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U.S. restrictions on tech investment in China bolster China's policy of self-reliance

AYESHA RASCOE, HOST:

There are new rules designed to rein in U.S. investments in key technologies in China. They're on top of a Biden administration decision this past fall to block exports of advanced microchips to China. All that will make it harder for China to get its hands on cutting-edge tech, and that may be a win for Washington for now. But as NPR China affairs correspondent John Ruwitch reports, it may also accelerate Beijing's push to be more self-reliant.

JOHN RUWITCH, BYLINE: The instinct toward and mythology around self-reliance goes back decades for China's ruling Communist Party. Late leader Mao Zedong talked about (speaking Chinese), or self-reliance, a lot. And this propaganda song from the early 1940s extolled the virtues of self-reliance in agriculture.

(SOUNDBITE OF SONG, "NANNI BEND (NAN NI WAN)")

GUO LANYING: (Singing in Chinese).

RUWITCH: But arguably the biggest technological breakthrough ascribed to self-reliance early on was this one.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PERSON #1: Three, two, one.

UNIDENTIFIED PERSON #2: (Speaking in Chinese).

RUWITCH: That was China's first nuclear test in 1964. It came just five years after the Soviet Union pulled out of an agreement to share nuclear technology with Beijing and then recalled all its advisers.

CHRIS MILLER: I think if you look at the chronology, what you find is that China's leaders have been focused on self-sufficiency and technology for a very long time.

RUWITCH: Chris Miller is author of the book "Chip War" and a professor at Tufts University in Boston. He says there's been a pattern for decades of strategic support when Beijing identifies a technology that it thinks is important.

MILLER: It's put large funds from both the national government and provincial and local governments, as well as state-owned enterprises, behind priority technology sectors. It's built out large capacity and manufacturing for these sectors. It's given these companies privileged access to China's large domestic market.

RUWITCH: A recent case in point - cars.

MILLER: This year, China overtook both Germany and Japan to become now the world's largest auto exporter. And again, that's thanks to a decade of government investment and preferential access to China's market.

RUWITCH: Under leader Xi Jinping, the self-sufficiency drive has accelerated. Microchips were identified as a priority almost a decade ago. In 2015, the government launched a program called Made in China 2025, an industrial policy to turn China into a world leader in 10 key sectors, including IT, robotics and aerospace. And he introduced a policy called dual circulation in 2020. It aims to grow domestic demand in the economy, to reduce dependence on foreign markets and fuel indigenous innovation. Here's Xi speaking about priorities at a party congress last fall.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT XI JINPING: (Through interpreter) We will accelerate the implementation of the innovation-driven development strategy. We will speed up efforts to achieve greater self-reliance and strengthen science and technology.

RUWITCH: To underscore the point, he promoted five leading scientists into the policymaking politburo. Yu Jie is a senior research fellow on China at Chatham House in London.

YU JIE: I mean, I cannot think of any cabinets in any of the national government at this stage now to have such a strong science presence at all.

RUWITCH: She says U.S. policies may serve as a catalyst for China's tech indigenization drive.

YU: I think Beijing has decided already that there will be no return on more benign bilateral relations with the United States. And particularly, the competition with science and technology has been the key component for that.

RUWITCH: Yu expects China to pour more money into R&D. Emily Weinstein is a research fellow at Georgetown University's Center for Security and Emerging Technology.

EMILY WEINSTEIN: Anyone who says that we're going to stop China from indigenizing by cutting off access to things is kidding themselves.

RUWITCH: And she believes the Biden administration is well aware of this.

WEINSTEIN: I don't think I would ever advise the administration to not go forward with a policy because they were afraid of pushing China too hard on accelerating indigenous efforts. China is already there, and they're already moving full speed ahead.

RUWITCH: The best Washington can hope for, she says, is to slow Beijing's march. John Ruwitch, NPR News. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

John Ruwitch is a correspondent with NPR's international desk. He covers Chinese affairs.