China is entering the new year with its tech ambitions under a Covid cloud. The enormous cost of the now abandoned zero-Covid policy has badly strained government finances, and the communist party’s pledge to build a world-beating chip industry, already reeling from American sanctions, is falling victim to the familiar ills of cost, waste and corruption.
A much hyped one trillion yuan ($145 billion) investment plan is reportedly on hold. Costly subsidies have born little fruit but they have encouraged graft and provoked sanctions. As a result, government officials are looking at alternative ways of encouraging growth in the semi-conductor industry, according to Bloomberg.
The problems with the chip programme have raised broader questions about whether China’s increasingly autocratic system is capable of innovation
Xi Jinping has pledged that China will ‘resolutely win the battle in key core technologies’, and a domestic semi-conductor industry is fundamental to that ambition. Chips are crucial to the production of products ranging from smartphones to laptops, cars, aircraft and even cookers and refrigerators.
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