under Xi Jinping’s leadership. In response to the economic impacts from the ongoing COVID-19 pandemic to the US-China trade and technology war, China’s Politburo announced the ‘dual circulation’ strategy at a Central Financial and Economic Commission meeting in 2020. ‘Dual circulation’ aims to boost China’s self-reliance in order to better protect against global instability in order to reduce the country’s vulnerability to external shocks. China seeks to increase its innovation-development capacity by attracting foreign capital and technology know-how in order to maximize their benefits while retaining overall control of the system.
The Chinese government is consolidating its influence in both domestic and foreign markets where Chinese firms operate by mobilizing public, private, and public-private investment vehicles to support technological development. Beijing’s ambitions to become a techno-superpower are being realized. Their financial mechanisms have been in existence for decades, but new ones have also appeared. The decade-long mechanisms have yielded a mix of results, whereas the success of the newest ones remains to be determined.
China’s government is expected to further assert itself in all aspects of the innovation system by providing financial support and political direction for crucial and strategic industries. This paper examines the various financing vehicles that involve diverse actors to support China’s whole-of-nation approach to achieving technological self-reliance through a range of diverse actors. This paper evaluates the mechanisms’ achievements and shortcomings as well as areas to watch in the future.
For more see: Atlantic Council
