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China Is Determined To Win The World Technology Crown From The US With A Plan Of 1.4 Trillion USD


Beijing is speeding up bids for global leaders on key technology, and plans to inject more than a trillion dollars into the economy through launching everything from Next generation wireless network to artificial intelligence (AI).

In the master plan, backed by President Xi Jinping himself, China will invest about 10 trillion yuan (US $ 1.4 trillion) over six years, by 2025, calling for urban authorities and Private high-tech giants like Huawei Technologies help set 5G wireless networks, install cameras and sensors, and develop AI software that will enhance automated driving for automated plants and mass surveillance. 

The new infrastructure initiative is expected to push mainly regional corporations, from Alibaba Group and Huawei Group to SenseTime Group at the expense of US companies.
As technology nationalism coalesces, the investment dynamics will reduce China's dependence on foreign technology, repeating the goals set out earlier in the "Made in China 2025" program. 

Such initiatives have attracted fierce criticism from the Trump administration, leading to moves to halt the rise of Chinese technology companies like Huawei.

The technology investment push is part of a financial package that is awaiting the signing of China's legislature, the National People's Congress convened this week. The government is expected to announce infrastructure funding of up to $ 563 billion this year, amid the country with the worst economic performance since Mao Zedong.

The nation's largest providers of cloud computing and data analytics Alibaba, the parent company of the South China Morning Post, and Tencent Holdings will be key members of the upcoming effort. China has entrusted Huawei, the world's largest telecommunications equipment supplier, to help stimulate 5G. Technology leaders including Pony Ma Huateng and Jack Ma are participating in the program.

Maria Kwok's company, which is an integrated government-backed IT system provider, is among many who are seizing this opportunity. In southern Guangzhou city, Digital China is bringing half a million project housing units online, including a complex the size of 3/4 Central Park in New York. To find a home, users simply need to log in to an app, scan their faces and verify their identity. 

Leases can be electronically signed through a smartphone and the rental agency will automatically be noted if the tenant's payment is delayed. There is no guarantee this program will bring economic rejuvenation for proponents. Unlike previous efforts to revive the economy with bridges and highways, this newly installed digital infrastructure will help national champions develop advanced technologies. 

Nannan Kou, head of research at BloombergNEF, said China's new stimulus plan could lead to the consolidation of industrial internet providers and could lead to the emergence of some larger companies and can compete with global leaders, like GE and Siemens.

China is not alone in pumping money into technology as a way to escape the post-covid-recession. Earlier this month, South Korea said AI and wireless communications would be the "New Deal" core to create jobs and boost economic growth.

According to the government supporting the China Information Industry Development Center, the 10 trillion yuan that China estimates to spend between now and 2025 include areas that are often considered top-notch, such as AI and IoT, as well as items like high voltage lines and high-speed rail. More than 20 provinces and 31 provinces in mainland China have announced projects worth more than 1 trillion yuan with active participation from private capital.

Morgan Stanley's separate estimate puts the new infrastructure at about US $ 180 billion per year for the next 11 years - or US $ 1.98 trillion. These calculations also include power lines and railways. That annual figure will nearly double the three-year average, the investment bank said in a March report listing key stock beneficiaries including companies like China Tower Corp, Alibaba. , GDS Holdings, Quanta Computer and Eclech Co.

Beijing's "half-hearted" vision is stirring up a lot of stocks, a big reason why five of China's top 10 best performing stocks this year are technologies like network equipment maker Dawning Information. Industry and Apple GoerTek supplier. 

The bare outlines of the master plan are enough to motivate experts on everything, from satellite operators to broadband providers.

It is likely that US companies will not benefit much from technology-driven stimulus and in some cases they will lose their current business. Earlier this year, when China's largest telecommunications provider, China Mobile awarded a 37 billion yuan contract to 5G base stations, the largest stake was transferred to Huawei and Chinese companies others like Sweden, Ericsson has just over 10% of businesses in the first 4 months.

In one of its projects, Digital China will help the northeastern city of Changchun exchange US cloud products IBM, Oracle and EMC with Chinese self-developed technology.

According to a March study note from the UBS Group, it is at the datacenters that a significant chunk of new infrastructure development will take place. More than 20 provinces have issued policies to support businesses using cloud services.

Tony Yu, executive director of Chinese server manufacturer H3C, said his company is witnessing a significant increase in demand for data center services from some of its leading internet companies. He told Bloomberg Newsmen that rapid growth in the upcoming fields will bring a new force to the Chinese economy after the pandemic has passed.

Data center operator supported by Bain Capital, ChinData Group estimates that for every $ 1 spent on data centers there will be an investment of $ 5-10 in related fields, including the network, power grids and advanced equipment manufacturing. A range of supply chain companies will benefit from these investments.

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