Hey, Odd Loots listeners. This episode, you're about to hear us from another podcast here at Bloomberg, the Big Take Asia podcast.
And in this episode you are going to hear about China's efforts to dominate industries of the future. Specifically, it is looking at China's ten years old Made in China Plan to see how the country is actually faring when it comes to advancing key technologies.
This episode of Big Take Asia will give you a preview of the next episode of Odd Lots, arriving on Thursday, when we'll speak with co authors of a new Bloomberg report. We're going to be speaking with Bloomberg's Asia Government and Politics correspondent Rebecca Chune Wilkins as well as Bloomberg Economic analyst Gerard de Pippo.
They will help us unpack the China twenty twenty five plan and what their research has uncovered. In the meantime, enjoy this episode of The Big Take Asia Bloomberg Audio Studios, Podcasts, Radio News.
The US presidential election is a week away and the contest between Donald Trump and Kamala Harris could not be tighter. The two candidates are going head to head on everything from the economy to immigration, but one area they agree on is the need to curb China's rise.
We've got hundreds of billions of dollars just from China alone, and I haven't even started yet. But taris are two things if you look at it. Number one is for protection of the companies that we have.
Here in a policy about China should be in making sure the United States of America wins the competition for the twenty first century, which means focusing on the details of what that requires, focusing on relationships with our allies, focusing on investing in American based technology.
So how is the US doing versus China, which superpower is leading the race for dominance of the twenty first century?
Rebecca Chung Wilkins, Bloomberg's Asia Government and Politics correspondent, says a good way to try to answer this question is by looking at the key emerging technologies that China identified as its priority back in twenty fifteen when it announced it's made in China twenty twenty five plan are came and when you look at that plan now nearly a decade later, new research by Bloomberg Economics and Bloomberg Intelligence shows that made in China twenty twenty five has largely been a success.
So of the thirteen key technologies tracked by Bloomberg researchers, China has achieved a global leadership position in five of them and is catching up fast in seven others.
Welcome to the Big tich Asia from Bloomberg News. I'm wanh. Every week we take you inside some of the world's biggest and most powerful economies and the markets, tyccoons and businesses that drive this ever shifting region. Today on the show, how did China get ahead in key technological advances despite US efforts to prevent that from happening? And would a
Harris or Trump administration change that? Rebecca says back in twenty fifteen, when the Maiden China Plan was announced by the Chinese Communist Party, it was all about helping the country achieve two big goals.
One is this self sufficiency, not wanting to be reliant on other countries, and is preparing for any kind of scenario where, for example, China might be cut off from say its energy supply or whatever it might be. And China, more broady does have a sort of preoccupation or prevailing concern with preserving its own security, so standing on its own two feet, and the second is becoming increasingly competitive and in fact a globe leader in some of these
key strategic areas. So there's both a sort of inward and an outward element to the maiden in China plan.
The plan highlighted ten priority sectors for the nation to focus on, including aerospace equipment, energy saving cars, biomedicine, and high end machine tools and robots. And now, almost ten years later, according to the analysis by Bloomberg, China has in fact become a global leader in many of these key areas.
So those sectors include solar panels, unmanned aero vehicles, those are drones, graphene which is a coating material that's using tons and tons of sectors, high speed rail, and electric vehicles.
Now, does China have any natural advantages that makes it possible that it's been able to take leading positions in these sectors or is this simply by design and the will of Beijing?
Well as worth saying that even in twenty fifteen, China, as we determine, was already a global leader in three of them these sectors, in graphene, solar panels, and in unmanned area of vehicles, so they had a sort of somewhat of a headstart in any case. But the other important element here to remember, I think, is that when Beijing does signal out an area for support, when it signals out a key policy priority, it really is able
to throw the full weight of its economy essentially behind that. So, for example, if it decides that electric vehicles are a priority, say it can ask banks to lend it credit cheaply. It can get local governments to lease it land cheaply or perhaps even at no or low cost. It can also get large state owned enterprises to use the sort of full force of its resources, it talents, and direct
it towards those industries. So you know, Beijing has an incredibly sort of powerful basis here, an incredibly powerful set of resources to direct towards these industries when it has selected these priorities.
This is one key area where China hasn't caught up to the US, and that's in advanced semiconductors. That's in part because of some key things the US has done to keep its rival from catching up.
There's sort of three big tools for economic stakecraft that we've seen. One of them is tariffs, imposing these high costs for imports coming into the US, sometimes prohibitively high. The second are export controls, essentially trying to prevent the transfer of US technology, goods, services overseas to other parts of the world. And the final part of that are
financial sanctions. The big area where we can say that some of the US export controls and so on have been more effective is in sort of high advanced semiconductors. And it's important to remember in this context such just a handful of companies involved in this kind of really
advanced semiconductor tech manufacturing. And it's fair to say the Biden administrations they have been successful in building consensus among allies among other countries trying to contain China's access to semiconductors. And so we saw Dutch companies, Japanese companies essentially falling in line in preventing China from accessing the actual products needed to manufacture these types of chips.
And in light of that of the US having allies to support its approach to trade on China and its approach to contain China, what is China done to make sure it has access to the technologies it needs.
China's actually has been stoppiling like that. That's the sort of fundamental basis of this. They're stop piling a record amount of semiconductor equipment, and that includes these high end video chips. If preparing essentially for a number of further curbs. It's looking further out thinking if we see these kind of moves accelerate, if they're expanded, where will we be and how do we try and future proof against that.
But it's not just semiconductors where the UA is trying to use export controls to slow China down. After the break, a look at the other tools the US is using and will a new administration keep them going. The US has leaned on its allies to limit China's access to advanced technologies like semiconductors. Meanwhile, the US is also concerned about its ability to be a leader in other sectors
as well. Some of these areas were outlined back in twenty twenty two by National security advisor Jake Sullivan.
Computing related technologies, biotech, clean tech are true force multipliers through the tech ecosystem, and leadership in each of these areas is a national security imperative. We're investing in the industries of the future and strengthening the resilience and security of our supply chains.
Sullivan calls these technologies a national security imperative. Bloomberg's Rebecca Chung Wilkins says that's an important thing to take note of because over time she's seen a change in the way the US talks about the need to restrain China.
Yeah. I think in the early days of the trade war, a lot of the focus was on the sort of wrongdoing, as they alleged of Chinese companies, But over time that has really morphed into this whole discussion over national security and increasingly this focus on China's preparedness for a war. And in fact we've almost seen the true real concerns at the heart of some of these economic policies over
sort of military might. Essentially, it's this question of deterrence whether or not Beijing and Washington will essentially adopt this idea that the cost of this trade conflict and trade war and the cost of this increase in competition are worth it or not. It comes sort of, I suppose, to this fundamental question of to what extent both sides feel that their own national security is fundamentally at risk.
On the campaign trio, Trump and Harris have advocated different approaches towards China, even as both agree on the need to thwart its rise. I asked Rebecca what Trump currently has in mind here.
Well, we just in a way have just seen an amplification, perhaps unsurprisingly, of some of his previous policies. He's mentioned this possibility of sixty percent tariffs across all Chinese imports into the US.
But it would be crazy high.
That would be crazy high, and it would really hurt the Chinese economy. One Bank, for example, estimates that it could essentially har Chinese GDP growth, So it would really be a significant hit to China, but also a significant hit to the US if that then results in a higher cost of goods.
Bloomberg's editor in chief John Mikkelswaet pressed Trump on that point in an interview earlier this month.
You're talking about sixty percent trade on that, sixty perent tariffs on that, You're talking, as you said, one hundred two hundred percent or things you don't really like. You're also talking about ten to twenty percent tariffs on the rest of the world. That is going to have a serious effect on the overall economy, and yes, you're going to find some people who were gained from individual tariffs. The overall effect could be massive.
I agree, it's going to have a massive effect. Positive effect. It's going to be a positive Let me just no, no, let me committed.
The other thing to remember with Trump is that he has taken a more protectionist stance. Writ large, he's not just concerned about Chinese imports, but he's concerned about imports from everyone, including, for example, the European Union.
What do we know about Harris's approach if she wins.
Well, Harris's approach we expect to be more consistent with the Biden administrations. I will say she too has focused on this idea of jobs and sort of American industrial policy, trying essentially to build up some of those manufacturing bases. Again, She's been critical of Trump's proposed tariffs, but she has been quite firm on some of the national security risks that the US faces.
So, Rebecca, is either approach really doing a great job in containing China's tech development.
Well, if we look at the success of the Biden administration and we look just going back to the beginning at some of those maiden China targets. For example, we can see that actually they aren't successful, or they haven't been successful in certain key areas if we exclude semiconductors. Actually trade has found a way to get through sanctions haven't been hugely successful. So that's one question for Harris that this need to perhaps recalibrate the approach.
Despite the US efforts to slow down China, the world outside the US is increasingly driving Chinese evs, surfing on Chinese smartphones, and powering their homes with Chinese solar panels, and Rebecca says there might be better approaches for the US to maintain its competitiveness.
One approach to thinking about what would be more effective than sanctions is this idea that Adam Posen from the Peterson Institute has mentioned, which is suction not sanctions. Essentially that the US should be making use and taking up talent, resources, innovation coming from China and partnering with it in order to advance its own industries and its own key sectors.
So basically taking away all the talents so that the US makes use of.
It, taking the best of what China has developed, and then building on that to develop and innovate at a faster pace.
This is the Big Take Asia from bloom News. I'm wan ha. If you'd like to hear more about Bloomberg's research on the Maiden China Plan, check out the conversation on Odd Lots with my colleagues Joe Weisenthal and Tracy Alloway.
The other thing that happened that I think was actually a bigger deal from the Chinese perspective was when the US added Huawei to the Commerce Department's entity list in early twenty nineteen, Because what that signal was that the United States was effectively trying to kill what was arguably China's best global technology company. The US would say, We're not trying to kill it, but the restrictions are pretty draconian, and there is very much that vibe.
And check out our last episode where you can hear more about one critical market that China's focusing on EVS and how one Chinese carmaker BYD is dominating the electric auto market globally. That's on our Big Take Asia feet. This episode was produced by Young Young, Jessica Beck and Naomi.
It was mixed by Alex Sugiera and fact checked by Eddie Dun was edited by Caitlin Kenny and Daniel Tan Kate Maoy Shaven as our senior producer, Elizabeth Ponso is our senior editor, Nicole Beemster Bower is our executive producer, and Sage Bauman is Bloomberg's head of podcasts. Please follow and review The Big Tick Asia wherever you listen to podcasts. It really helps new listeners find the show. See you next time,