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Illustration: Luo Xuan / GT
The Trump administration has dealt a new blow to the Chinese technology sector, October 29, the US Commerce Department announced that it would prohibit the Chinese chip manufacturer Fujian Jinhua Integrated Circuit Co. to buy components, software and hardware. technology products to US companies.
The embargo against Jinhua aggravates the tension between China and the United States, rising from a trade dispute to a battle for technological development. The supply cuts reflect the US concern over China's high tech industries that may pose additional risk or pressure to US technology companies.
In its December 2017 national security strategy report, the United States identified China and Russia as their strategic rivals.
Since Jinhua is part of the "Made in China 2025" program for the development of high technology, the export ban is also a blockade against China's national development strategy. On the contrary, the measures taken against the Chinese chip maker will only strengthen the country's determination to develop its own technology sector. China is still a developing country and its most fundamental driver for sustainable development lies in the real economy, especially the global competitiveness of its manufacturing sector.
It is now clear that the United States is preventing Chinese companies and investments from entering or buying technology products from its advanced technology sector. To break the blockade, China needs to integrate deeper into the global innovation community. Despite the export restrictions imposed by the United States, Chinese companies may still be able to acquire the necessary components from other developed markets such as the EU and the United States. Japan. Given the attractiveness of China's large consumer market, it is impossible for all these countries to impose technological blockades on Chinese companies.
It is also necessary that China deepen the reform and opening up of the market, which will stimulate the industrial modernization of Chinese enterprises. Everyone knows that China has a huge consumption potential and it is essential to make good use of this potential to revive the economy. The exports of a country can raise its economy, as well as its imports. By stimulating consumption and allowing consumers to enjoy higher quality products, imports can help modernize consumption and, consequently, the industrial upgrading of Chinese enterprises.
Under the competitive pressure of imported products, Chinese industrial innovation will be stimulated, with industries moving from the smallest to the medium and high end to achieve high quality growth. But there are two things to keep in mind.
First, China should not rock from one extreme to the other. In the future, Chinese exports will no longer be as prosperous as before and the country's economic growth model will have to focus more on the exploration of domestic demand through the medium of the country. opening up markets and stimulating innovation. This does not mean that China will fully open its market and become the demand side of other countries' exports. In short, China needs to move from a purely export-oriented model to a comprehensive model combining its advantages for both exports and the consumer market, with the aim of promoting its own modernization of consumption and consumption. its industries.
China is currently experiencing considerable trade surpluses with some of its major trading partners. But giving up our own industries and placing too much emphasis on stimulating consumption in order to ease the pressure of trade will not bring us any good in the long run.
The strategy of moving from export to consumption is actually wrong. From an economic point of view, no country knows its growth potential fueled by consumption, the real economy being the engine of sound economic development. This is why the United States, the European Union and Japan pay so much attention to their exports and the competitiveness of their high-tech industries. Basically, manufacturing or export benefits represent the long-term development potential of a country.
Secondly, foreign companies wishing to enter the Chinese market are right to be concerned about the protection of intellectual property rights, but innovation also needs industrialization and the creation of markets to generate economic value. This is why so many multinationals have established research and development centers in China. They need the vast pool of consumers to accelerate the commercialization process of their technology and generate revenue as quickly as possible.
Multinationals are not nationalists but globalists and aim to integrate global resources. Although they have suggested to China to improve its business environment, its goal is to better integrate into the Chinese market and derive more dividends from China's economic development. While preserving its fundamental interests, China must accelerate the pace of its integration into the global innovative industrial chain through reform and openness.
The article was written by Global Times reporter Wang Jiamei from an interview with Zhang Monan, a researcher at the China Center for International Economic Exchanges. [email protected]
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