Beijing’s Tech Restructuring Signals Enhanced Competition With the United States
April 7th, 2023, Patrick Beyrer, Intern, Center for China Analysis, Spring 2023.
In early March 2023, Beijing announced a science and technology governance overhaul that suggests China is continuing to lean further into its technological competition with the United States. The institutional reform plan, published after China’s annual parliamentary Two Sessions, said the Chinese Communist Party (CCP) would establish a Central Science and Technology Commission (CSTC) to coordinate policy in these areas and would restructure the state Ministry of Science and Technology (MOST) under the State Council into a leaner but more powerful R&D-focused institution.
The new CSTC — which will presumably be led by General Secretary Xi Jinping himself — and the restructuring of MOST underscore Beijing’s increased priority of technological self-reliance and making innovation in critical and emerging technologies a core state objective. Taken together, state media describe the institutional reforms as a direct response to a “changing external environment” and global pressure from technology sanctions, supply chain instability, and geopolitical competition. The reforms aim to realize the “shortening of the distance between the decision-makers and policy executors” to better mobilize national resources for “breakthroughs in bottleneck technologies.”
As part of these efforts, MOST will bolster its science and technology policy planning responsibilities, expand focus on institutional reforms, and better attend to “macro-management” duties, while its previous authority over scientific project review and management is handed over to other ministries. In other words, this “slimmed down” MOST will focus on major national innovation strategies under the direction of CSTC, whose offices will be housed within MOST.
The CCP has focused for decades on significantly building China's domestic technological capacity. In 2006, Beijing identified “indigenous innovation” as a top policy priority in its “Guidelines on National Medium- and Long-term Program for Science and Technology Development.” At the time, however, the main aim of upgrading China’s industrial capacity was accelerating productivity and economic development.
In 2015, the Made in China 2025 policy outlined indigenous innovation goals that would see the country achieve greater international dominance in many high-tech sectors and become a global powerhouse in advanced technologies. The strategy considered innovation a catalyst for domestic goals such as scaling manufacturing capabilities, upgrading China’s industrial value chain, and cultivating domestic talent, but also adopted a stronger view of innovation as a competitive pursuit on the world stage.
In the years that followed, Xi embraced an even more open narrative of technological competition with Western countries, especially the United States, following U.S. efforts under the Trump and Biden administrations to curb China’s tech giants and its burgeoning geo-economic power. The CCP declared technological independence and indigenous innovation as pillars of “strategic support” for its national development strategy in the 14th Five-Year Plan, released in March 2021.
This year, however, Xi dialed up his rhetoric on international competition. Xi told the Jiangsu delegation at this year’s Two Sessions that China must “shape new development momentum and new advantages” to “effectively respond to external repression and containment.” He went further in remarks to United Front advisors, saying that “Western countries, led by the United States, have implemented comprehensive containment, encirclement, and suppression against China, bringing unprecedentedly severe challenges for China's development.” Around the same time, outgoing State Councilor Xiao Jie said the MOST restructure was specifically motivated by the “severe situation” of “international technology competition, containment, and suppression.”
This framing is markedly more direct in its acknowledgment of geopolitical competition as an underlying driver of science and technology policymaking. China’s relations with the United States and many other developed democracies continue to sour, especially following Beijing’s refusal to condemn Russia’s invasion of Ukraine. Xi has consistently addressed China's need to become a more advanced technological power, but China’s rivalry with the United States has never been so explicitly linked to the process of innovation itself.
Political rhetoric about MOST’s priorities has also assumed a more competitive posture. In 2019, Wang Zhigang, the Minister of Science and Technology, told a National Science and Technology Work Conference that MOST’s top priorities should focus on strengthening long-term strategic planning, accelerating core technology research and basic research applications, and constructing a high-quality national innovation system.
While these objectives remain cornerstones, even after the recent restructuring, Wang’s rhetoric over the last few months has followed Xi’s in emphasizing China's struggle with the United States. Last December, Wang published his reflections on Xi’s report to the 20th Party Congress two months prior, in which he outlined MOST’s priorities with a much sharper bent towards competition: “resolutely winning the battle for critical technologies,” reaching “historic breakthroughs in strategic areas,” and striving for “major original achievements” in technological frontiers.
These developments suggest that MOST’s primary concern will be rapid progress in upgrading China’s capabilities in a limited number of critical “bottleneck” technologies at the heart of U.S.-China tech competition, such as semiconductors, biotechnology, and quantum computing. This goal makes sense given extant and potential U.S. export controls and other restrictions, but a relatively narrow focus could come at the expense of building a more comprehensive domestic innovation ecosystem. Indeed, responsibilities for functions like research budgeting, industrial expansion, and scientific development in rural areas are being dispersed across other agencies, which could make coordinating policymaking more difficult.
Many Chinese experts support these bureaucratic shifts, on the basis that a more tailored focus on key competitive scientific and technological innovations will better address the “chokepoint problem” of apex technology that China cannot produce domestically. Some say these reforms finally address what they believe should be the core ethos of Chinese innovation: “technology is about winning.”
Just a couple of years ago Beijing was rejecting “strategic competition” as a label for U.S.-China relations. But now political discourse and institutional structures are both beginning to reflect and respond to this new dynamic. China’s top diplomat, Wang Yi, argued last year that competition with the United States should be “healthy” and help the two countries to “bring out the best in each other.” This February, he adopted a stronger tone, saying that China will “never fear” competition with the United States.
Many Chinese experts anticipate that decoupling will continue, and they increasingly enjoy the discursive flexibility to push this viewpoint. One scholar argued last summer that only by focusing on the “new pattern of major power competition” can China accelerate the right type of innovation.
The latest institutional reforms speak for themselves: the CCP increasingly views its science and technology policies through the paradigm of geopolitical competition. The scope and nature of the party’s efforts to enhance its technological capabilities should be understood as a direct response to this changing calculus. Beijing’s institutional response to the emerging U.S.-China “tech war” will likely accelerate its efforts to achieve indigenous breakthroughs in technologies tied to geopolitical competition.