China can’t afford another crackdown on its tech companies

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Premier Li Qiang struck an unusually somber tone in his nationwide speech on policy plans, instead touting China’s technological advances.

I heard him speak in person several times over the years, including his first and only speech. He will hold a press conference in 2023 and is as motivational as Chinese politicians can be. But his frank depiction of the challenges and technical goals on Thursday was much more measured in tone.

Quite different from Beijing’s top-down industrial policy — a model started to gain fans. This approach has sparked concern in Washington, which is trying to pursue its own version with CHIPS and the Science Act.

However, excessive state involvement it wasn’t good for China’s aircraft targets, according to a report published last week by Scott Kennedy of the US-based think tank Center for Strategic and International Studies.

Instead, he said, rapid advances are being made where China’s private sector is taking the lead, such as in electric vehicles. Strengthened Beijing’s global status as a technology powerhouse.

State-organized infrastructure still remains important. Government-built charging stations helped bring electric cars to the mass market.

Now China is making computing power available to its domestic AI companies as part of its 15th five-year development plan, which began in January.

But innovation is already happening in the private sector. Just before Li’s speech last week, I stopped by the offices of Beijing-based startup Linkerbot. The company produces mechanical hands for humanoid robots, which attracted global attention last year.

The company has abandoned the idea that it would benefit from special policy support. Instead, the startup said overall industrial development is enabling its technology to move quickly from research labs to real business use.

Linkerbot said its robotic hands have been sold to customers not only in China but also in Europe, Japan and South Korea. And in a refrain I hear more often, Linkerbot claims production times are at least one-sixth that of its foreign rivals, at one-tenth the price.

Beijing’s push to give the private sector more leeway dates back to President Xi Jinping’s term last February. met with technology entrepreneurs.

state owned Changan Automobile It responded by working on in-car technology with Huawei. Collaboration helped the company rise to the top third row China’s new energy vehicles ranking based on domestic sales last year, ahead of Tesla.

Technological advances have attracted international attention.

Changan, based in the southwestern metropolis of Chongqing, said it has hosted numerous government delegations, industry partners and customers from Europe, Southeast Asia, the Middle East and Latin America over the past year.

Chen Wei, president of Chongqing-based fintech company Yucun Keji, said a US delegation of more than 100 young science and technology professionals will travel to the city in about a month.

Chen, who will make a presentation to the US delegation, is also one of Chongqing’s representatives at the National People’s Congress, like Changan’s President Zhu Huarong.

This is the kind of public-private market dance that businesses in China have had to carry out for a long time.

But this year the risks are higher. With tariffs, wars abroad and slowing growth at home, China’s technology companies bear an increasing national responsibility. This is something Beijing does not want to discourage.