Big Take Asia: The US Pledged to Contain China’s Tech Ambitions. It’s Not Working.
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Hey, odd lots listeners this episode, or about to hear from another podcast, your bloomberg, the big take asia podcast.

And in this episode you are going to hear about china's efforts to dominate industries of the future. Specifically, IT is looking at china's ten years old made in china plan to see how the country is actually fearing when IT comes to advancing key technologies.

This episode, big take asia will give you a preview of the next episode od lots arriving on thursday when we'll speak with co authors a new blob g report. We're going to be speaking with bomberg asia government and politics correspondent rebeca tune wilkins as well as bloomberg economic .

analyst George the people o they will help us unpack the china 22 five plan and what the research has uncovered。 In the meantime, enjoy this episode of the big take asia.

Blomberg, audio studios, podcasts, radio news .

the U. S. Presidential election is a week away in the contest between Donald trump and come, hairs could not be tighter.

The two candidates are going head to head on everything from the economy to immigration. But one area they agree on is the need to curb china's rice. We get hundreds .

of billions of dollars just from china alone. And I had even start yet, but tears. And two things, if you look at the number one is for protection of the companies that we have.

make policy about china should be in making sure the united states of amErica wins the competition for the twenty first century, which focusing on the details of what that requires, focusing on relationships with our allies, focusing on investing in american based technology.

So how is the U. S. Doing versus china, which superpower is leading the race for dominance of the twenty first century rebeca tune wilkins bloomberg, s asia government and politics correspondent, says a good way to try to answer this question is by looking at the key emerging technologies that china identified as its priority. Back in twenty fifteen when he announced its made in china 2 twenty five plan.

发 中国制造 2025.

部署 全面。 And when you look at that plan now, nearly a decade later, new research by bloomberg g economics and blumberg intelligence shows that made in china twenty twenty five has largely been a success.

So over the thirteen key technologies tracked by britton burger researchers, china has achieved a global leadership position in five of them and is catching up fast in seven others.

Welcome to the big tick asia from bloomberg news. I'm one haa. Every week, we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever shifting region. Today on the show, how did china get ahead in key technological advances despite U. S.

Efforts to prevent that from happening? And what a hairs or trumpet administration change that? Rebecca says, back in twenty fifteen, when the made in china plan was announced by the chinese communist party, IT was all about helping the country achieve two big goals.

One is the self sufficiency, not wanting to be reliant on other countries, and is preparing for any kind of scenario. We are, for example, china might be cut off from, say, its energy supply, or whatever IT might be. And china, more broadly, does have a preoccupation or prevAiling concern with preserving its own security, so standing on its own two feet. And the second is becoming increasingly competitive and in fact, a global leader in some of these key strategic areas. So this inward at an outward element to the made in china plan.

The plan highlighted ten priority sectors for the nation to focus on, including ero space equipment, energy saving cars, biomedicine and high end machine tools and robots. And now almost ten years later, according to the analysis by bloomberg, china has in fact become a global leader in many of these key areas.

So those sectors include solar panels on manara vehicles. Those are drones, uh, graphing, which is a coating material that's using tons and tons of sectors, high speed rail and electric vehicles.

Now does china have any natural advantages that makes IT possible that it's been able to take leading positions in these sectors? Or is this simply by design in the world? beijing?

What is we're saying that even in twenty fifteen, china, as we determine, was already a global leader in three of these sectors in graphing solar panel and in unmanned area of vehicles. So they had a lot of somewhat of a heads start in any case.

But the other important element here to remember, I think, is that when beijing does signal out an area for support, when IT signals out a key policy priority, IT really is able to throw the full weight of its economy essentially behind that. So for example, if IT decides that electric vehicles are a priority, say, I can ask banks to lend IT credit cheaply. IT can get local governments to lease IT land cheat, perhaps even low cost, can also get large state enterprises to use a sort of full force of its resources at talents and direct IT towards those industries. So in beijing has an incredibly sort of powerful basis here, an incredibly powerful set of resources to direct towards these industries when IT has selected these priorities.

But there is one key area where china hasn't caught up to the u. And that's in advanced semiconductors. That's in part because of some key things the U. S. Has done to keep its rival from catching up.

They sort of three big tools for economic statement ft. That we've seen. One of them is tariff s imposing these high costs for imports coming into the us, sometimes prohibitive, timely, high.

The second export controls, essentially trying to prevent the transfer of U. S. Technology, goods, services, overseas, other parts of the world.

And the final part of that financial sanctions, the big area where we can say that some of the U. S. Export controls and someone have been more effective, is instead of high advanced semichannels ors.

And it's important remembering this context, it's just a handful of companies involved in this kind of really advanced semi conductor attack manufacturing and is Better to say the bite administrations. They have been successful in building consensus among allies among other countries trying to contain china's access to semiconductors. And so we saw dutch companies, japanese companies, essentially falling in line in preventing china from accessing the actual products needed to manufacture .

these types of chips. And in light of that of the U. S. Having allies to support its approach to trade on and its approach to contain china. What is china done to make sure IT has access to the technologies that needs china?

Said he has been stopped piling like that. That's a sort of fundamental basis of this is stop piling a record amount of semi conductor equipment and and that includes is high end video chips, is preparing essentially for a number of further curbs. It's looking further out thinking if we see this kind of moves accelerate, if they're expanded, where will we be and how do we try and future proof against that.

But is not just semiconductors where the U. S. Is trying to use export controls to slow china down after the break.

A look at the other tools the U. S. Is using, and will a new administration keep them going?

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The U. S. Has leaned on its allies to limit china's access to advanced technologies like semiconductors.

Meanwhile, the U. S. Is also concerned about its ability to be a leader in other sectors as well. Some of these areas were outlined back in twenty twenty two by national security advisor jake solvin.

Computing related technologies, biotech, clean tech are true force multiplier. The tech ecosystem and leadership in each of these areas is a national security imperative. We're investing in the industries in the future and strengthening the resilience and security of our supply chains.

Sullivan causey technologies, a national security imperative, bloomberg rebeca tran wilkins says. That's an important thing to take no of, because over time, SHE seen a change in the way the U. S. Talks about the need to restrain china.

Yeah, I think in the early days of the trade war, a lot of the focus was on the sort of wrongdoing as the alleged of chinese companies, but over time, that has really moved into this whole discussion over national security and increasingly, this focus on china's preparedness for a war. And in fact, we've already seen the true real concerns at the hall of some of these economic policies over sort of military might. Essentially, is this question of deterrence, whether or not beijing and washington will essentially adopt this idea that the cost of this trade conflict and trade war and the cost of this increasing competition are worth that or not IT IT come sort of, I suppose, this fundamental question of, to what extent both sides feel that their own national security is fundamentally at risk.

On the campaign trail, trump in Harris have advocated different approaches toward china, even as both agree on the need to sort its rise. I ask rebeca what trump currently hasn't mind here.

Well, we just, in a way, have just seen an amplifier ation pops on surprisingly of some of his previous policies. He's mentioned this possibility of sixty percent tarrifs across all chinese imports into the U. S.

That would be crazy high.

That would be crazy high. And IT would really hurt the chinese economy. One bank, for example, estimates that IT IT could essentially have a chinese GDP growth.

So IT would really be a significant hit to china, but also a significant hit to the U. S. If that then results in a higher cost of goods.

Bloomberg editor and chief john ico sweet pressed trump on that point in an interview earlier this month.

You're talking about twenty percent trade on two characters on that. You're talking, you said one hundred, two hundred percent, all things you don't really like. You're also talking about twenty ten, twenty percent tires on the rest of the world that is going to have a serious effect on the overall economy. And yes, you're going to find some people who were gained from individual terrorists. The overall effect could be massive.

I agree. It's going to have a massive effect, positive effect.

going to be a possible .

let me know, let me me know how unit you .

the other thing to remember with trump is that he has taken a more protectionist stance writ large. He's not just concerned about chinese imports, but he's concerned about imports from everyone, including, for example, the european union.

What do we know about Harris approach if he wins?

Well, hard as approach, we expect to be more consistent with the by administrations. I will say. He too has focus on this idea of jobs and sort of american industrial policy, trying to build up some of those of manufacturing bases.

Again, she's been critical of trumps proposed tariffs, but SHE has been quite firm on some of the national security risks that the U. S. faces.

So rebeca is either approach really doing a great job in containing china's tech development.

Well, if we look at the success of the bite administration and we look just going back to the beginning at some of those made in china targets, for example, we can see that actually they aren't successful or they haven't been successful in certain key areas. If we exclude semiconductors, actually, trade has found a way to get through. Sanctions haven't been hugely successful. So that's one question for Harris that this need to perhaps we calibrate the approach.

Despite the U. S. Efforts to slow down china, the world outside the U.

S, is increasingly driving chinese E, V, surfing on chinese smartphones, empowering their homes with chinese solar panels. And rebeca says there might be Better approaches for the us. To maintain its competitive ess.

One approach to thinking about what would be more effective than sanctions is this idea that add imposing from the Petersen institute has mentioned, which is section, not sanctions, essentially that the U. S. Should be making use and and taking up talent, resources, innovation, coming from china and partnering, whether in order to advance its own industries and its own key sectors.

so basically taking away all the talent, so that the U. S.

Mixes of IT, taking the best of what china has developed and then building on that to develop and innovate at a faster pace.

This is the big take asia from bomberg news. I'm one haa. If you'd like to hear more about bloomberg research on the made in china plan, check out the conversation on odd lots with my colleagues joe wan sol and Tracy elway.

The other thing that happened that I think that was actually a bigger deal from the chinese perspective, was when the U. S. Added hallway to the commerce department entity list in early twenty nineteen.

Because what that signal was the united states was effectively trying to kill what was arguably trying his best global technology company. The us. Say we're not trying to kill IT, but the restrictions are pretty dickon, ian. And there is very much that vibe.

And check out our last episode where you can hear more about one critical market that china is focusing on evs, and how one chinese car maker, byd, is dominating the electric auto market globally. That's on our big take asia feet. This episode was produced by yang yang Jessica c and nail me um IT was mixed by alex sugar and fact checked by eddy done IT was edited by klin Kenny and Daniel ten kate. Now we haven as our senior producer alis with console is our senior editor and all beams to boer is our executive producer and sage roman is bloomberg s ahead of podcast, please follow and review the big tick asia. Wherever you listen to podcast, IT really helps new listeners find the show, see you next time.

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