Beijing did a tech reality check on its industrial champions. The results were not amazing

The country’s big conglomerates are almost totally reliant on foreign suppliers for key components, countering suggestions that China is on the verge of being a technological superpower

PUBLISHED : Wednesday, 18 July, 2018, 11:00pm
UPDATED : Wednesday, 18 July, 2018, 11:00pm

China’s champion industrial enterprises are almost completely reliant on imports for top-end computer chips and crucial components, a state-run news service has reported, echoing calls for caution about the country’s technological prowess.

The report by the official China News Service was based on a survey by the Ministry of Industry and Information Technology of 30 of China’s biggest conglomerates.

The ministry questioned the companies about 130 “core components and materials”, finding them reliant on imports for 95 per cent of central processing unit and CPU-related chips for their computers and servers.

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The companies also depended on foreign suppliers for 95 per cent of the advanced manufacturing and testing components on production lines for various sectors, including rockets, large aircraft and even cars, according to the report published on Friday.

About a third of the “key materials” covered by the survey were not available in China, the state news agency reported, without detailing the items covered or when the survey was conducted.

The ministry did not release any information about the survey.

The report was shared widely on Chinese social media and countered perceptions that China is on the brink of becoming a technological superpower.

Beijing’s propaganda machine has played up the country’s technological progress with content such as the 90-minute Amazing China documentary produced by China’s state broadcaster. The film boasts of the country’s achievements in science and technology and was shown in cinemas across the country earlier this year to become the top-grossing documentary in China.

But that narrative took a hit in April when a US ban on key component exports to ZTE nearly toppled the leading Chinese telecom equipment maker, highlighting a huge weakness in the country’s industrial system.

At a forum in Beijing last week, Xin Guobin, vice-minister of industry and information technology, said official media had exaggerated the country’s innovation in manufacturing, saying China was still at the lower end the of global industrial chain.

“China still lags decades behind developed countries,” China News Service quoted Xin as saying.

The ZTE ban has been lifted for now but leaders are underscoring the need for home-grown technology.

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Chinese President Xi Jinping told a key economic policy decision-making meeting last week that China must grasp core technologies “with our own hands”, saying it was key to national security and high-quality economic development, state-run Xinhua news agency reported.

The country’s top leaders acknowledged that China’s technological power in key sectors was far behind many developed countries, according to a statement of the meeting.

Under its “Made in China 2025” plan released in 2015, Beijing gave the country 10 years to dominate 10 hi-tech sectors, but it has played down the ambitions in recent months since it triggered alarm in Washington and Brussels.