Will take forceful measures to ensure high-end manufacturing: Xi Jinping

This comes against the backdrop of shifts of production capacity to US, neighbours

China will take forceful measures to support the development of high-end manufacturing, President Xi Jinping said in first comments at the closely watched National People’s Congress.

The manufacturing industry must always be a pillar of strength for China, Xi told delegates from Jiangsu province. The country must ensure its self-reliance in technology, foster small and medium-sized enterprises and build global centers for innovation, state-run CCTV cited Xi as saying on Sunday. The commentary, also conveyed in a Xinhua report Monday, comes against a backdrop of accelerating shifts of production capacity from China to neighboring nations like India and Vietnam.

Big electronics assemblers from Foxconn Technology Group to GoerTek Inc. are responding to demand from their customers for a diversified supply chain and setting up more facilities outside China. That’s in addition to crippling US trade sanctions on China that are challenging the world’s second-biggest economy’s plans for growth and development. Xi, however, sounded a resolute note about China’s role as the world’s factory.

“I’ve always said there are two areas for China: one is to safeguard our rice bowl, and the other is to build up manufacturing,” the president said. “As a great nation with 1.4 billion people, we have to rely on ourselves to resolve those two issues. We can’t rely on international markets to save us.”

India has been particularly successful in emerging as an alternative site for electronics factories that assemble gadgets — including Apple Inc.’s iPhones — as Beijing and Washington drift further apart. Production of the latest generation of iPhone came much quicker to India this year than with prior iterations, and exports of the handset doubled. Foxconn plans a new $700 million plant in India, Bloomberg reported last week.

To secure its self-reliance, China could accelerate the localisation of information and communications technology and add new supportive policies for its chips sector, according to a Jefferies note by analysts including Edison Lee. Those measures could come in the second quarter of this year, the analysts added.

The Biden administration’s campaign to cap Beijing’s technological advancements last week included a new list of blacklisted Chinese tech giants. 

Among them were server maker Inspur Group and genetics company BGI, barring them from accessing certain US technologies. Inspur has been a partner for US giants like Intel Corp. and Cisco Systems Inc., helping them gain a foothold in China. 

US sees giant cargo cranes as possible China spying tools

US officials are growing concerned that giant Chinese-made cranes operating at American ports, including at several used by the military, could give Beijing a possible spying tool hiding in plain sight, the Wall Street Journal reported, citing people familiar with the matter. While comparably well-made and inexpensive, they contain sophisticated sensors that can register and track the provenance and destination of containers, prompting concerns that China could capture information about materiel being shipped in or out of the country to support US military operations around the world, said the report, the Journal reported. A Chinese Embassy representative in Washington called the US concerns about the cranes a “paranoia-driven” attempt to obstruct trade and economic cooperation with China.  

The cranes could also provide remote access for someone looking to disrupt the flow of goods, said Bill Evanina, a former top US counterintelligence official.

“Cranes can be the new Huawei,” Mr. Evanina said, referring to the Chinese telecom giant Huawei Technologies Co., whose equipment U.S. officials have effectively banned after warning that it could be used to spy on Americans. “It’s the perfect combination of legitimate business that can also masquerade as clandestine intelligence collection.” Huawei has said its products aren’t a national-security risk.

A representative of the Chinese Embassy in Washington called the US concerns about the cranes a “paranoia-driven” attempt to obstruct trade and economic cooperation with China. 

“Playing the ‘China card’ and floating the ‘China threat’ theory is irresponsible and will harm the interests of the U.S. itself,” it said.

Some Pentagon officials have compared ship-to-shore cranes made by the China-based manufacturer, ZPMC, to a Trojan horse, the Journal reported.

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