Indigenous technology vital for China: expert

Leading Chinese telecom equipment maker ZTE Corporation holds a press conference on April 20, 2018, after the U.S. Department of Commerce announces it will impose "a denial of export privileges" against ZTE. [Photo: cctv.com]

A Chinese expert says the recent ban by the United States on sales to a leading Chinese telecom equipment maker will get its own enterprises into trouble, and will also speed up China's push towards independence in its own technology industry.

Earlier this week the U.S. Department of Commerce announced that it would impose what it calls a "denial of export privileges" against ZTE Corporation.

The department says that it is taking this action in response to alleged violations of the Export Administration Regulations by ZTE.

As a result of this action, the Shenzhen-based company could find itself unable to import advanced hardware or software from the United States for the next seven years.

Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, says the United States will have a negative impact on that country's own chip makers.

"ZTE's development has created a huge market for U.S. chip makers. If ZTE's development is hindered, it will definitely affect the sales of relevant U.S. chip makers. In recent days, the stock prices of some of those companies have already seen some fluctuations," says Bai.

This move by the United States will put pressure on ZTE to invest in domestic research and development that would allow the company to weather the coming challenges.

Bai Ming says that it's vital for China's domestic enterprises to reduce their reliance on imported technology.

"We must attach great importance to independent research and development. If the manufacturing of our telecom equipment always relies on importing technologies and components from abroad, the development of these enterprises will carry a lot of risks, since the core technology for manufacturing key components is held by foreign companies," says Bai.

China imported 230 billion U.S. dollars' worth of chips in 2016. The value of its chip imports that year was almost double the value of its crude oil imports.

Analysts suggest that the reason for the massive flow of foreign-made chips into the Chinese market is the gap that exists between the manufacturing capability of China's homegrown chips and the ones produced by the world's leading chip makers.

As such, more efforts are needed to boost independent innovation in China's high-tech industry.

"We should mainly focus on research and development, concentrate on key technologies and seek for major breakthroughs. We will also adhere to a market-based system, which features both the market's role and the guidance and support from the country's policies," says Bai.

However, the expert also stresses that focusing on independent innovation does not mean that China will step back from its efforts to further open up and engage in international cooperation.

"We can cooperate with the world in a variety of areas to speed up our innovation, while also sticking to independent innovation and learning from imported products and technologies, so that we can avoid detours in the process of research and development, and maintain a high level of efficiency," says Bai.

At a press conference on Friday, ZTE's president Yin Yimin said the U.S. side's ban will put the company at risk, along with its global customers and shareholders.