US-China tech war: Beijing’s main policy lender pledges US$62 billion to fund tech innovation

China Development Bank has earmarked financing to support strategic emerging industries and advanced manufacturing

The funding support for hi-tech innovation forms part of a state-orchestrated strategy to reduce China’s reliance on imported technologies

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China Development Bank (CDB) is infusing resources in the country’s semiconductor industry amid the intensifying US-China tech war. Photo: Shutterstock

Published: 9:00pm, 4 Mar 2021Updated: 9:00pm, 4 Mar 2021

China Development Bank (CDB), a policy lender that finances high-priority government programmes, has earmarked 400 billion yuan (US$62 billion) of loans this year to support strategic emerging industries and advanced manufacturing, as Beijing accelerates moves to cut reliance on imported technologies amid trade frictions with Washington.

The pledge was announced days before the country’s political elite gather in Beijing for the annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference, known as the “two sessions”, to spell out economic and development goals for 2021 to 2025.

“We’re selecting 100 leading companies in the field of technological innovation, and 1,000 firms along the upstream and downstream industrial chains and [will] offer them special financial services support,” said CDB chairman Zhao Huan at a press conference on Tuesday. “This year, we plan to arrange loans of more than 400 billion yuan for strategic emerging industries and advanced manufacturing.”

CDB is also infusing resources in China’s semiconductor industry amid the intensifying US-China tech war. Zhao said the China Integrated Circuit Industry Investment Fund “has raised 200 billion yuan and fully entered the investment stage”.

That amount is more than what Taiwan Semiconductor Manufacturing Co, the world’s largest dedicated chip foundry, recently budgeted for capital spending. The company’s capital expenditure this year is expected to reach US$28 billion, up from US$17.2 billion in 2020.

CDB’s massive funding support for hi-tech innovation forms part of a state-orchestrated strategy to reduce the country’s reliance on imported technologies, particularly semiconductors. It is an issue that has been aggravated by stifling US trade restrictions imposed against major Chinese hi-tech companies, including telecommunications equipment maker Huawei Technologies Co and chip maker Semiconductor Manufacturing International Corp.

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