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  • China to Pour More Money Into Chips, AI and 5G to Catch U.S.

    China to Pour More Money Into Chips, AI and 5G to Catch U.S.

    (Bloomberg) -- China pledged to boost spending and drive research into cutting-edge chips and artificial intelligence in its latest five-year targets, laying out a technological blueprint to vie for global influence with the U.S.Chinese Premier Li Keqiang singled out key areas in which to achieve “major breakthroughs in core technologies,” including high-end semiconductors, operating systems, computer processors and cloud computing -- areas in which American firms now hold sway. Beijing will also aim to get 56% of the country on faster fifth-generation or 5G networks. Nationwide R&D spending will increase by more than 7% annually, which “is expected to account for a higher percentage of GDP” than during the previous five years, he added.China is moving quickly to cut its dependence on the West for crucial components like computer chips, an issue that became more urgent after a global shortage of semiconductors worsened during the pandemic. Beijing is also making big bets on emerging technologies from hydrogen vehicles to biotech while looking to ensure its own chipmakers can compete with the likes of Intel Corp. and Taiwan Semiconductor Manufacturing Co. That encompasses a new emphasis on silicon design software and so-called third-generation chipmaking -- two areas critical to Beijing’s drive to achieve technology self-sufficiency.“Innovation remains at the heart of China’s modernization drive,” Li said in an address to the National People’s Congress in Beijing on Friday. “We will strengthen our science and technology to provide strategic support for China’s development.”Li’s speech punctuated goals enumerated in China’s 14th five-year plan, also released Friday, which prioritized advances in younger spheres such as quantum computing, neural networks and DNA banks. The document enshrines a multi-layered strategy both pragmatic and ambitious in scope, embracing aspirations to replace pivotal U.S. suppliers and fend off Washington, while molding homegrown champions in emergent fields.Chipmakers including Shenzhen Goodix Technology Co. and China Resources Microelectronics Ltd. rose more than 3% on mainland bourses in the afternoon. But Hong Kong-listed Semiconductor Manufacturing International Corp., China’s largest chipmaker, slipped in tandem with a broader global tech-shares selloff.Read more: China Sets Conservative Economic Growth Target of Above 6%At stake is nothing less than the future of the world’s No. 2 economy. Beijing is moving swiftly while the Biden administration escalates a battle against what it called “techno-autocracies.” That could extend or even expand blacklistings that banned key transactions with corporations from Huawei Technologies Co. to ByteDance Ltd. and Tencent Holdings Ltd.To a country that imports $300 billion of chips annually, a worsening global shortage drives home the risk of relying on potentially hostile suppliers for the building blocks of everything from AI to next-generation networks and autonomous vehicles. Friday’s report formalized China’s ambitions to develop its own software for semiconductor design -- supplanting tools from American firms Cadence Design Systems Inc. and Synopsys Inc.It also pledged to develop its own advanced chip manufacturing technologies and key materials that comprise third-generation chips. The country aims to secure first-mover advantage in that nascent arena, involving compounds such as silicon carbide and gallium nitride and chips can operate at high frequency and in higher power and temperature environments, with broad applications in fifth-generation radio frequency chips, military-grade radar and electric vehicles.While specifics of that endeavor won’t emerge for months, Friday’s documents provided important clues about the envisioned roadmap. That includes building more national laboratories and innovation centers, as well as ramping up efforts to implement a little-heard of program called the Sci-Tech Innovation 2030 Agenda. Beijing also revealed plans to try and entice more talent from abroad via a “technology immigration system,” likely targeting semiconductor hotbeds from Silicon Valley to Taiwan.Read more: China Deals Fresh Blow to Tech Giants in Reach for DataOpen sharing of data will be key, according to the report. Beijing is establishing a platform for sharing public and government data, while simultaneously crafting policies to ensure the security of that information. In a related move, the five-year plan called on technology giants such as Alibaba Group Holding Ltd. and Tencent Holdings Ltd. to share key data, dealing a further blow to companies already reeling from heightened antitrust scrutiny.“Basic research is the wellspring of scientific and technological innovation,” Li said. “So we will ensure the stable functioning of funding mechanism for basic research and boost spending in this area by a considerable sum.”(Updates with share action from the sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • China Deals Fresh Blow to Tech Giants in Reach for Data

    China Deals Fresh Blow to Tech Giants in Reach for Data

    (Bloomberg) -- China called on its technology giants to share key data, dealing a further blow to the companies already reeling from heightened antitrust scrutiny.Companies are encouraged to open up data related to areas from search to e-commerce and social media, in order to promote the healthy development of the sharing and online economies, according to a government report outlining the Communist Party’s top priorities for the next five years. Beijing is also establishing a platform for sharing public and government data.While Xi Jinping’s government has long identified data as a key resource, it’s the first time that the opening up of data amassed by private-sector companies has been included in the country’s top economic guidelines. Beijing in November launched a sweeping crackdown on alleged monopolistic practices in its giant internet industry, worried about the growing influence of its largest private corporations thanks to the vast swathes of information they’ve hoovered up.Industry behemoths Alibaba Group Holding Ltd. and Tencent Holdings Ltd. as well as up-and-coming competitors like ByteDance Ltd. and Meituan have at their disposal vast amounts of proprietary information, gathered from the hundreds of millions of consumers shopping on their platforms and using social-media apps like WeChat and Douyin. Surrendering that data could undermine their market-leading positions and deal a heavy blow to their ability to squeeze out smaller competitors.Antitrust regulators in November unveiled new rules to stamp out monopolistic practices in its tech industry, cracking down on practices such as forced exclusive arrangements with merchants known as “Pick One of Two” to algorithm-based prices favoring new users. Beijing also intends to better regulate the collection and use of consumer data, according to a plan by the general offices of the powerful Communist Party Central Committee and the State Council, the cabinet.The 14th Five Year Plan released on Friday didn’t provide specific details on how companies should share their data.“China’s thinking on data policy has made a game-changing evolutionary leap,” Kendra Schaefer, head of digital research at Trivium China in Beijing, said before the National People’s Congress. “Increasingly, in the eyes of Chinese policymakers, creating the legal and technical infrastructure to support the marketization of data is not a nice-to-have, but an immediate economic imperative.”Data ownership and security has long been a flash point between China and rival nations, especially the U.S. Under the Trump administration, Washington had sought to ban services by ByteDance and Tencent, arguing that the companies could allow Beijing to gather data from tens of millions of American users. Corporations are already required to provide access to their technology and assist with investigations involving crime and national security, under a 2017 Cybersecurity Law.Beijing’s stance is echoed by at least one of its tech moguls. “To grab users, every app is spending huge resources in building up content that can only be viewed within the app,” Baidu Inc.’s Robin Li said in a proposal to China’s top lawmaker. The effectiveness of his company’s leading search engine relies on open online information. “They become ‘information islands’ separated from each other.” He suggested the government set up a pilot program to break up such barriers among internet services vital to daily lives.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Baidu Said to Win Hong Kong Bourse Nod for Second Listing

    Baidu Said to Win Hong Kong Bourse Nod for Second Listing

    (Bloomberg) -- Chinese search engine giant Baidu Inc. has secured approval from the Hong Kong stock exchange for a second listing in the city, according to people familiar with the matter.Nasdaq-listed Baidu plans to launch its share sale as soon as next week, the people said, asking not to be identified as the information is private. The offering could raise at least $3.5 billion, Bloomberg News has reported.A representative for the company declined to comment. Shares in Baidu fell 6.2% in the U.S. on Thursday amid a selloff in technology stocks.Baidu follows online car-sales website Autohome Inc. in seeking a trading foothold in the Asian financial hub this year, after a wave of such share sales in 2020 which saw some $17 billion raised. Other companies looking at selling shares in the city include Tencent Music Entertainment Group and video companyA wave of U.S.-listed Chinese firms have been listing in Hong Kong since Alibaba Group Holding Ltd. kicked off the trend in late 2019. Deteriorating relations between the world’s two biggest economies have risked threatening Chinese companies’ access to America’s capital markets. The second listings also enable the companies to expand their investor bases closer to their home markets.Read more: Baidu’s Back With an $80 Billion Rally and Electric Car AmbitionOnce one of China’s big three tech leaders alongside Alibaba and Tencent Holdings Ltd., Baidu is now playing catch-up as the country’s internet users increasingly shift from desktop to mobile. It began years ago to sink billions of dollars into areas from language learning to voice interaction and autonomous driving, betting on smart devices and vehicles of the future. But that endeavor ran into trouble in the initial stages, capped by the departures of several pivotal executives.Now, aided by steady investment in R&D and Beijing’s focus on developing smart nationwide infrastructure, commercialization cases are finally coming to the fore: in January, the company announced it’s teaming up with Zhejiang Geely Holding Group to produce smart electric vehicles. The tie-up is intended to help Baidu deploy its Apollo self-driving tech in more vehicles, a person familiar with the matter has said.(Adds Baidu’s shares in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.