HONG KONG - U.S. President Donald Trump is giving China’s make-at-home ambitions a helping hand. Beijing’s move last week to speed up next-generation telecom licences was a show of trade war bravura, given the foreign inputs that are likely to be required. Much of the country’s broader industrial plans, though, have been about encouraging long-term self-sufficiency. Washington’s assault on equipment-maker Huawei now leaves no choice.
The long-awaited 5G approvals came sooner than expected. Anticipated later in 2019, they came less than a month after the U.S. government said it would place Huawei on an export blacklist, though a temporary reprieve was swiftly granted.
Unfortunately, faster paperwork doesn’t change the U.S. government’s huge leverage over Huawei. The company’s cutting-edge equipment operations could take years to get back to normal if a ban on U.S. suppliers is not permanently lifted, delaying 5G investment led by carriers like China Mobile that could cost up to $220 billion or so by 2025. That makes the licences look like a symbolic reiteration of Beijing’s ambitions, rather than a game-changer.
Yet the aggressive rollout is just one of multiple policies intended to propel Chinese tech firms to global leadership, and to reduce their dependence on imported gear. Results have been mixed. Despite jaw-dropping sums invested in recent years – including a “big fund” that raised more than $20 billion in its first phase – China’s semiconductor industry is still seen as stuck around five years behind international heavyweights. Areas like memory chips have seen advances, but it’s debatable whether others, such as manufacturing more generally, have narrowed the gap. The country imported more than $300 billion of chips last year.
The Huawei kerfuffle, though, could cut other Chinese tech firms off from their U.S. suppliers. That brings more urgency than any centrally devised plan. Analysts now openly speculate about how fast more can be transferred back: those at Jefferies, for instance, say that among 39 key technologies in the tech value chain, China currently lags the United States by an average of 3.4 years. They argue fresh efforts to achieve tech independence are now a foregone conclusion, and it can be done faster than many expect. Trump, it seems, has encouraged Chinese companies to act when Beijing’s own bureaucrats could not.
- China’s government on June 6 granted 5G licences to the three major telecom operators and China Broadcasting Network. The move gives the companies a green light to start commercial deployment of the technology, ahead of the original timeline of 2020.
(Editing by Clara Ferreira Marques and Katrina Hamlin)
© Reuters News 2019