China is focusing on technological innovations as it navigates a high-stakes rivalry with the US. At the Two Sessions, the country has pledged to increase investment in high-tech industries and scientific innovation to enhance self-reliance and national security amid intensifying competition.
Premier Li Qiang highlighted China's resilience against tariff hikes by the Trump administration while expressing concerns over the strained multilateralism and diminished free trade globally.
Key strategies unveiled during the meeting include a 7 percent rise in research & development and defense spending. Additionally, Beijing plans to inject 300 billion yuan into state-owned banks to provide financing for tech firms. The 15th five-year plan outlines significant investments in innovation and industrial upgrades, with a target for "digital economy industries" to contribute 12.5 percent to GDP.
Future focus areas for China encompass semiconductors, AI, biomedicine, machine-brain interfaces, and drones. The country aims to double the number of electric vehicle systems within three years and establish "hyper-scale" computing clusters powered by cost-effective energy sources.
Andy Ji, an analyst at ITC Markets, noted that China is transitioning towards a technology-driven economy, emphasizing AI and advanced manufacturing.
In addition to its tech initiatives, China has set a more conservative growth target of 4.5-5 percent for the year, reflecting a shift towards structural health over rapid expansion. Fred Neumann, chief Asia economist at HSBC, emphasized China's focus on fostering technological advancements and high-tech investments, albeit potentially slower progress in rebalancing the economy towards consumption.
