The official media of the Communist Party of China (CPC) have recently published articles encouraging “self-reliance” in chip manufacturing, and from the central government to local governments have invested money in the chip industry, which has been accused of creating a bubble. The picture shows huawei‘s lab.
A few days after the end of the two sessions of the National People’s Congress (NPC), party media outlet Quyi published a speech Xi Jinping made at a conference of the Chinese Academy of Sciences three years ago, revealing the CCP’s ambition to become the world’s “scientific center and innovation hub. But the 14th Five-Year Plan released at the two sessions inadvertently gave away the CCP’s underhandedness and hardness in the field of science and technology.
Xi Jinping’s Speech Reveals CCP’s Ambition for Science and Technology Domination
On March 15, 2021, the party media Quyi magazine published Xi Jinping’s so-called important speech at the CAS conference three years ago (original text), in which Xi Jinping said he wanted to “become the world’s major scientific center and innovation highland” and that “we need to build a world science and technology power more than at any other Time in history. a world power in science and technology”.
On May 28, 2018, Xi Jinping attended and delivered a speech at the opening of the 19th General Assembly of Academicians of the Chinese Academy of Sciences and the 14th General Assembly of Academicians of the Chinese Academy of Engineering at the Great Hall of the People in Beijing.
Xi Jinping speaks at the 19th General Assembly of Academicians of the Chinese Academy of Sciences and the 14th General Assembly of Academicians of the Chinese Academy of Engineering on May 28, 2018.
Xi said at the conference that “China must vigorously develop science and technology if it wants to be strong and rejuvenated. He stressed that the new round of scientific and technological revolution and industrial change is reshaping the world, and “science and technology have never had such a profound impact on the future Destiny of the country as they do today”; and the CPC is “faced with both a once-in-a-lifetime historical opportunity and a serious challenge of widening the gap”.
The outline of the 14th Five-Year Plan of the CPC
Just four days before the article was published in “Seeking Truth,” the CPC officially released the outline of the 14th Five-Year Plan at its two sessions. The outline is composed of 19 articles, 17 of which are in fact the first and last, of which the second article at the top is the science and technology strategy of “insisting on innovation”, and even “digital development” is listed as the fifth article, which fully reveals the CCP’s attitude towards science and technology in the present and future. The 14th Five-Year Plan
“The outline of the 14th Five-Year Plan places “self-reliance and self-improvement in science and technology” as a strategic support for national development, proposes to “strengthen the national strategic science and technology force” and improve the CCP’s The “new type of state system”.
Current affairs commentator Li Linyi pointed out that Xi Jinping’s rehashing of old words, especially his claim to become “the world’s leading scientific center and innovation highland” instead of one of them, coupled with the two sessions of the National People’s Congress, which put the science and technology strategy on the top of the agenda, once again highlights the CCP’s ambition for technological domination.
Since 2018, the CCP’s strategic initiatives such as “Made in China 2025,” civil-military integration and theft of advanced foreign technologies have been subject to a series of crackdowns by the U.S. Trump administration, and the CCP has significantly toned down the propaganda tone of its science and technology strategy in recent years.
The bottom of the 14th Five-Year Plan: The gap between the CCP’s science and technology innovation and the U.S. is widening again
The 14th Five-Year Plan launched 20 columns, including 4 columns: Column 2 , Column 3 , Column 8 , and Column 9 , which are directly related to science and technology.
(Screenshot of Column 1 of the 14th Five-Year Plan of the Communist Party of China )
Column 1 also lists “innovation-driven” as the second category of indicators after “economic development”, including The three innovation indicators include: the growth of investment in R&D (%), the number of high-value invention patents per 10,000 population (pieces), and the proportion of value added of core industries in digital economy to GDP (%).
Column 1 proposes the main social development targets, and sets the representative indicator of science and technology strategy – the growth of R&D expenditure in society as a whole – as “an average annual growth of more than 7%, striving for an investment intensity higher than that of the actual ’13th Five-Year Plan’ period. “.
Column 2 is the skeleton of the CPC’s long-term planning outline; the amendment to the R&D indicator – “the proportion of investment in basic research to the investment in R&D will be increased to more than 8%” – is also an important indicator in the CPC’s science and technology strategic plan.
The intensity of R&D investment (GERD/GDP), i.e. the proportion of society-wide R&D expenditure to gross domestic product (GDP), has been one of the core indicators of a country’s science and technology innovation capability. It indicates how much resources a country is willing to devote to R&D activities and reflects the importance of science and technology in the whole country. “GERD” is an acronym for Gross domestic expenditure on R&D. “R&D” is an acronym for Research and Experimental Development (R&D).
What is the reality of the CCP’s strategic plan to become a “scientific center and innovation hub”?
For many years, the CCP has been advocating scientific and technological innovation. However, in terms of R&D intensity, an indicator of research strength, China’s investment in research has been growing over the past 20 years, but it does not match its status as the world’s second largest economy.
(Comparison of R&D investment intensity between China, Japan, Korea and Germany, 2000-2019 / Source: OECD)
For example, China’s total R&D investment has been ranked second in the world since 2013, and its R&D intensity has grown from 0.75% in 1999 to 2.23% in 2019; however, there is still a considerable gap compared to the R&D intensity of developed countries such as the US at 3.07%, Germany at 3.18%, Japan at 3.24% and Korea at 4.64% in the same year (data for each country from OECD).
More importantly, the CCP seems to have run out of steam in catching up with the U.S., and in recent years has been re-distanced by the U.S. in terms of R&D intensity.
The 13th Five-Year Plan, for example, set a goal of increasing R&D investment intensity by 0.4 percentage points over five years, to reach 2.5% by 2020. However, the current situation is that China’s R&D investment intensity is 2.23% in 2019, and only 32.5% of the planning progress has been completed in the first four years.
(Total R&D investment and investment intensity in China from 2010-2019 / Source: National Bureau of Statistics of the Communist Party of China)
Comparing again the total amount of investment in R&D funding and the intensity of investment in China from 2010-2019, we can see that although China’s investment in R&D funding is growing, the rise in the intensity of investment is slowing down and the curve of R&D intensity is flattening.
Comparison of R&D intensity between the U.S. and China, 2010-2019 (Source: Organization for Economic Cooperation and Development OECD)
The gap between China’s “R&D intensity” and that of the U.S., the main target of the CCP’s technology theft, has indeed been narrowing for most of the past 20 years, from 1.8 percentage points in 1999 to 0.66 percentage points in 2015. In 2015, the difference was 0.66 percentage points.
But since 2016, the gap between China and the U.S. in R&D intensity has started to widen again: from a gap of 0.69 percentage points in 2016, to 0.84 percentage points in 2019.
It is worth mentioning that Trump took office at the end of 2016, and during his tenure the U.S. government began to be vigilant against the infiltration of the Chinese Communist Party (CCP) and to counter the CCP’s theft of U.S. technology.
The 14th Five-Year Plan’s Science and Technology Indicators “Big Release”
In stark contrast to Xi’s ambitious speech at the CAS conference, the CCP’s 14th Five-Year Plan is “watered down” in terms of science and technology targets.
For example, the 14th Five-Year Plan does not follow the old practice of setting quantitative targets for the most important science and technology evaluation criterion – “R&D investment intensity” – but gives a vague statement: the annual average growth of social R&D investment is more than 7%, and the investment intensity is higher than that of the “13th Five-Year Plan”. The actual investment intensity in the 13th Five-Year Plan period.
In fact, according to the official communication of the CPC, the annual growth of China’s R&D investment during the 13th Five-Year Plan period (the data for 2020 has not yet been released) is in double digits. In other words, the average annual growth rate of R&D investment set in the 14th Five-Year Plan (above 7%) is not as high as the actual level of the previous Five-Year Plan, reflecting the importance the CCP attaches to science and technology and innovation capabilities, which is decreasing rather than increasing.
According to CCP statistics, the target of “R&D intensity” set by the CCP in its science and technology development plan has never been achieved in the past 20 years.
In the Tenth, Eleventh, Twelfth and Thirteenth Five-Year Plans, the targets set for R&D investment intensity were The planning targets were 1.55 (1.32% in 2005); 2% (1.75% in 2010); 2.2% (2.1% in 2015); and 2.5% (2.23% in 2019, less than one-third of the planning progress).
Commentator Li Linyi said, compared with Xi Jinping’s bold words three years ago, the vague expressions of the CPC’s 14th Five-Year Plan and the big release of science and technology indicators reveal that the CPC is now out of money, so it cannot guarantee the investment in scientific research, and can only “strive” for a higher investment intensity than the 13th Five-Year Plan. The “13th Five-Year Plan” period.
The second bottom of the 14th Five-Year Plan: Insufficient investment in basic research
Although the 14th Five-Year Plan of the Chinese Communist Party has released signals that it wants to compete with the United States in areas such as chips (integrated circuits), artificial intelligence, and quantum technology, it has also revealed several hard wounds in its science and technology strategy.
In addition to its inability to guarantee the intensity of investment in scientific research, another major science and technology weakness of the CPC is the lack of investment in basic research.
The 14th Five-Year Plan for Science and Technology proposed that “the proportion of investment in basic research to investment in R&D should be increased to more than 8%”.
However, according to the official data of the CPC, even the ratio of basic research funding hit a new high in 2019, breaking 6% for the first time, reaching 6.03%, and breaking 5% for the first time in 2015, reaching 5.1%; this indicator of the CPC is also far from that of the US and European countries.
The share of basic research funding in the United States exceeded 10% back in the 1960s, and the share has remained stable between 16% and 20% for the past 20 years, and the ratio in Europe and the United States has generally remained in this range.
In other words, the proportion of investment in basic research in China over the years is only one-third of that in developed countries in Europe and the United States.
Basic research is regarded as the cornerstone of science and technology innovation. The proportion of investment in basic research represents a country’s innovation capability and is the key to breakthroughs in frontier or core technologies. For example, in Japan, the proportion of basic research investment to total R&D expenditure has remained above 20% for a long time during its rapid growth.
According to a study by mainland scholars Sun Yutao and Wang Xi 2021, “Increasing government R&D funding to cope with Sino-US competition” (original article), it is mainly universities and government research institutions that are engaged in basic research in China, and the funding is mainly fiscal funds. Insufficient government investment in R&D funding makes it difficult to lay out basic research in the long term and affects the ability to improve innovation at source. According to the article, the Chinese Communist Party authorities should increase government investment in R&D in order to solve the problem of “stuck” technologies.
According to a report by the self-published “Innovation Research” (original article), since the 1950s, basic research investment in the United States has almost quadrupled as a percentage of gross national product, and the share of basic research in R&D funding has nearly doubled.
The paper points out that although the U.S. basic research funding is also predominantly federally funded, the corporate sector also accounts for a significant share of government-led investment. The share of the federal government’s investment in basic research remained between 44% and 69%, and companies were the second largest funder, with a share of 15% to 34%.
Compared with the diversified basic research investment in the United States, according to the Communist Party of China’s Statistical Bulletin on Science and Technology Investment, China spent 133.56 billion yuan on basic research in 2019; among which enterprises invested 5.08 billion yuan, accounting for only 3.8% of basic research funding, and the ratio was only 1/10 to 1/5 of that in the United States.
The target of raising the proportion of basic research investment to 8% proposed in the 14th Five-Year Plan is not only far behind the level of the United States and Europe, but also faces the real problem of the lack of money of the Chinese government and the reluctance of the corporate sector to invest.
The bottom of the 14th Five-Year Plan: Science and technology management chaos and serious corruption in scientific research
The second part of the 14th Five-Year Plan proposes to “improve the institutional mechanism of scientific and technological innovation”, including the implementation of the “unveiling of the list to hang”, “horse race” and other scientific and technological management system.
“In fact, in recent years, governments around the world have begun to experiment with similar scientific research policies. For example, in 2017, Guizhou Province launched a technology list system, and in 2018, Guangdong Province piloted a list-revealing system for major science and technology projects in strategic emerging industries.
The Communist Party of China (CPC) authorities have recently introduced policies such as the “unveiling of lists” in an attempt to address China’s chronic problems of chaotic science and technology management and serious corruption in scientific research.
According to the Xinjing News (original report), on April 17, 2019, the Ministry of Education of the Communist Party of China (MOE) issued a notice requiring university researchers to refrain from falsifying science and technology projects, research funds, and awards and honors.
The notice from the Ministry of Education is not an unwarranted one, as cheating the Communist Party’s education and scientific research funds and even national defense R&D funds, etc., has long been the unspoken rule in Chinese scientific research practice.
Wuhan “Hongxin” 100 billion chip scam exploded last year. (Screenshot of Wuhan Hongxin’s official website)
For example, in the field of chips, which the Chinese Communist Party is most interested in breaking through, there have been a number of core-making scams that have shocked the nation. The most famous of them are the 863 “Hanxin Project” in 2003, and the 100 billion dollar chip scam of Wuhan “Hongxin” which exploded last year.
“The 863 Program, known as the National High Technology Research and Development Program, is a national basic research program led by the Communist Party of China (CPC) government, which ended in 2016.
The Hanxin Project, released by the Shanghai Municipal Government in 2003, was one of the major parts of the 863 Project. The “Hanxin” chip was actually purchased from the United States and forged by civilian workers after polishing off the original logo. The “Hanxin” chip was not only verified by domestic authoritative experts as China’s first DSP chip with independent intellectual property rights, but also directly cheated the Chinese Communist Party out of hundreds of millions of yuan in research funds, and caused 1.1 billion yuan in losses to Shanghai Jiaotong University and many other institutions.
Wuhan Hongxin, established in 2017, claimed a total investment of RMB 128 billion and had been listed as a key project by the Wuhan and Hubei governments, with a cumulative investment of 15.3 billion yuan completed by the end of 2019. 2020 the project rotted and was revealed to have laid off all its employees.
Commentator Li Linyi said that the 14th Five-Year Plan’s new policies on science and technology, such as the “unveiling of the list”, are a disguised acknowledgement of the seriousness of corruption in China’s scientific research; and whatever the new policies are, they are constrained by the CCP’s corrupt political system, making it difficult to change the reality of China’s chaotic science and technology management.
Li Linyi believes that the 14th Five-Year Plan released by the CCP has exposed the shortcomings of its science and technology system and the CCP’s lack of interest in science and technology innovation. The U.S. government needs to be highly vigilant about the CCP’s 14th Five-Year Plan trends and technology theft.
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