Tech in China : full report

 China's technology sector has been on a rollercoaster ride in the last year. There have been tighter regulations, billions of dollar wiped from companies' market values, and a push by Beijing to achieve technological self-sufficiency.

These are some of the key themes that will be discussed at CNBC’s annual East Tech West event, which is held in Guangzhou's Nansha district in southern China.

Here are the top concerns and priorities of China's technology sector at this moment.

China's crackdown on tech

The world-record setting initial public offer of fintech giant Ant Group was stopped in November 2020.

Beijing then introduced a number of new rules, starting with antitrust laws for internet platforms . It also created a strengthened data protection law. Antitrust fines have been issued to Meituan, an online food delivery company, and Alibaba's e-commerce giant.

China's quantum computing

China's quantum computing improvements will benefit its armed forces which are third in strength worldwide.

Quantum computing allows high-powered computers to solve difficult problems that would otherwise be impossible for ordinary computers.

Richard Feynman, an American physicist, discovered the idea for quantum computing in 1980. International Institute for Strategic Studies stated in a 2019 report that it has two key military uses. It can decipher secret military messages and can hack into secure communications.

Alexander Vuving, a professor is at the Daniel K. Inouye Asia Pacific center for security studies. He stated that he believes China spends a lot on research and development. He said that the government also uses civilian private companies to build its military.

Last month, consulting company Booz Allen Hamilton stated that Chinese "threat" groups will collect information that allows quantum computers to discover new valuable materials. These could be drugs or chemicals.

China in motion

It is unknown how far Chinese researchers have advanced quantum computing. According to the 2021 U.S. defense report to Congress on China, the Asian superpower continues its pursuit of leadership in key technologies that could be used for military purposes.

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The report also stated that China's 14th Five Year Plan, an economic plan pushes quantum technology across many fields.

Heather West is a market researcher at IDC, based in Massachusetts. She stated that Quantum computing could be used to find hidden "military vessels." It could also allow countries to access more information about the militaries of other countries.

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Vuving stated that quantum computing is still in its " nascentstage" but many countries are trying to improve it. These include China, India, Japan and Germany. He stated that anyone who is in the lead will likely lose it quickly as their competitors will copy them.

China's ongoing technology rivalry with the U.S. has made Beijing's efforts to increase self-sufficiency in a number of sectors more urgent. Semiconductors are a critical component of everything, from cars to mobile phones.

China is still behind the U.S., other countries and is having a hard time catching up. This is due to the complexity of the semiconductor supply chains, which are dominated by foreign companies.

Multiple countries at Risk?

Chen Yi-fan is an assistant professor in diplomacy and international relationships at Tamkang University, Taiwan. Chen stated, "Taiwan and the United States are all likely targets for China in quantum computing attacks so long as they don't have strong quantum encryption to defend."

In August 2020, Trump's administration, National Science Foundation, and Department of Energy announced that they would spend $625 million over five year on quantum research and development.

West stated that there is a lot of research going into the Department of Defense of the U.S. She stated that she didn't believe they would invest money in it if they didn’t believe there was potential.

Carl Thayer, a former professor of politics at University of New South Wales in Australia, is now retired. He stated that smaller countries cannot compete with China's quantum computing capabilities. He said that they would need technicians, engineers and money.

China is working hard to improve its reputation in the semiconductor industry.

Beijing stated in its five year development plan (the 14th of its type), that it would make science and technology self-reliance and self improvement a strategic pillar of national development.

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This plan identifies the areas Beijing considers "frontier technology", such as artificial intelligence (AI), and space travel.

China has made significant progress in space. This includes launching its first space station. It hopes to send its first mission crewed to Mars in 2033.

Chinese tech giants Baidu and Tencent have made significant investments in artificial intelligence.

Electric vehicles in China 

China is also emphasizing electric vehicles, a topic investors are familiar with. This industry is part China's drive to reduce carbon emissions.

The Chinese government has been supporting the development of new energy vehicles for many years through subsidies and other supportive policies. This has resulted in thousands of companies joining the industry, even though most have never produced a single vehicle.

The avowed intention of Chinese President Xi Jinping to make China a cyber great power is not something to take lightly. Xi declared his determination to allow Chinese technology to " catch-up and surpass" Western technology early in his tenure. International attention has been focused on China's rapid advancement in cutting-edge technologies like AI, quantum computing and 5G networks. What seems to have gone largely unnoticed, however, is a two-track state-directed strategy to gain a structural and strategic advantage through international technology standards.

This track is the deliberate push to gain influence within international technical standard-setting bodies (also known standards developing organizations or SDOs). These bodies can either be multilateral, made up of government representatives, or multistakeholder groups where industry and technical experts are allowed to participate. The Xi administration quietly sought to put Chinese nationals into key leadership positions, to head important technical committees and groups, and to encourage Chinese companies to vote on Chinese proposals.

The Chinese government and the Tech

The process of approving and negotiating technical standards was developed by the leaders in technology, the United States and Europe. This process was largely led and managed by industry. They believed that the process should be open, bottom-up and private sector-led. The Chinese government sees technical standard-setting as a crucial element in a national strategy to support Beijing's international interests. The state sets guidelines for the operation of SDOs in China to achieve national objectives. These goals are not just commercial, but also strategic. Beijing's "cyber sovereignty", a push to establish national borders in cyberspace that prevent the free flow information, is an example of this.

Beijing has a second track to its strategy of gaining advantage through international technology standard-setting runs on the Belt and Road, specifically its "Digital Silk Road." Beijing uses the Digital Silk Road projects as a means to establish de facto standards through the export of its technologies. These exports, following the lead of Western companies, create "path dependencies" which essentially lock customers in to using Chinese technology. It makes it expensive and difficult to switch to a product with different specifications. Beijing has signed agreements with countries along the Digital Silk Road to harmonize standards, fund local standards certification centers, as well as translate Chinese-developed standards into local languages.