World Economy

Xi Pledges Support for China Tech Firms

Xi Pledges Support for China Tech FirmsXi Pledges Support for China Tech Firms

China’s President Xi Jinping has vowed to increase government support for technology companies, state media reported, in an attempt to raise the country’s competitiveness that could also further fuel concerns over protectionism.

Beijing has put forward so-called Internet Plus and Made in China 2025 strategies, which aim to make Chinese firms world technology leaders and call for progressive increases in domestic components in priority industries such as robotics and aerospace equipment, Reuters reported.

Foreign business groups have voiced concern that such policies could limit foreign firms’ opportunities in China and ultimately starve innovation.

“To be the world’s major scientific and technological power, the state will have to champion first-class institutes, research-oriented universities and innovation-oriented enterprises,” the official Xinhua news agency cited Xi as saying at a science event on Monday.

Xi said the country will “provide bigger support for tech companies”, especially small and medium-sized firms, reorganize research institutes and universities, and plan cities and regional centers to be attractive to innovation industries.

“Our biggest advantage is that we, as a socialist country, can pool resources in a major mission,” Xi said, in comments reported late on Monday.

He also vowed to give scientists more power in allocating funding and directing their research, Xinhua reported.

Xi did not specify if support would be geared toward home-grown technology firms. Chinese officials have said their policies do not unfairly take aim at foreign companies and have repeatedly promised to ramp up intellectual property rights protection to attract more foreign investment.

Many foreign technology firms were put on the defensive as their China business suffered in the wake of information leaks by former National Security Agency contractor Edward Snowden in 2013.

 Affects Neighbors

Those nearest to China are among the hardest hit as growth in the world’s second-largest economy grinds to the slowest pace in a quarter century, Bloomberg reported.

Hong Kong, Macau, and Taiwan all saw their economies shrink in the first quarter, while Mongolia’s commodities-fueled boom has faltered. And the bad news doesn’t stop there.

“The ripples are likely to spread further out,” said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong.

“As China’s economy continues to cool, it will provide an ongoing drag on global output, curtailing inflation pressures in the process and anchoring interest rates in the process. The economic malaise currently experienced by China’s immediate neighbors, therefore, is only a portend of a milder version to afflict economies elsewhere as China comes off the boil.”

That’s already the reality facing Hong Kong.