China's State-Owned Enterprises Drive Investment in Emerging Hi-Tech Industries Amid Tech Containment

Investment Surge by State-Owned Enterprises

China's state-owned enterprises (SOEs) are making headlines with their substantial investments into emerging hi-tech industries. Over the first seven months of the year, SOEs have invested more than 1 trillion yuan (US$141 billion) as part of Beijing's initiative to bolster strategic sectors against US-led tech containment efforts.

SASAC Reports Increased Investment

The State-owned Assets Supervision and Administration Commission (SASAC) has reported a remarkable 24% increase in investments directed towards cutting-edge industries, which now account for 38% of total investment. This push aligns with President Xi Jinping's strategy to cultivate new quality productive forces in pursuit of domestic innovation and tech self-reliance.

• Key Investments Include:
• Artificial Intelligence
• Biopharmaceuticals
• Advanced Equipment Manufacturing
• Aerospace
• New Energy
• Quantum Technology

Strategic Focus on High-Risk Sectors

As highlighted by Zhao Xijun, a finance professor from Renmin University, these investments, while essential for China’s economic growth, come with significant uncertainties. Zhao emphasizes the need for SOEs to enhance their management skills to ensure that investments yield strategic returns and align with national development goals. The focus on strategic sectors is crucial, especially as China faces increasing geopolitical tensions.

Support for Emerging Industries

In line with the directives from the leadership, the need to support these emerging industries is underscored. During the pivotal third plenum in July, China's leadership stressed the need for stronger frameworks to guide new sectors and ensure sustainable growth, directing state capital towards forward-looking industries.