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China introduces ‘AI+’ in defiance of US regulations, significantly increases science and technology budget by 10%

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Advanced manufacturing, fostering new growth engines
Li Chang “Establishment of AI+ digital cluster”
The competition for technological hegemony with the United States is likely to intensify.
President of the People’s Bank of China: “There is room for a reduction in the bank reserve ratio”

Chinese President Xi Jinping is attending a meeting of the Jiangsu Province delegation and talking at the second meeting of the National People’s Congress (National People’s Congress) held at the Great Hall of the People in Beijing, China on the 5th. President Xi instructed, “We must deepen reforms in science and technology, education, and talent systems, and resolve bottlenecks that block the development of new productive forces.” Beijing = Xinhua Newsis

China has decided to significantly increase this year’s science and technology budget by about 10% compared to the previous year, putting ‘high-quality development’ at the forefront. While the United States is curbing China’s challenge to technological hegemony by regulating exports of semiconductor manufacturing equipment and artificial intelligence (AI) chips, it is seen as a stepping stone to overcome the impasse by developing its own technological capabilities.

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Some analysts say that this policy is an inevitable choice due to the extremely depressed domestic market. It is said that the intention is to use high-tech manufacturing as a new growth engine as the real estate market, which has led the growth of the Chinese economy so far, has become difficult. If China actively invests in science and technology, the competition for technological hegemony between the U.S. and China over AI and 6th generation (6G) mobile communications is expected to become much more intense than it is now.

● This year’s science and technology budget alone invested 68 trillion won.

According to this year’s budget report reported by the Chinese government to the National People’s Congress on the 5th, the science and technology budget was set at 370.8 billion yuan (about 68.6 trillion won), a 10% increase from last year. This is the largest increase since 2019, and can be said to be unusual considering that last year’s increase rate was 2%. This is because the increase is even higher than in the defense sector (7.2%), which China has declared to invest heavily in for three consecutive years. China’s Ministry of Finance said, “Although there are budget constraints, we will continue to guarantee spending in the science and technology field because of its pivotal role in driving China’s development.”

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China’s commitment to science and technology is also revealed in Premier Li Chang’s work report. “We need to accelerate the development of new production forces,” Prime Minister Li said. “Let’s strengthen standard guidelines and quality to create more ‘Made in China’ brands.” The relevant fields included connected cars (smart cars), advanced hydrogen energy, bio-manufacturing, and the aerospace industry.

Prime Minister Lee also used the concept of ‘AI+’ for the first time. China used the term ‘Internet+’ to revitalize the Internet in the 2010s. Prime Minister Lee said, “We will build a digital industrial cluster with international competitiveness through AI+.”


China once led the world in technology in some AI fields, such as facial recognition. However, due to the Chinese government’s regulations on information technology (IT) companies, it is evaluated that it has lagged far behind the United States in the generative AI field, represented by ChatGPT. In addition, the United States has banned the export of high-end AI semiconductors made by Nvidia, and has even recently put a brake on the export of low-end AI semiconductors. The Economist Intelligence Unit (EIU) reported, “Chinese leadership is concerned that China may fall further behind as they look at the recent development of generative AI in the West.”

● Xi Jinping: “Remove obstacles for high-quality development”

Chinese President Xi Jinping is also supporting the development of cutting-edge technology. On the 5th, President Xi met with the Jiangsu provincial delegation and instructed, “We must deepen reforms in science and technology, education, and talent systems, and resolve bottlenecks that block the development of new productive forces.”

Jiangsu Province, China’s second largest economy, is a region where high-tech companies are concentrated. The fact that President Xi met for the first time with the Jiangsu Province delegation during the two sessions (National People’s Congress and National People’s Political Consultative Conference) this year as last year can itself be said to be a strong message about the high-tech industry.

There are also predictions that China will begin full-scale economic restructuring through these two sessions. China’s National Development and Reform Commission ranked ‘industrial system modernization through innovation’ as the top 10 core tasks in its ‘2024 Economic and Social Development Plan’ report. Hong Kong’s South China Morning Post (SCMP) said, “China is experiencing a structural upgrade of its economy,” and “the key to the productivity leap is scientific and technological innovation.”

The Chinese government also mentioned the possibility of additional measures to stimulate the economy. People’s Bank President Pangongsheng, who attended the joint press conference of the economic ministers on the 6th, said, “The current bank reserve ratio is 7% on average, and there is room for further reduction in the future.” Lowering the reserve ratio reduces the amount of money that banks are required to hold, which has the effect of releasing money into the market. This is interpreted as being conscious of criticism that Prime Minister Lee’s work report lacked specific measures. Chairman Fan also hinted at the possibility of an interest rate cut, saying, “Reducing social finance costs, such as personal mortgage loans, will boost investment and consumption.”

US-China conflict

Source: Donga

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