China’s technology sector has undergone quite a few changes over the past year. Moreover, regulations have been tightened, billions of dollars in companies’ market value have been erased, and Beijing’s pursuit of technological self-sufficiency has intensified. What will be the primary concern of the Chinese technology sector in 2022? Let’s dive in.
China’s Tech Clampdown
In November 2020, Ant Group’s record-breaking initial public offering was suspended. In response, Beijing has introduced new rules from the antitrust areas of Internet platforms and enhanced data protection law. Alibaba, as well as Meituan, were threatened with antitrust sanctions.
This had a severe impact on the Chinese giants. Alibaba shares have fallen 41% to date. Now the main question is whether China will introduce the new regulation. If so – in what areas? Which companies could be the next target? What does all this mean for the growth of the technology sector in China?
Struggles and Semiconductors
The ongoing technological rivalry between China and the US has added to the urgent need to increase Beijing’s self-sufficiency in various sectors. One of them is semiconductors, which are crucial for everything.
However, China is struggling to catch up with the US and other countries. This is due to the complexity of the semiconductor supply chain, which foreign companies dominate. The field of chip manufacturing is a good example. SMIC is a few years back TSMC and Samsung. However, SMIC is not able to produce the latest chips needed for leading smartphones.
Foreign companies command the most leading tools and apparatus needed to produce high-end chips. US sanctions have denied China access to the instruments. At this point, Chinese companies can not compete. Hence, how China will strengthen its domestic chip industry by 2022, we will see in stages.
Borderland Tech
The semiconductor business is one of many commerce where China is trying to improve its credentials. In a five-year development plan released earlier this year, Beijing noted that self-development in science and technology is becoming a strategic pillar of national development. The plan identifies areas that Beijing sees as border technology – osmotic travel and artificial intelligence.
China has made significant progress in space, including launching its space station. He has ambitions to send his first crew mission to Mars in 2033. As for artificial intelligence, Chinese tech giants are investing heavily in it.
Electric Vehicles
Another area that China is highlighting is electric cars. This industry is part of the action to reduce emissions. China has planned to become carbon neutral by 2060.
For several years, the Chinese government has supported the development of new energy vehicles through subsidies and other favorable policies. This has driven tens of thousands of corporations in the sector, though many have never made even one car.
Moreover, according to Canalys, about 1.1 million electric cars were sold in the first half of this year. This is the same as the 2020 sales rate. China is the biggest market for electric vehicles. Therefore, this growth has attracted a lot of new players with a technological background. Xiaomi wants to mass-produce its electric cars in the first half of 2024. Baidu has created its own electric car business with Geely.
China’s Economic Signals
Chinese tech giants now have to deal with China’s slowing economy. Moreover, attempts to contain debt-induced expansion in the real estate sector and electricity shortages have added to other economic challenges. Hence, Alibaba has cut revenue guidelines for the current fiscal year.
It is interesting to see how sustainably China will cope with the new and tackling challenges and what China’s economic or technological situation will be like by 2022.
