"Just outline the five where they're dominant and the areas that they're growing."
"Right. So we looked with our Bloomberg Intelligence and Economics colleagues at 13 key technologies that are part of China's Made in China 2025 initiative from about ten years ago. The five areas where China is clearly leading as of this year would be drones, high-speed rail, EVs, as you were just discussing, solar panels, and graphene. Some advanced materials where their competitors will be things like semiconductors, AI, machine tools, LNG carriers - they have like a big ship target - and drugs like pharmaceuticals. Where they're really behind is commercial aircraft."
"Interesting, Cheryl, as you just read out this sort of dream smorgasbord of Bloomberg Technology stuff. I think one thing we reflect on in the show is that some of those key areas, right, semiconductors, even drones and TV, it's very policy-focused. In other words, the government in China can change their mind, but they're often willing to support those industries through finance or policy to make them successful."
"Indeed. I mean, industrial policy is a big part of it. China's new energy vehicle targets and plans go back to around 2009. So they predate Made in China 2025. How they do this is hard to quantify, but there are a lot of subsidies for buyers, for firms. There's state-backed credit, state-backed investment funds, government procurement, etc. But I think BYD is a good example. The EV sector clearly benefited from Chinese industrial policy, but the industrial policy also didn't pick winners, so to speak. BYD was the one that rose to the top, in part because consumers are ultimately the ones deciding, and now it is a globally competitive firm."
"Just outline the five where they're dominant and the areas that they're growing."
"Right. So we looked with our Bloomberg Intelligence and Economics colleagues at 13 key technologies that are part of China's Made in China 2025 initiative from about ten years ago. The five areas where China is clearly leading as of this year would be drones, high-speed rail, EVs, as you were just discussing, solar panels, and graphene. Some advanced materials where their competitors will be things like semiconductors, AI, machine tools, LNG carriers - they have like a big ship target - and drugs like pharmaceuticals. Where they're really behind is commercial aircraft."
"Interesting, Cheryl, as you just read out this sort of dream smorgasbord of Bloomberg Technology stuff. I think one thing we reflect on in the show is that some of those key areas, right, semiconductors, even drones and TV, it's very policy-focused. In other words, the government in China can change their mind, but they're often willing to support those industries through finance or policy to make them successful."
"Indeed. I mean, industrial policy is a big part of it. China's new energy vehicle targets and plans go back to around 2009. So they predate Made in China 2025. How they do this is hard to quantify, but there are a lot of subsidies for buyers, for firms. There's state-backed credit, state-backed investment funds, government procurement, etc. But I think BYD is a good example. The EV sector clearly benefited from Chinese industrial policy, but the industrial policy also didn't pick winners, so to speak. BYD was the one that rose to the top, in part because consumers are ultimately the ones deciding, and now it is a globally competitive firm."