Why China Needs to Integrate Its National Strength with Global System?
In 2020, U.S.-China relations have been at a record low
since the establishment of diplomatic relations between the two countries. Although
China is unwilling to completely decouple from the United States, stimulated by
the COVID-19 pandemic however, the United States has been continuously cutting
ties between the two countries in trade, investment, financial markets, key
industries, technology, and education. Among the measures taken by the United
States are the suppression of Huawei's 5G business globally, cutting off
Huawei's chip supply, forcing TikTok to sell its U.S. business, and imposing
sanctions on several Chinese technological companies. This of course, has hit
certain key Chinese technologies and products hard. From the perspective of
China, this is not merely about commercial interests or technological
restrictions, but also a strategic restraint on China's long-term development.
Since the United States has identified China as a
long-term strategic competitor, which is basically the equivalent to a
"quasi-enemy" in the geopolitical field, the pressure on China's
future development has increased drastically. In the face of such pressure,
China began to adjust its development strategy, from the "international
and domestic dual cycle" model that relied heavily on external markets and
globalization in the past to an "inner circulation" model that mainly
relied on its domestic market. Under such context, the principles of
"independent innovation" and "self-reliance" have once
again been given unprecedented significance and some views that expect technology to be
bought under globalization have been criticized once more. What is certain is
that seeking breakthroughs in some key industries and key areas with the "nationwide
full-force" will become an important collective action for China in the
China does indeed have several success stories in this
regard, for instance its early nuclear and space project "Two Bombs, One
Satellite" in the 1960s, and the BeiDou Navigation Satellite System. In these
strategically significant fields, despite severe external blockades, China
still possesses the nationwide force and basically remains independent in
developing its own strategic system projects.
So, under the technological "encirclement and
suppression" initiated and pushed forward by the United States, can China
once again reproduce similar results in the fields of the semiconductor industry?
Researchers at ANBOUND think that this requires rational and objective
While there certainly are success stories as cited above,
it should also be noted that China has struggled for decades in more industrial
fields and invested trillions of dollars without successfully mastering the
core technologies, nor has it obtained the leading power of industrial
development as well as having failed to form a controlled industrial system. Automobile
manufacturing and the semiconductor industry are two typical examples of this.
Automobile manufacturing is typically not a
"national security" industry. China adheres to the concept of
"market for technology" in attracting foreign investment, and the
German automobile industry takes the lead in the Chinese market. However, based
on the actual results, while China's auto industry has supported a huge market,
the original intention of "market for technology" has not been
realized. Compared with the scale of China's automobile consumer market and
industry, the country's independent core technology is extremely
disproportionate. So far, China's automobile industry still has a long way to
go compared with those of more developed countries and advanced enterprises, in
terms of its key components, core technologies, and design capabilities. This
gap, one may say, is a generational one.
This is especially true in the semiconductor field.
China's idea of developing the semiconductor industry is not something new. As China
had already planned to develop the semiconductor industry with its national
power as early as the 1980s. By the 1990s, with the support of the state,
China's industrial actions in the field of large-scale integrated circuits
continued to develop. In the past few decades, under the smooth development
environment of globalization, China invested countless funds in the
semiconductor industry (according to a rough estimation, this would be
approximately more than one trillion yuan of capital investment), as well as a
large amount of manpower, material resources and policies. But even with all
these resources and efforts however, China still faces severe restrictions in the
semiconductor industry. Judging from the case of Huawei's chip supply cutoff,
in the high-end areas of the semiconductor industry, the U.S. government can
still easily restrain China.
The cases cited above, show both success and failure when
such projects are done with nationwide strength. Why then are there the
different results? ANBOUND's researchers believe that there are different
degrees of marketization and globalization depending on the industry, and the
effects of "national strength" are completely different. "Two Bombs,
One Satellite" and "BeiDou system" are both strategic industrial
fields, and have much lower degree of marketization. There is in fact only one
direct customer of these strategic industrial systems, namely the state itself.
This means that the relevant industrial system is a closed one, and there is no
need to consider cost or market competition. Therefore, although the related
industries are complex and have extremely high technological content, these two
examples are simple in terms of the industrial system, including the market.
It is however, a totally different story for the
semiconductor industry. Although the main products of this industry are small
chips, semiconductor chips involve market-oriented, open industrial systems.
From chip infrastructure, IC design, chip manufacturing, packaging and testing,
semiconductor equipment, key materials, etc., the semiconductor industry chain
is the most globalized industry chain. This means that its success cannot be
achieved by a single country alone, and any of its industrial goal can only be
achieved through international cooperation. In this regard, it is more
complicated to make semiconductor chips than engaging the aerospace systems, as
it needs integrated and transnational strength.
In the era of anti-globalization and under geopolitical
pressure, China might be inclined to think more about development strategies
using its own national strength and independent innovation. From the
perspective of public policy, this is completely understandable, and to a
certain degree this is the right thing for China to do. However, China should
not forget that many things can only be achieved through global cooperation. While
China can achieve accomplishments on its own based on its national strength in
certain industries, it cannot deny the power of global strength. In the era of
deep globalization, it is necessary to have a rational understanding of the
relationship between the two.
Final analysis conclusion:
The reality is that, while the Chinese central government
placed its emphasis on the "inner circulation" during the year, it also did not
abandon the notion of the "international and domestic dual cycle". In
this regard, the national strength of China must be integrated with global
strength as an effective public policy theory.
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