The Chinese Communist Party has set up a new commission to oversee development of science and technology, as it wraps up a massive overhaul of government and party bodies announced in March. Cadres were studying outcomes from “the first meeting” of the Central Science and Technology Commission, the Ministry of Science and Technology said in a post on its official website on July 17. The post – which was the first public reference to the new party body – went unnoticed until state media highlighted it on August 20. No other information was provided about the members of the commission or its head. The science commission, which will oversee Beijing’s technological self-sufficiency drive, is the final one to be set up under the overhaul plan. It comes as the United States doubles down on its containment of China’s tech sector, including the suspension of hi-tech exports, over what it says are security concerns. China’s government restructuring plan would include the financial and technology sectors, President Xi Jinping said in March. Central authorities had aimed to complete the overhaul on the national level this year, while local governments have until the end of 2024 to set up corresponding branches.
Deng Yuwen, former Deputy Editor of the Study Times, the official newspaper of the Central Party School, said Beijing had obviously made a very “hard push” for the revamp, as most of the work had been completed much ahead of schedule. “It shows Xi has given lots of personal attention to this overhaul, because this is vital for the regime’s stability given the current geopolitical environment,” Deng said. “Facing the containment drive from the U.S., it is only natural for Xi to respond by strengthening the Party’s control in finance, technology, and domestic security with the Party and his trusted men controlling relevant institutions.” The new commission will effectively exert more direct Party control on the Science Ministry and other government bodies related to the quest for technological self-reliance – a top priority for China as the U.S. tech war intensifies. The first post-reshuffle party body revealed to the public was the Hong Kong and Macao Work Office of the Communist Party Central Committee, which announced its first meeting on July 11. The overhaul plan presented in March included the setting up of a supervisory Central Finance Commission, expected to be led by President Xi, and its general office, likely to be overseen by Vice Premier He Lifeng. Both would be Party bodies directly answering to the Central Committee. A committee was also to be set up to oversee Party affairs at all state-owned financial institutions and regulators.
As part of its push for high-tech self-reliance, China’s imports of Dutch lithography machines have surged this year, with the first seven months already surpassing ASML Holding’s previous forecast for 2023 sales to China, according to a new report, as Chinese firms stock up on the equipment ahead of new export curbs. From January to July, Chinese imports of Dutch-made lithography machines, nearly all from ASML, grew 64.8% year-on-year to USD2.58 billion, Chinese semiconductor industry consultancy JW Insights said in a report, citing China Customs data.
In January, ASML projected that its sales to China this year would remain steady at about €2.2 billion, or 14% of its total annual revenue. In July, China imported USD626 million worth of lithography machines from the Netherlands, nearly eight times more than the same month last year, according to the report. ASML has a near monopoly on the world’s most advanced lithography machines, which are required for the production of cutting-edge chips. Under U.S. pressure, the company has cut off exports of its extreme ultraviolet (EUV) lithography systems to China. The company has until now been able to continue shipments of less advanced deep ultraviolet (DUV) lithography systems to the country, but that is expected to soon change. Under new rules from the Netherlands that go into effect on September 1, ASML will be required to apply for a license from The Hague to ship its most advanced DUV lithography systems, dealing a fresh blow to China’s semiconductor industry. As a result, Chinese firms have rushed to stockpile machines so they can continue to fulfill production demands for as long as possible after next month, JW Insights said.
From 2015 to 2022, Jiangsu province and the cities of Shanghai and Beijing were China’s biggest importers of Dutch lithography machines, the report noted. Heavy demand from China helped offset a slump in the global semiconductor industry and boosted ASML’s earnings this year, the company said last month. While the firm saw a delay in demand for its DUV equipment from some customers, it has been compensated by strong demand for tools used in more mature and mid-critical nodes, particularly in China, ASML CEO Peter Wennink said. “Our Chinese customers say: ‘We are happy to take the machines that others don’t want’, because their fabs are ready and they can take the tools that become available,” Wennink said in a separate video interview released by the company.
The Chinese government earlier this year condemned the U.S. for “coercing” other countries into imposing technological blockades on China and “undermining market rules and international trade”, as well as the stability of the global supply chain. Chinese media, at the same time, have played up the possibility the country could deliver its first home-grown lithography machine capable of producing 28-nanometer chips by the end of this year. The Securities Daily reported last month that Shanghai Micro Electronics Equipment is ready to deliver the SSA/800-10W machine, the South China Morning Post reports.
China also said it will prioritize expanding computing power to create a strong foundation for its digital economy, which has become an increasingly vital battleground in its tech war with the U.S. “Computing power is now the cornerstone of digitization,” said Minister of Industry and Information Technology Jin Zhuanglong. With more than 41% of its economic output generated from the digital economy, China has the world’s second-largest computing capacity, after the United States. To catch up, the world’s second-largest economy must accelerate the construction of national computing hubs and data centers while quickening the pace of technological breakthroughs, Jin added.
