China to press ahead with investments in 5G and IoT

China to press ahead with investments in 5G and IoT

China’s top economic planning agency says investing in “new form of infrastructure” is a top priority.

China will press ahead with investments in artificial intelligence (AI) and 5G in 2019 as it competes with the US in the two key areas amid a technology race between the world’s two biggest economies.

China’s state planner has singled out AI, the industrial internet, Internet of Things (IoT) and 5G as part of its investment priorities this year as part the country’s efforts to “construct a new form of infrastructure” and “speed up the commercialisation of 5G”, according to Lian Weiliang, deputy head of China’s National Development and Reform Commission.

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Investing in this so-called new form of infrastructure is one of five priorities, he said. The other investment priorities are for traditional infrastructure such as logistics, transport as well as education and healthcare.

Putting technology-related investments at the top of the priority list underscores China’s efforts to transform from a capital- and labour-intensive manufacturing economy driven by foreign investment into an innovation-led, consumption-driven economy. This task has taken on added urgency in the wake of the ongoing trade tensions with the US, the world’s biggest economy and China’s largest trading partner.

Lian said China will make its investments more targeted and effective and refrain from resorting to massive economic stimulus, without specifying the size of the investment.

Investments in infrastructure such as AI, IoT and 5G may reach hundreds of billions of yuan this year, according to Wu Qi, senior analyst with Pangoal Institution, a China policy think tank.

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“China is in the process of nurturing new economic engines,” Wu was quoted as saying by Securities Daily.

“AI, industrial internet and internet of things are not only new businesses, but also new engines to upgrade traditional sector.”

Earlier this month, China announced a plan to grant a batch of temporary 5G licenses to mobile operators in numerous Chinese cities this year to allow for larger-scale deployment and to accelerate the launch of 5G services in consumer devices.

Despite the success in 5G deployment at home, Chinese telecom equipment giants have faced regulatory push back abroad. Huawei Technologies is facing increasing scrutiny of its security practices among foreign governments, some of which are reviewing whether its 5G networking equipment poses a national security threat.

In November, US proposed new export restrictions on additional technology sectors considered crucial to national security, furthering the Trump administration’s campaign to crack down on intellectual property theft by foreign nations including China. AI, machine learning, data analytics and robotics are among the identified 14 categories of new technologies.

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