According to President Xi Jinping’s plan, China will invest approximately 1.4 trillion. dollars within 6 years to 2025 in new technologies. It calls on local authorities and technology giants such as Huawei to build 5G mobile networks, install cameras and sensors for and develop artificial intelligence (AI) software on which to base autonomous driving systems, automated factories and mass systems. observation.
The new infrastructure initiative is expected to become an engine for the growth of giants such as Alibaba, Nuwei and GeneTime Group at the expense of US companies. Against the backdrop of growing “technological nationalism”, President Xi’s investment plan will reduce China’s dependence on foreign technology – a goal that was set with the announcement of the “Made in China 2025” program. These initiatives have met with sharp criticism from the administration of US President Donald Trump, which is laying the groundwork for slowing the rise of Chinese technology companies such as Huawei.
“Nothing like this has happened before. This is the bet that China hopes to win the global technology race,” said Digital China Chief Executive Officer Mapia Kyok of her Hong Kong office, surrounded by a camera. From this year, we are really starting to see how cash flows are flowing in this direction, “she added.
The investment in the technology sector is part of a $ 563 billion fiscal package awaiting approval from authorities that should help China deal with the worst recession since Mao’s time.
The largest cloud computing service providers, Alibaba and Tencent, will be at the heart of the venture, with leaders Jack Ma and Ma Huateng expressing support for the program. Beijing has already commissioned Huawei to distribute 5G technology.
However, there is no guarantee that this program will bring the desired economic boost. Unlike Beijing’s previous large-scale projects, such as highways and bridges, this new digital infrastructure will help state champions develop new cutting-edge technologies.
In addition, China is not alone in the race for dominance in the technology sector since the COVID-19 pandemic subsided. Earlier this month, South Korea announced that artificial intelligence and wireless communications would be at the heart of its “new deal” to create jobs and boost growth.
According to the state-sponsored China Center for Information Industry Development, Beijing will spend the aforementioned 10 trillion yuan ($ 1.4 trillion) on investments mainly in the AI and Internet of Things sectors, as well as on developing the country’s high-speed rail network.
A separate estimate by Morgan Stanley estimates China’s investment in new digital infrastructure at about $ 180 billion a year over the next 11 years, or a total of $ 1.98 trillion. dollars. The biggest beneficiaries of this plan will be companies such as China Tower Corp., Alibaba, GDS Holdings, Quanta Computer Inc. and Advantech Co.
Beijing’s vision is already affecting the shares of a number of companies, which is the main reason why 5 of the 10 best performing Chinese companies on the stock exchanges this year are from the technology sector, such as network equipment manufacturer Downing Information Industry Co. and a supplier of parts for Arrle – GoerTek Ins.
US companies are unlikely to benefit from investments in the technology sector, and in some cases they will lose existing business. Earlier this year, China Mobile, China’s largest telecom, contracted 37 billion yuan to build 5G networks, with the lion’s share of that amount going to Huawei and other local companies. Swedish telecommunications equipment maker Ericsson received just over 10% of orders in the first four months of the year.
In one of its projects, Digital China will help the northeastern city of Changchun to replace the cloud services of the American companies IBM and Orasle with local technology.
It is the data centers that will be among the places that will receive the most financial support. More than 20 Chinese provinces have introduced policies to support companies using cloud services, according to UBS.
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