China High-Tech Surge: China’s push to improve its manufacturing sector, especially in high-tech sectors like semiconductors and electric vehicles (EVs), is raising concerns about overcapacity and cheap exports. China’s central bank reported a 38.2% year-on-year increase in industrial loans and a 0.2% fall in property loans by September.
While some economists draw distinctions between the current investment wave and previous instances, trading partners, especially in Europe, express unease. The European Chamber of Commerce in Beijing president, Jens Eskelund, emphasizes the potential clash between Europe and China as overcapacity extends to batteries, solar, and chemicals.
China’s industrial policy, geared toward making it a global leader in advanced manufacturing, is sparking concerns about excessive production capacity. Policymakers aim to channel investments from real estate into manufacturing, especially high-tech and advanced manufacturing, as part of the 14th five-year plan. However, critics argue this shift may jeopardize the need for increased domestic consumption.
Also Read: China Tech Independence Drive Amid Tighter U.S. Restrictions
Despite similarities to past overcapacity challenges, the current focus on high-tech sectors differentiates it. The sums involved are also smaller, but concerns remain about global markets’ ability to absorb the additional capacity. Signs of overcapacity are emerging, such as China’s potential to meet global demand for lithium-ion batteries and automakers having the capacity to produce 43 million cars annually.
As China races to invest in advanced sectors, some see it as a positive move supporting long-term development. However, others worry about the impact on global trade and inflation dynamics, especially as countries pursue strategies favouring domestic high-tech industries.
The issue of overcapacity and potential trade tensions will likely be a topic of discussion at the Asia Pacific Economic Cooperation (APEC) forum, where Chinese President Xi Jinping is expected to meet U.S. President Joe Biden.
Our Reader’s Queries
Is China catching up to the US in technology?
A recent report suggests that Chinese researchers are ahead of their American counterparts in the study of numerous critical technologies. The report highlights Beijing’s dominance in certain scientific pursuits and predicts that they are well-positioned to make significant breakthroughs in the future. With their expertise and focus on innovation, it seems that China is poised to lead the way in shaping the future of technology.
Why is China so advanced in technology?
The Chinese diaspora, like other diasporas, has played a crucial role in China’s progress. Overseas Chinese have been instrumental in facilitating trade, investment, and modern technology transfer to China through commercial activities and public non-profit cooperation. Their contributions have been widely recognized as a vital channel for China’s development.
Is China considered a high tech country?
China and America are at the forefront of technological advancements, thanks to their scientific breakthroughs. These two nations have developed cutting-edge products that have revolutionized the world. From smartphones to electric cars, their technological prowess is unmatched. Their commitment to research and development has enabled them to stay ahead of the curve and set new standards in innovation. As a result, they continue to dominate the global market and inspire other countries to follow in their footsteps.
What is China’s breakthrough in chip technology?
A significant shareholder has announced that Shanghai Micro Electronics Equipment Group Co. has made a technological breakthrough in chipmaking equipment. This development is a positive sign for the Chinese company, which has been blacklisted by the US. The announcement suggests that the company is making progress in China’s efforts to overcome US chip sanctions.