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Stock markets have been buffeted this week by fears of a trade war between the U.S. and China. Both countries have threatened billions of dollars in tariffs on each other's exports. One reason for the U.S. moves is alarm at the Chinese government's ambitious plan to dominate the technologies of the future. NPR's Anthony Kuhn has this report from Beijing about the plan and what it could mean.
ANTHONY KUHN, BYLINE: In a speech to China's parliament last month, Premier Li Keqiang talked about the plan known as Made in China 2025. It's designed to put an end to the idea that a made in China label means cheap consumer goods like toys, shoes or patio furniture.
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PREMIER LI KEQIANG: (Through interpreter) We will promote the development of integrated circuits, 5G mobile telecommunications, aircraft engines, new energy vehicles and new materials.
KUHN: The plan was announced in 2015. It calls for China's government to funnel billions of dollars into developing and acquiring advanced technologies in fields such as artificial intelligence, robotics and biopharmaceuticals. It also calls for Chinese companies to control 70 percent of the domestic market in such key sectors by the year 2025. In a report last month, the U.S. Trade Representative's Office laid out the case for tariffs. It specifically points to the Made in China plan which, it says, discriminates against U.S. companies and threatens U.S. trade. China's vice minister of commerce, Wang Shouwen, dismissed these criticisms at a press conference yesterday.
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WANG SHOUWEN: (Speaking Chinese).
KUHN: "Made in China 2025 is transparent, open and non-discriminatory," he says. "Foreign and Chinese companies, public and private sector companies can all participate." Wang adds that the Made in China plan is strictly in line with World Trade Organization rules, and he says China has no intention to monopolize domestic markets.
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WANG: (Speaking Chinese).
KUHN: "Some of the targets in our plan are intended as forecasts or guidance," he says. "They're not mandatory requirements."
What the U.S. fears is that China will get its advanced technologies by either coercing or just stealing them from U.S. firms and then boot those firms from the China market. Lester Ross, partner-in-charge of the law firm WilmerHale's Beijing office, says that there's nothing wrong with China trying to make its economy more innovative.
LESTER ROSS: But to the extent that it is coercive, to the extent that it is inconsistent in dramatic ways with market-based principles of competition - it fundamentally distorts the world economy.
KUHN: Hu Xingdou is an economist at the Beijing Institute of Technology. He argues that the Made in China plan might work.
HU XINGDOU: (Through interpreter) Or it might create huge production overcapacity and waste. It may also tempt many companies to try to trick the government into giving them subsidies.
KUHN: He says China appears to lead the world in areas such as high-speed rail, but in fact...
HU: (Through interpreter) China has basically just synthesised others' technology. There's very little innovation in it. China's simply standing on the shoulders of those who have done the research before them.
KUHN: Hu argues that the trade frictions with the U.S. are a good opportunity for China to bring its policies more into line with international rules. Equally important, he says, is that China's Communist Party needs to honor its pledges to its own people to allow markets, not the party or government, to decide where investments should go. Anthony Kuhn, NPR News, Beijing. Transcript provided by NPR, Copyright NPR.