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China People's Congress

China keeps tech priority in 'new development pattern'

Country to spend 3% more this year for electron collider and unmanned helicopter

A military truck carrying an unmanned jet parades past Tiananmen Square during celebrations to mark the 70th anniversary of the formation of the People's Republic of China on Oct. 1, 2019.    © Reuters

SHANGHAI -- The headline-grabbing debates on slowing growth and the new Hong Kong security bill have obscured China's announcements about high-technology developments at the ongoing National People's Congress, the country's legislative sessions being held in Beijing.

Among the announcements made, at a time when nationalist sentiment is running high, is that the construction of the $5 billion Circular Electron Positron Collider, not unlike the CERN project in Switzerland, is moving a pace. Some of the equipment for the project to find the elusive Higgs boson particle that could yield clues to the origins of life has reached "design standard," Wang Yifang, director of the Institute of High Energy Physics, told state media Global Times on Monday.

On Friday, Premier Li Keqiang told the NPC: "We will accelerate the development of national laboratories, restructure the system of key national laboratories and develop private R&D institutions."

Earlier in May, the country successfully launched a project to construct by 2022 a rocket that will lay the foundation for a manned spaceship eventually.

The Chinese government is focused on realizing President Xi Jinping's vision for a "new development pattern" by harnessing its increasingly modernized industrial capabilities and focusing on its huge domestic market.

Such grand statements come as a large swathe of the world remains on coronavirus lockdown, resulting in weak demand for Chinese exports. Chinese companies with overseas operations have also come under rising scrutiny by other governments.

Xi told economic planners on the sidelines of the NPC on Saturday that China must focus on stoking domestic demand. Xi stressed that the country must refine structural supply-side reforms and accelerate the development of strategic industries, digital economy and intelligent manufacturing.

The central government's overall budget for science and technology in 2020 will fall by 9% to 319 billion yuan ($45 billion) from a year ago. But total spending, including those by provincial governments, is expected to rise by 3% this year.

John Lee, senior analyst at Digital China at the Mercator Institute for China Studies in Germany said that the need to be a global leader in core technologies has deep roots in China. 

"There is no question that China will maintain a focus on high-tech development, even if this is no longer branded with the label 'Made in China 2025,'" he said, referring to the policy road map laid out by Xi to catch up with the West in areas that include aerospace and semiconductor manufacturing.

China is also pushing its ambitions in the aviation sector.

On Feb. 26, when new cases of coronavirus were reaching its peak, China Eastern Airlines, one of the country's top three state-controlled carriers, unveiled a new subsidiary at a ceremony in Shanghai attended by a small group of dignitaries and guests, all donning masks.

The unit, One Two Three Airlines, marked the first step in the commercialization of Chinese-made aircraft by a national carrier. China Eastern Chairman Liu Shaoyong vowed to make China-made aircraft "fly higher."

The group had signed a purchase agreement in 2019 to buy 35 ARJ21-700 short- to medium-range turbofan regional jets made by Commercial Aircraft Corp. of China, or COMAC. The purchase is part of a larger agreement by the top three carriers to buy 105 aircraft.

State-owned COMAC has delivered 25 ARJ21 aircraft since 2015, 19 of which went to Chengdu Airlines for use on domestic routes. Its narrow-body aircraft C919 has yet to begin commercial flights, while the wide-body CR929 is still at an early stage of development.

Shanghai-based COMAC's aircraft development is progressing well, said David Yu, chairman of China Aviation Valuation Advisors. Another state-owned plane maker Aviation Industry Corp. of China, or AVIC, is also progressing a pace, with its amphibious aircraft AG600, the world's largest, set for its maiden sea takeoff later this year. Its high-altitude unmanned helicopter will also be ready to take to the skies this year, the group said.

"Both companies have big budgets, and the nation wants them to break into the Airbus and Boeing duopoly in the large commercial aircraft market," said Yu.

In the area of fifth-generation telecommunications infrastructure, the government is adding over 10,000 5G base stations weekly to the 200,000 stations already built and has increased the number of users to 36 million. Huawei Technologies, one of the builders, expects 800,000 base stations to be completed by the end of the year.

Although Beijing has responded in a muted way so far to the recent U.S. move to impose additional restrictions on Huawei and to expand the ban of Chinese companies on security issues, the government is shaping its policies on the basis of those sanctions, said Michael Hirson of risk advisory company Eurasia Group.

"Once the NPC is over, Beijing is likely to loosen some of this restraint and may outline some steps in retaliation," he said.

Matt Ferchen, head of global China research at Mercator Institute China Studies, said while China was doubling down on commitments to support high-tech and innovative industries as part of efforts to stimulate its economy post-pandemic, it was unclear if China could attain self-sustainability given the tightly bound high-tech supply chain.

"[Such a drawback] could push China to more statist and less market-oriented directions," Ferchen said.

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