March 2023
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?HOW CHINA MADE A DIFFERENCE THIS MONTH:
"WAR AND PEACE"
This month, geopolitics was still much about ‘war’ talks coming from Western alliances versus new ‘peace’ narratives coming from China. Beijing’s brokering to restore diplomatic ties between Saudi Arabia and Iran as well as Xi’s meeting with Putin in Moscow to discuss a way to end the war in Ukraine made headlines in the Global South. Europe and Washington as contrast sent more weapons to Ukraine, warning the world of the autocratic China and Russia to want create a new world order and using peace talks as false pretext. While we can contemplate about the establishment of a new world order or reinstating of the current world order, China had a most active month of technological reforms, advancements and new bans.
1.????China is leading the world in 37 of 44 ‘critical’ technologies
2.????Two sessions: NPC AND CPPCC
3.????ASML: The Netherlands to block advanced chips printers to China
4.????China is doubling down on chip independence
5.????Tik Tok CEO gets grilled in by U.S. lawmakers
6.????Beijing greenlights operation of unmanned self-driving vehicles
7.????China approves first home-grown mRNA vaccine
8.????China speeds-up warship design with AI
9.????COSCO forms an electrical ship innovation alliance
(Click the links in titles below to read a larger news article on each topic)
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?The Australia Strategic Policy Institute (ASPI) ‘critical technology tracker’ brings a wakeup call to the West: Western democracies are losing the global technology competition! ASPI’s report is based on over 2 million articles, papers and patents and most comprehensive research. ?
In 8 fields, China is considered “high risk” of achieving a “technology monopoly”: nanoscale materials, coatings, 5G and 6G, hydrogen, supercapacitors, electrical batteries, synthetic biology and photonic sensors. In 29 other fields, China is at “low or medium risk” to establish a “tech monopoly”.
What is most alarming is that Europe is not at all visible in leading in any of the 44 critical technologies or even as runner up. When considering the top 5 countries for each of the 44 fields, only Germany, France, U.K. and Italy pop up as number 3, 4 or 5. Seldom all three as Canada, Australia, India, Iran, South-Korea, Japan do steal spots too. The full report here .
Every year China holds the two most important meetings of the year (NPC and CPPCC) known as the two sessions (lianghui 两会). The most popular story from the NPC (China’s legislative body) was that Xi Jinping secured an unprecedented third term as President of People’s Republic of China. We all expected this, so we can hardly call it breaking news. The NPC session had much more interesting, yet less covered, ‘breaking news’ that could change China and the world this decade.
After 45 years craving for ever more, China now wants to attain a much more balanced, high-quality and inclusive development of its economy and society. Beijing’s blueprint aims to modernize China through innovative (entrepreneurialism + deep tech), compliant (CPC guidance + control), self-reliant (food + energy + security), green (nature + planet) and open (data + international) policies that are people centered. To achieve this, China’s State Council announced reforms to its ministerial departments to fully support and optimize innovation in key areas including science and technology, intellectual property rights, data and finance.
Too much content to explain, but if you want to dive deep into the topic, the South China Morning Post did a great job!
The CPPCC (China’s political advisory body) invited different tech representatives than in the previous years. No Jack Ma, no founder from Tencent, NetEase or Sogou. New on the list were CEOs of firms in chip manufacturing, robotics, laser, aerospace and aeronautics. To understand China’s future, we need to look at what we don’t see. The internet platform business is out, and deep tech is in!
On March 8th, the Netherlands government said it plans new restrictions on export of chip technology to protect its national security. Neither China nor ASML were explicitly named, but the new policy is clearly targeted at China’s ambitions to overtake the U.S., Taiwan, South-Korea and Europe in the global microchip supply chain.?
Peter Wennick, ASML’s CEO warned governments against descending in protectionism, arguing the huge advancements an integrated global supply chain had on societies across the globe. With the ban from Den Haag, China has been given no choice but to forge ahead with its own advanced DUV chip machinery and ecosystem. Wennick sees a five-year gap to cash in on chip production in Europe, about the same time it takes to bring new factories online. Europe could be shooting itself in its own feet.
This ban will further destabilize and disrupt the global chip supply chain. Weaponizing microchips and DUV equipment means we should expect more chip price hikes, shortages, retaliations , IP theft, and overheating talent wars. Acknowledging the ASPI report above, it may indeed be one of the “last critical technologies” the West can still lead if we block China out. Others say, it is short-sighted, hypocritical and counterproductive. Doomed if you ban, doomed if you don’t! For Europe, it will likely expose its weakness more than its strengths.
领英推荐
?As US tightens control on China’s access to chips and related products to build them, China is giving a handful of its most successful chip companies easier access to subsidies and more control over state-backed research. SMIC, Hua Hong, Huawei, and equipment suppliers Naura and AMEC will be among the first benefiting from the policy shift.?
Will this help China catch up with leaders like TSMC, Samsung or ASML? It would be easy to assume that Chinese chip manufacturers will fail again as many did before. Innovation with government money does not guarantee success. But times have changed. The bottom-up drive to innovate is well alive in China as domestic market demand is massive due to the chip bans. As example, Huawei announced this month that they already replaced 13,000 parts and 4,000 circuit boards to overcome U.S. sanctions; and they made a breakthrough in building design tools (EDA) for chips larger than 14nm. SMIC as another example announced last year they were able to build 7nm chips without the most advanced DUV equipment, all while posting record sales and profitability in 2022 as China’s domestic demand for chips has skyrocketed.
The pressure on Tik Tok is building up as the Biden administration threatens to ban Tik Tok over allegations of national security. TikTok CEO Shou Zi Chew was grilled for five long hours by a hostile House Committee in U.S. “TikTok is a weapon by the Chinese Communist Party to spy on you, manipulate what you see and exploit for future generations” was a statement by a republican senator that kind of summarizes how Washington had already made up its mind on Tik Tok.
It is unlikely that the American courts can ban or force a sale, as Tik Tok in U.S. has already taken every step required by U.S. law in terms of data operations and security. Even if the U.S. did rule against Tik Tok, Beijing could still block a sale as the algorithms built in Beijing would have to be approved for sale by Beijing regulators. So, only in case of a ‘forced sale’ or ‘stealing’ as Chinese would say, a connection with Beijing would come to life. It makes the CCP look like a jack-in-a-box that will not appear as long as the music keeps playing.
Tik Tok has become a symbol of everything that is wrong with the US-China relationship. Two pictures that went viral on Chinese social media shows a photo of Tik Tok CEO Shou Zi Chew in the U.S. versus Apple CEO Tim Cook visiting Beijing at the same time. The meme suggested how China treats American big tech CEOs with pride and love, while America treats Chinese big tech CEOs with arrogance and paranoia. For Chinese netizens , Mr. Shou is the symbol of “Mr. Perfect in the Eye of the Storm”, while the same netizens called the U.S. hearing a kindergarten fight. Is this another storm in a Chinese teacup?
?Beijing greenlighted the commercial operation of autonomous driving service without in-car safety supervisors for the first time. A 60km2 area in the outskirts of Beijing was approved for Baidu and Pony.ai to operate in. China began trial runs of robotaxis in 2020, but the cars had mandatory a human “security officer” behind the wheel in case of emergency. No more.
The cities of Wuhan and Chongqing had already greenlighted Baidu’s Apollo Go service last summer. Getting rid of the safety supervisor in China’s capital is a major step forward in China’s effort to commercialize driverless technology. One can expect many Chinese cities to allow robotaxis before 2025 if safety and viability of the technology are holding up.
Beijing has approved its first home-produced mRNA Covid vaccine, developed by CSPC Pharmaceutical Group. The vaccine is said to be 70-85% effective after booster vaccination.
China has been trying to create an mRNA vaccine for years while refusing to clear vaccines from BioNTech and Pfizer for domestic use. A little too late?
?I never understood why Beijing did not end the strict “covid-zero” policy six months earlier. China’s policy worked well for 2 years. But after the Shanghai lockdowns, it didn’t anymore. The rest is history. In February 2022, Beijing said it had two mRNA vaccines within reach of approval. What if the delay in the availability of a Chinese mRNA vaccine has resulted in Beijing’s prolonged strict ‘zero-covid policy’ position? We will most likely never know.
?What we do know today is that China is capable of making an effective mRNA vaccine. During the pandemic we read that China was incapable of making its own mRNA vaccine while Chinese vaccines were proven less effective. We can now put this claim to rest. China was indeed two years behind.
A research team funded by the Chinese military say they used artificial intelligence to design the electrical layout of a warship with unprecedented speed and accuracy. It took humans 300 times longer than A.I. to complete the exact same tasks with ‘100 per cent accuracy’. As China plans to have over 400 warships by 2025 to keep America at bay in the South China Sea, the main bottleneck to that ambition was designing the ships, not the lack of labor to build them. It seems China is “ready for engineering applications” in China’s shipbuilding industry to boost the speed of warship manufacturing. What does this mean for Taiwan?
?China’s largest shipping entity, COSCO, has formed the China Electric Ship Innovation Alliance (CESIA). The formation of CESIA intends to integrate the best resources in the green shipping industry chain to promote establishing industry standards for green and low-carbon ships. As the world’s largest shipbuilder and electrical battery supplier, China is well positioned to lead in the electrification of big containerships. Shipping accounts for some 3% of the world’s carbon emissions.
Recommended reading of the month:
Ashley Dudarenok released her new book that is a must read for anyone excited about the Metaverse and Web3. I am one of them! When the hype waned last year with Meta’s layoffs and ChatGPT that (literally) took over all of our conversations, most of us forgot about the Metaverse. Not the Chinese!
I made a YouTube video last month about how China is mirroring the real world at China speed. Especially for Businesses, China can give us a glimpse into how we will connect with customers in the future. If you want to read a very easy to understand overview of the Metaverse with cases from China and elsewhere, this book offers an insight on practical examples, opportunities and challenges of the Metaverse.
If you know of any other breaking China innovation news from March that I missed, do let me know so I can add it in next month’s newsletter!
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1 年Ashley Dudarenok 艾熙丽 Check out the end of my newsletter!