BEIJING – The latest tour of Chinese President Xi Jinping across the country’s south has showcased some key factors that allow a glimpse into his thinking when it comes to counteracting the effects of the ongoing trade war with the United States.
Xi is seeking an answer to the war with Washington through reducing the dependency on American technology and replacing it with Chinese tech.
China’s state media has been revealing information surrounding Xi’s three-day inspection tour – a protocol that government leaders often use to announce new policies and issue orders – in bits and pieces.
During a visit to Nancheng on Tuesday, Xi said that it was important for China to focus on its domestic issues, promote innovation capabilities in key areas and accelerate the development of technologies with their own intellectual property rights, the official China Daily reported on Thursday.
Xi acknowledged that the present technological transition would not be exempt from risks and challenges and urged the Chinese people to prepare for a difficult situation ahead, given the increasingly-complex international context.
During his visit to Ganzhou on Monday, he emphasized the strong will and firm faith of his ruling Communist Party in achieving new victories.
Although Xi has mentioned the many challenges the country faces on earlier occasions, his statement comes amid an upsurge in the trade war against the US. Washington recently included the Chinese cellphone-maker Huawei in a list of companies and individuals that would be denied access to US technologies.
Analysts said to EFE that this ban was the first theater of operations in a battle for technological supremacy in which China and its firms will not have it easy.
“Companies like Huawei can survive thanks to the huge Chinese domestic market and the government’s subsidies for research and development in particular. It will take time for Huawei to acquire the tech and patents,” Jean-Pierre Cabestan, the head of the political science department at Hong Kong’s Baptist University, told EFE.
He added that decoupling would be the major long-term consequence, a kind of Cold War. But, he said, it would be “very different from the old Cold War because of the high degree of interdependence among economies.”
“Decoupling the most strategic sectors of US (and Western economies) from the Chinese economy is the objective, and it seems today inevitable,” he said, adding that it will not completely affect the trade relationship between China and the West.
According to Cabestan, the problem for China is that it has fewer options than the US to take retaliatory measure for which Xi is using “all the weapons he can dispose of in order to deter as much as possible any current or future US sanction in order to renegotiate.”
The same concept of a new Cold War can be found within the editorials of many Chinese tabloids. A columnist for China Daily wrote on Thursday that “it seems Washington is more concerned about who would dominate the telecommunications and high-tech sectors rather than global growth.”
“Google will only harm itself by severing ties with Huawei,” the columnist added. “Huawei has taken the lead in developing 5G technology, which has the potential to revolutionize the global economy.”
“China cannot become a truly prosperous country without becoming a big tech power and consumer market. But the US seems determined to prevent China from achieving that goal,” he said.
At the same time, Lu Kang, the spokesperson for China’s foreign ministry, said that the US uses it national powers to push down Chinese technology, which did not help in creating an adequate atmosphere to resume commercial negotiations.
During his tour, Xi also visited a plant that produces rare earths, which are important elements for the production of technological products that could become a trump card for the Chinese president, given that the US imports 80 of these materials from China.
Analysts believe that if China were to take fresh countermeasures on the Huawei ban, there could be unpredictable consequences, according to Ren Xiao, a professor of International Relations at Fudan University who believes that the situation between the two countries is continuously deteriorating.
Ren said that Xi’s visit to the manufacturer was a move to warn Trump of the consequences to his aggressive stance in the trade war, although he predicted that the Chinese president would be careful before restricting the export of rare earths.
As an outcome of the ban, Alphabet, Google’s parent company, revoked Huawei’s Android license, which means the Chinese telecom giant will lose access to updates to the Android operating system except those available through an open source license, while six electronic components manufacturing company from the US and one German have also broken commercial ties with Huawei.
ARM Holdings, a chips design company based in the United Kingdom, has given instructions to its employees to suspend business with Huawei, the BBC reported on Wednesday after gaining access to the company’s internal documents.