But harming China’s interests will affect global industrial, supply chains
The attempts by the United States, Japan, Australia and India to deepen their ties in critical and emerging technologies are aimed at marginalizing China in crucial global industrial and supply chains, which will harm the interests of their own companies, experts said on Wednesday.
On Tuesday, leaders of the four countries, known as the Quadrilateral Security Dialogue or simply Quad, said in a joint statement that they will strengthen cooperation in 5G, semiconductors, biotechnology and quantum technologies, including closer partnership in international standardization organizations.
Bai Ming, deputy director of international market research at the Beijing-based Chinese Academy of International Trade and Economic Cooperation, said though the Quad refrained from mentioning China in their statements, their moves are targeted at downsizing China’s presence in global industrial chains, which will affect the businesses of many companies operating in the nation.
Bai further said China is the world’s largest market for semiconductors, and its chip production capacity is also growing, which make it a very important part in the global semiconductor industrial chain that no company can ignore.
The Chinese mainland imports semiconductors worth more than $300 billion annually. Most, though not all, major US semiconductor companies make at least 25 percent of their total global sales to companies in the Chinese mainland, according to an article published on the Brookings Institution’s official website.
“Access to this massive market (China) is essential for the success of any globally competitive chip firm today and in the future,” said the Semiconductor Industry Association, a Washington-based group that represents the US semiconductor industry, in a research report.
The Chinese mainland accounted for 11 percent of worldwide semiconductor fabrication capacity in 2019, and the number is forecast to reach 18 percent in 2025 and nearly 19 percent in 2030, according to the Semiconductor Industry Association.
“Any attempt to marginalize China will weigh down on the global industrial and supply chains that are already struggling with the lingering impacts of the COVID-19 epidemic,” Bai said.
Frank Meng, chairman of Qualcomm China, said earlier that strong relationships between global technology companies are the biggest stabilizing force for global collaboration, and the US chip heavyweight is upping its investments, expanding its presence and seeing a growing list of partners in China.
Qualcomm will continue to engage closely with China’s industries to jointly build a digital ecosystem, and advocate speedy adoption of 5G, artificial intelligence and the internet of things across industrial sectors to help fuel China’s high-quality economic development, Meng said.
Dong Yifan, assistant research fellow at Institute of European Studies at the Beijing-based China Institutes of Contemporary International Relations, said the Quad’s efforts to create a small, exclusive circle risk fomenting divisions rather than promoting cooperation in the global digital economy, and causing fragmentation of the corresponding rules, mechanisms and markets.
According to Dong, their efforts to deepen cooperation in international standardization organizations are also aimed at reducing China’s say in the global telecom arena. In essence, it is to curb the development of related industries in China by shaping international standards in 5G and beyond.
China has been playing a vital role in drafting global 5G standards. Four of the top 10 holders of patents essential to 5G standards are Chinese companies. Huawei Technologies Co holds the top spot with a share of 14 percent as of Dec 31, data from the China Academy of Information and Communications Technology showed.