BEIJING – Chinese leaders met Monday to formulate an economic blueprint for the next five years that is expected to emphasize development of semiconductors and other technology at a time when Washington is cutting off access to U.S. technology.
President Xi Jinping’s government is working to promote self-sustaining growth supported by domestic consumer spending and technology development as tensions with trading partners hamper access to export markets and technology.
The ruling Communist Party wants Chinese industry to rely on domestic suppliers and consumers, a strategy it calls “dual circulation.” Economists warn that while this might help to reduce disruption of trade disputes with the United States and other partners, it will raise costs and hurt productivity.
The Five-Year Plan, the 14th in a series issued since the 1950s, is the foundation for government industrial plans in the heavily regulated economy. Its broad outlines are due to be announced after the meeting ends Thursday but the full plan won't be released until March. Legal and regulatory changes and plans for individual industries will follow.
Innovation will "drive China’s manufacturing industry and push it up the global value chain while strategically ensuring domestic supply,” the official Global Times newspaper said. “Achieving independence in key areas, such as scientific research and finance, is expected to be a focus.”
The latest plan is expected to emphasize domestic development of semiconductors for computers and smartphones — China's biggest single import by value — next-generation telecoms, artificial intelligence and other fields.
The ruling party has promoted semiconductor development for two decades but Chinese makers of smartphones and other products still rely on the U.S., Europe and Japan for processor chips. Beijing feels increased pressure after the Trump administration cut off access to most American supplies for Huawei Technologies Ltd., a global maker of smartphones and switching equipment, in a feud over technology and security.
“While the biggest challenge for Beijing five years ago was a weak economy, the one today is a potential decoupling with the U.S.," Macquarie economists Larry Hu and Xinyu Ji said in a report.