The Diplomat
Overview
Tech Policy at China’s 2024 Two Sessions
Associated Press, Mark Schiefelbein
China

Tech Policy at China’s 2024 Two Sessions

From EVs to AI, China is pinning its hope for robust economic growth on its booming tech sector.

By Nico Han and Ariel Silverman

This year, one clear message that emerged from China’s “Two Sessions” – the annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference – is the China Communist Party’s ongoing focus on technological development. What technology policies were reiterated in these sessions?

China’s bid to guide industry and R&D to fulfill development principles of strategic importance boils down to four main directions: modernizing industrial systems and strategic emerging industries (replacing the “Old Three” with the “New Three”), pushing for independent development of core technology, fostering the ecosystem of artificial intelligence, and deepening the national market and penetrating international markets through the Belt and Road Initiative (BRI).

The official discourse highlighted significant progress in modernizing industrial system and strategic emerging industries, especially advanced manufacturing relating to exports. Exports volumes of the so-called “New Three” items – electric vehicles (EVs), lithium batteries, and photovoltaic products – grew by nearly 30 percent in 2023. The EV industry experienced particularly notable growth; China’s EV exports came in at $34.1 billion in 2023, 70 percent higher than the previous year’s figure.

These booming industries bolstered China’s exports amid sluggish overall economic growth and the declining share of exports in the “Old Three” items: household appliances, furniture, and clothing.

The Two Sessions emphasized Beijing’s intent to stabilize foreign trade volumes and optimize these emerging strategic exports amid ongoing China-U.S. decoupling. The United States severely restricts EV imports with a 27.5 percent tariff on Chinese-made EVs (compared to 10 percent in the EU) to support domestic manufacturing and supposedly protect crucial national security interests. As a result, China is expected to increase strategic exports to the EU and BRI-participating countries.

The government work report delivered at the National People’s Congress also stressed achievements in core technology and high-end equipment. The report highlighted advancements in aviation engines, gas turbines and fourth-generation nuclear power units. The transaction volume of core technology contracts increased by 28.6 percent in 2023.

The digital economy also accelerated in 2023, with the penetration rate of 5G users exceeding 50 percent. Such progress is supported by artificial intelligence and quantum computing technologies’ integration in advanced manufacturing processes – a trend that will likely only accelerate in coming years according to one state publication, the Global Times.

Looking ahead, China intends to shepherd the growth of the entire ecosystem of artificial intelligence (AI). One of the most significant questions raised at the Two Sessions was how to maximize the benefits of AI while establishing a plan to prevent privacy infringements, intellectual property rights disputes, and the spread of false information.

NPC delegate Liu Qingfeng, who is also the CEO of iFlytek, a partially state-owned information technology firm, proposed recommendations based on the General AI Development Guidelines originally released in 2017. The guidelines advocate that the central government formulate a national AI development framework equipped to achieve the following outcomes:

  • To leverage the advantages of a coordinated national system and increase and maintain sustained investment in the “main battlefield” of general large-scale model foundational capabilities.
  • To accelerate the formation of an independent and controllable industrial ecosystem centered around domestically produced large-scale models.
  • To promote the opening and sharing of high-quality training data at the national level.
  • To introduce more objective, fair, and credible evaluation methods to accelerate the application of large models in various industries including finance, industry, automotive, culture and tourism, government affairs, education, and healthcare.
  • To research talent competency models and training programs for the era of general artificial intelligence.
  • To expedite the formulation and review of laws and regulations related to general artificial intelligence technology.
  • To conduct research on humanities and ethics related to AI.

Liu’s proposal was then circulated by official state media, signaling a high possibility that it will be enacted in the coming year.

Finally, the Two Sessions highlighted other areas that could contribute to China’s economy in the future, including technology related to new energy vehicles, hydrogen energy, new materials, innovative drugs, bio-manufacturing, and commercial aerospace. The state sees its role as actively nurturing these industries, expanding applications, promoting integrated clusters with related technology, and encouraging venture capital and equity investments.

Certain elements of China’s unique governance structure give it an advantage in the global race for developing strategic technologies. The unified and integrated decision-making system unique to China means that funds can be swiftly allocated to strategic industries such as advanced semiconductors. In that context, Premier Li Qiang emphasized a continuation of policies to encourage state-owned enterprises, private enterprises, as well as foreign-funded enterprises, building on the string of regulations produced since 2020.

China also enjoys a lower-end market and relatively lax data restrictions in the domestic market. Meanwhile, U.S.-led barriers on Chinese students seeking to study abroad further aided the return of overseas talents, with STEM students increasingly preferring to return to China after studying abroad. This adds to China’s already- robust STEM talent pipeline, with 75 percent of Chinese Ph.D. students specializing in STEM fields.

Nevertheless, significant challenges remain. It is unclear whether the efficiencies realized through high-end manufacturing advancements and AI integration will be able to compensate for a weak domestic market and help China realize its ambitious 5 percent growth rate target.

Moreover, although China is leading its Western counter parts in many emerging and critical technologies such as hypersonic and 5G and 6G telecommunication technologies, China-U.S. decoupling continues to pose significant challenges for the country. Despite significant investment in the semiconductor industry, China-made chips lag behind the global standard, maintaining China’s dependence on foreign manufacturing.

Want to read more?
Subscribe for full access.

Subscribe
Already a subscriber?

The Authors

Nico Han conducts policy and market intelligent research on the Greater China area. She is the co-founder and director of multiple young professional-focused organizations based in the U.K. and Canada. She worked at CSIS and the Wilson Center in Washington, DC. Nico holds a Master of Philosophy from University of Oxford, and she is a Yenching Scholar at Peking University.

Ariel Silverman is a Yenching Scholar at Peking University. She has led independent research in South America and Asia, focusing on the intersection of law and technology. Ariel Silverman graduated from Harvard College in 2023 with an A.B in Social Studies.

China
China-Russia Relations Have Surged Forward Since the Ukraine War Began
China
Sunflower Movement 10th Anniversary Reflects Taiwan’s Current Political Divisions