Get ready for global technology war & end of globalization as we know it – China unveils ambitious 5-year plan

Beijing remain’s resolutely committed to increasing the nation’s financial prowess in the face of growing anti-China sentiment on the world stage and a simmering ‘Cold War’ with Washington.

Today the Communist Party of China wrapped up a very important week-long meeting. Known as the “fifth plenum” of the party’s central committee, the leaders of China released a communiqué which set out their immediate goals, political priorities and vision for the country’s future, including its new five-year economic plan. 

The fourteenth of its kind since the revolution of 1949, the plan sets out several goals including increasing GDP to 100 trillion yuan ($14.89 trillion) by the end of this year, internalising economic production and consumption, technological innovation, green development and reducing inequality. There are also plans for increased support for Hong Kong in light of recent unrest and, in a first for such schemes, a timeline for establishing a ‘Great Socialist Culture’ by 2035.

The release comes at a very important time, in the midst of a changing international environment whereby the country faces unique challenges in light of an increasingly hostile United States as well as the spread of anti-China sentiment to other nations around the world. 

What does this mean for the wider world? This if anything is a reaction to a changing world, a revelation that China and the West are increasingly apart, particularly in the field of technology, and may be set on ever diverging paths. The technology war initiated by Trump is heating up. 

With Washington having sought to suppress the country’s access to crucial strategic sectors, the communiqué sets out “self-reliance” as one of its most important goals. China wants to catch up and power ahead orientating the country’s economic development “inwards” as trade tensions and uncertainties grow. Thus, inevitably, a world of two distinct tech spheres is crystalizing.  

The end of globalization?

It is not surprising that China has been one of the biggest advocates and supporters of “globalization”– something even its critics would agree on. It was, after all, the neoliberal world as formulated in the 1980s and 1990s which ultimately helped propel Beijing’s rise to an economic and manufacturing giant, combined with an atmosphere of reconciliation with Washington. As Deng Xiaoping initiated economic reforms, the country became the beneficiary of Western outsourced manufacturing, as well as opening up its markets to foreign investment, and subsequently took off. 

However, that world is steadily slipping out of existence. The golden days are long gone. Whilst China remains, and will long remain, an unmatchable industrial power at the core of so many supply chains, the openness of the post-Cold War world is dead. Instead, nationalist and identity driven movements around the West have emerged denouncing globalization and effectively started to reverse it. This is, of course, intertwined with China’s own troubles with Trump, who has blamed the depletion of American industries on Beijing. He has slapped tariffs on Chinese goods, aspiring to return manufacturing to the US.

Despite the lack of realism in the president’s proposals, the newfound hostility towards China is real, and this has intertwined with existing anxiety over China’s increasing global power to create a Cold War-like atmosphere in Washington. The era of “reconciliation” and warmth between Beijing and the wider West is over. 

The subsequent spread of anti-China sentiment which Washington’s narratives have fomented around the world has already begun to have consequences, just look how Huawei has found itself banned in multiple locations. The “openness” which Beijing thrived on is fading, and as the United States pursues confrontation whilst hammering Chinese technology firms such as Huawei. Beijing recognises new strategies are needed for this new world.

The drive for self-reliance

Most urgently, China needs to find a way to sustain its development and also uphold its technological advances which Washington is so desperate to quash. The answer is “self-reliance”: the idea that China, a nation with 1.4 billion people and a growing consumer base at home, can find its biggest strengths from within. 

If certain countries are aiming to force China out, it must prepare for that, and, likewise, as Washington weaponizes the supply chains of high-tech components which it controls (such as semiconductors), it must “decouple” itself from the United States and invest in its own capabilities to plug the gap on this weakness. 

As a result, China pledges to rapidly increase its research and development budget and thus lessen its dependency on goods which America sees as pure strategic leverage, especially if companies such as Huawei are to continue to be global contenders. 

However, this will not mean a complete retreat inwards as, in the words of the deputy director of the Office of China’s Central Commission for Financial and Economic Affairs, Han Wenxiu, “decoupling is basically not realistic, and there’s no benefit for China or the US, or the entire world.”

Global implications

China is not about to abandon the opportunities available in foreign trade and investment. In many areas not a lot will change but the drive for technological self-reliance is nonetheless a sign that the world may ultimately see itself divided into two spheres of innovation and technology, a trend started by the White House but one which has been consolidated as a global trend. 

Business with China will not end, but the idea of “co-dependency” and “integration” in crucial areas certainly will. If reliance on China lessens, certain things also may become more expensive at home, and the tech companies themselves could be hurt.

The US and its allies do not want to be dependent on, or supplementary towards China in these fields and as a direct consequence nor is this feasible for Beijing itself. The ultimate impact of all this is that China’s new Five Year plan affirms the inevitability of a global technology war and the end of globalization as we knew it. Words such as “self-reliance” may cloud the fact China will be heavily integrated into global business everywhere we look, but they also imply that in some ways this is no longer feasible. Tough decisions await those countries caught in the middle. This is still globalization, but not as we know it.

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