Chinese gambit: from China's new plan to dominate the U.S. in the technology race

Beijing will intensify efforts to become a leader in key technologies, planning the infusion of money for the development of everything from wireless networking to artificial intelligence.

According to the plan approved by the General Secretary of the CPC Central Committee, XI Jinping, within six years China will invest about $1.4 trillion in the development of wireless networks of the fifth generation, the installation of cameras and sensors, as well as the development of software for artificial intelligence that will be the basis for self-driving cars, automated factories and systems of mass surveillance, according to Bloomberg.

it is Expected that the development of a new technological infrastructure will involve mostly local giants — Alibaba, Huawei, SenseTime Group Ltd. etc Forced technological nationalism, coupled with the investment drive will reduce China’s dependence on foreign technology, which resonates with the objectives set earlier in the program, “Made in China 2025”. Such initiatives have already provoked fierce criticism from the administration of trump, with the result that steps were taken to block the growth of Chinese technology companies such as Huawei.

it is Expected that the decree on the massive investment in technology would approve of the Chinese legislature this week. Presumably, the government will announce the funding of infrastructure in the amount of $563 billion this year. The biggest suppliers of cloud computing and data analysis in the country — company Alibaba Group Holding Ltd. and Tencent Holdings Ltd. — are the main actors of the upcoming project. China has entrusted Huawei to deploy 5G.

according to Bloomberg, there is no guarantee that this program will provide economic rejuvenation promised by its supporters. But unlike previous attempts to revive the economy this newly founded digital infrastructure will help the nationalNYM players to develop advanced technology.

a New stimulus plan China is likely to lead to the consolidation of the industrial Internet providers and can lead to the emergence of larger companies that can compete with world leaders such as GE and Siemens, says Annan CoE, senior researcher, Bloomberg NEF in Beijing.

China is not alone in the initiative of the infusion of money into the technology sector as a way to get out of postirochnaja economic downturn. Earlier this month, South Korea said that the AI and wireless communications will at the centre of its new programs to create jobs and stimulate growth.

According to the China center of information industry development, 10 trillion yuan ($1.4 trillion), which estimates that China will spend up to 2025, covers areas that are generally considered advanced, such as AI and the Internet of things and objects such as lines and high speed rail. More than 20 of the 31 provinces and the region of mainland China announced projects totaling more than 1 trillion yuan, with the active participation of private capital, announced on Wednesday, the state newspaper.

According to some estimates, Morgan Stanley, over the next 11 years, every year to build new infrastructure worth about $180 billion, or $1,98 trillion in total. These calculations also include power lines and Railways. This annual figure is almost twice the average for the last three years, said in a March report, the investment Bank, which lists the main beneficiaries of the shares, including such companies as China Tower Corp., Alibaba, GDS Holdings, Quanta Computer Inc. and Advantech Co.

the Vision of Beijing is already affecting the stock market. So, 5 of the 10 best Chinese stocks this year — at technology companies like network equipment maker Dawning Information Industry Co. or vendor Apple — the company GoerTek Inc. Even drafts of the plan was enough to push shares of various companies engaged in technology – from satellite operators to the providers.

it is Unlikely that American companies will profit more from the stimulus measures in the field of technology, and in some cases they risk losing existing business. Earlier this year when the largest Telecom operator in the country, China Mobile signed contracts for 37 billion yuan for supply of base stations 5G, exported for Huawei and other Chinese companies. Swedish Ericsson has received only slightly more than 10% of the business for the first four months. In one of the projects in the northeastern city of Changchun, local company Digital China will replace the products IBM, Oracle and EMC on Chinese technology.

in data centers will be a significant amount of work on the development of new infrastructure. More than 20 provinces launched a policy of supporting enterprises using cloud computing services, said in a March note, UBS Group AG. Tony Yu, Director-General of the Chinese server manufacturer H3C, said that his company has seen significant growth in demand for data centers by the leading Internet companies in the country. “The rapid growth in promising sectors will bring a new force in China’s economy after the pandemic is over”, he told Bloomberg News.

According to the estimates of operator data centers Chindata Group supported by Bain Capital, for every dollar spent on data centers will account for another $5 to $10 investment in related sectors, including networks, power grids, and production of modern equipment. “A number of companies in the supply chain will benefit from this,” — said in a statement.