Million dollar question: Will China achieve self-sufficiency in critical technology by 2025?

In September 2021, speaking at a programme in Beijing, President Xi Jinping had said China would “exhaust all means” to recruit intelligent and innovative professionals from around the world to make the country self-sufficient in technology. He pledged to achieve self-sufficiency in critical technology by 2025.

Today, this plan appears to be in tatters. Huawei, China’s giant telecom company which was showcased as Beijing’s prowess to unleash revolution in the world with its 5G-technology, is currently lurching towards its slow and undignified death. The denial of critical technology by the US and its European allies to Huawei has made it vulnerable for rejections even in Africa and Latin America.  

Rather the ground reality is that the Chinese tech titan which was projected to be a world leader in 5G technology has to see a decline in buyers within China. For the first time in many years, Huawei has not been one of China’s five best-selling phone brands. As per the market research firm Canalys, the top five in order are: Apple, Vivo, Oppo, Xiaomi and Honor. If a market analysis of Counterpoint Research, a global analysis firm is to be believed, Apple captured a whopping 23 per cent market share in China in Q4 of 2021, making it the number one smartphone brand in the country in terms of the number of devices sold per quarter.

It has generated a widespread concern among Chinese authorities about Huawei. Despite $75 billion in subsidies from the Chinese Communist Party government, it is fading out of the market space in China itself. Once considered as the crown jewel of China’s tech industry and enjoyed tremendous goodwill across the country, Huawei is no longer the most sought after brand today across the country.

Instead, as per South China Morning Post’s recent report, lack of access to key hardware and software technology due to US restrictions, Huawei’s smartphone business has almost collapsed. According to SCMP, several franchise retailers of Huawei phones in mainland China and Hong Kong have closed down their stores, while others have switched to selling other brands.

Bloomberg News recently said, “Huawei’s decline shows how China is often its own worst enemy, as its global assertiveness makes its rivals multiply.” Except for a few poor countries in Southeast Asia, South Asia, Middle-East, Pacific, Africa and Latin America, a majority of world powers are against China. It is engaged in a major trade dispute with the US. With India and Japan, it is involved in border and territorial disputes. Indonesia, Vietnam, Philippines, Malaysia and Brunei are aghast at being punched and kicked in the South China Sea by Beijing which claims the entire region as being part of its imaginary ‘Nine Dash Lines.’

Already, the 27 European Union members have refused to have any amicable ties with China after the latter’s despicable treatment of Uyghur Muslims in the Xinjiang region and human rights violations of people in Hong Kong. The EU members are also concerned about aggressive behaviour of China in the South China Sea.

For the first time in almost two decades, Germany sent a warship, which crossed the South China Sea in December 2021. Similarly, the UK’s relationship with China is passing through its worst phase on account of Beijing’s violation of the 1984 agreement on “one country, two systems” and crackdown on residents of Hong Kong, human rights abuses against China’s Uighur.

Like Germany, the UK, a non-EU member, also sent its aircraft carrier for the first time since 2008 to the South China Sea in July 2021, challenging Beijing’s claim to the sensitive waterways. This indicated how strongly anti-China sentiment spilled across advanced economies of the world. The Cauldron of unhappiness against China was already blowing across international business and the corporate sectors.

While trying to maintain its economic competitiveness and fulfill its vaunted political ambition to become a global superpower, China was found busy in stealing R&D secrets, patents and intellectual assets on an industrial scale. From 2016 to 2019, China found itself embroiled in scores of trade theft accusations by the US. According to independent researcher Nicholas Eftimiades’ report, Chinese economic espionage activities accounted for US $ 320 billion in losses which was about 80 per cent of the total cost of intellectual property theft to the US in 2018.

Despite such expose against China and its nefarious activities in the US, the UK became the first country in the world to slap a ban on Huawei 5G technology in July 2020. It had ordered the removal of the Huawei kit from 5G networks by 2027. It also banned mobile providers from buying new Huawei 5G equipment on the suspicion that the Chinese government could use the equipment to spy on foreign entities and individuals.

Still it proved to be the last nail in the Huawei’s coffin when US President Joe Biden in November 2021 ordered banning Huawei and ZTE from getting approval for network equipment. But then black cloud had started hovering over Huawei when the US Department of Justice on January28, 2019, charged the Chinese telecom giant with bank fraud and stealing of trade secrets.

Today, consequence is there before the world for the Chinese telecom company. Incapacitated by technological denial, Huawei now symbolises China’s weak, hollow and feeble capacity to become technological Tsar of the world. Struggling with critical technology like microchips on which relies much of China’s electronics and telecom productions, whether the country will ever be able to fulfill President Xi’s dream of achieving self-sufficiency in critical technology three years from now is a million dollar question. Despite investing billions of US dollars in indigenous production of semiconductors, China’s domestic chip production could meet only 15.9 per cent of its chip demand in 2020-21, said IC Insights, a US-based semiconductor research firm.