Changes and Implications of China’s High-tech Industry Development Policy after the US-China Conflict

Since the 2010s, the Chinese government has promoted its high-tech industries through the Strategic Emerging Industries and China Manufacturing 2025 policies, among others. It has focused on cultivating the next-generation information technology (IT), biotechnology, new energy vehicles, and new materials industries, and investment is being funneled to these sectors in an effort to secure engines of future growth. Specific measures include subsidies, R&D support, and human resource development, but the most important feature of the Chinese policy stance is the government’s use of subsidies to create drive supply and demand in the market and build an industrial ecosystem. However, the US sanctions regime targeting the Chinese technology sector threatens to derail China’s efforts to foster its high-tech industries US technology sanctions against the country. While the country has successfully formed companies and markets have through subsidies and aggressive mergers and acquisitions (M&A), Chinese tech firms are heavily dependent on the US and EU for so-called “choke point” technologies, such as semiconductors; American semiconductor export controls and investment bans have had a significant impact on China’s high-tech industries and its science and technology (S&T) policies. In this paper I examine the characteristics of China’s high-tech industry development and S&T strategies and describe changes to Chinese policy following the eruption of the US-China dispute. I specifically analyze how China has promoted industries and technologies in the past, focusing on high-tech industries such as semiconductors and batteries, and review the evolution of Chinese policy since the beginning of the US-China conflict.