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Trade War

China 'hides its claws' in high-tech development race with US

Enormous Xiongan construction project creates a new city and reveals Beijing's intentions

Roads in a model district, the Citizen Service Center in Xiongan New Area, Hebei Province, are being used for test driving autonomous cars. (Photo by Tetsushi Takahashi)

BEIJING -- The trade war between the U.S. and China is intensifying, with the American government reinforcing its aggressiveness due to fears that China may surpass the U.S. in next-generation high technology. China has gone on the defensive and has begun to "hide its claws" as a strategic move.

U.S. President Donald Trump slapped hefty tariffs on Chinese imports on July 6, citing China's "theft" of intellectual property. On the same day, Chinese President Xi Jinping convened the Central Comprehensively Deepening Reforms Commission, tasked with formulating wide-ranging reforms under his chairmanship.

Xi made no reference to the U.S.-China trade war at the meeting, according to a statement distributed by China's state-run Xinhua News Agency, in which the Chinese leader stressed the need for steadily deepening reforms.

But a closer analysis of the statement reveals strategic moves made by China to gear up for battling the U.S. in the field of high tech.

At the meeting, the commission adopted instructions for "deepening comprehensive reforms of Xiongan New Area in Hebei Province." Although details of the instructions have not been released, they are believed to call for accelerating the national project of constructing the new area.

China decided in April 2017, under Xi's prodding, to build a new city, with a population of 2 million, 100km southwest of Beijing, to be completed by 2035.

The "project of the millennium" was initially regarded merely as political propaganda meant to bolster Xi's authority in comparison with strongman Deng Xiaoping and former Chinese President Jiang Zemin. They took the initiative in building Shenzhen, a modern metropolis in Guangdong Province, and Shanghai Pudong New Area, respectively. But it is apparent now that the Xiongan project is even more substantial.

A model district, the Citizen Service Center, opened in the Xiongan area with little fanfare in April, with more than 10 daringly designed buildings already completed. They suggest how the district is being developed into a futuristic city with hotels, supermarkets, restaurants and other facilities.

The district was built on what was farmland only half a year ago. The Xiongan project is designed to build a whole city and realize the widespread use of electric vehicles, self-driving cars and other next-generation technologies at a stroke.

Visitors to the district quickly understand what China is trying to achieve. Gasoline-powered cars are banned from entering the district, where a large number of electric vehicles are allocated, and there is an array of charging stations for them. Roads are being used to experiment with autonomous driving vehicles, and leading Chinese internet service company Baidu has been running prototype cars.

China should have touted the project as a symbol of its strength a while ago. In fact, "Amazing China," a movie released this spring, depicted China's homegrown technological achievements, which fired up its citizens' self-esteem.

But the situation has changed since Trump began to impose trade sanctions against China, targeting high-tech products. While the showing of the movie has been suspended, the state-run news media now rarely run stories about the "Made in China 2025" initiative to upgrade the nation's high-tech industry.

As a strategic shift, China now says it still has a long way to go before reaching the top of the technology world. Liu Yadong, editor-in-chief of the Chinese state-run Science and Technology Daily, told a lecture meeting in late June that there is a wide gap between China and Western countries in terms of technological development.

The late Deng Xiaoping adopted a diplomatic strategy of "hide your claws, bide your time" before China's growth into a powerful country. China is now returning to the philosophy to ease the growing sense of alarm in the U.S.

The Soviet Union launched the world's first artificial Earth satellite, Sputnik 1, in 1957. Shocked by surprise success, the U.S. began to spend massively on technological development, which has led to the creation of innovative technologies, such as the internet and the global positioning system, and enabled the U.S. to win the competition with the Soviet Union.

China's emergence could be the Trump administration's Sputnik moment. But in contrast with measures taken by the U.S. following the Sputnik launch to reinforce its technology and beat the Soviet Union, the Trump administration is vigorously moving ahead to protect its competitive edge by trying to forcibly suppress China's growth.

Apparently, however, China merely hides its claws when it yields to the U.S. In a case considered to represent China's actual stance, a former Apple employee was arrested in the U.S. on July 7, and charged with stealing information about the company's self-driving car technology for a Chinese company.

China undeniably needs to improve its handling of intellectual property rights. But even if the U.S. beats China in their trade war, there is no guarantee that it can win in the field of high technology. Trump should recognize it as quickly as possible.

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