China's Five-Year Plan, Indigenous Innovation and Technology Transfers, and Outsourcing

The 12th Five-Year Plan is a continuation of a long term strategy of capability building that had been in place for decades. What are the implications for the United States of China's attempt to bolster its high technology industries? First I think we will see increasing market competition for American firms across the board from Chinese companies, with the circumstances in some industries more pressing than others. U.S. firms will not necessarily be global leaders in many fields where we take such leadership as a given. Chinese companies like Huawei will increasingly be world leaders in supplying advanced technology products to world markets. The seeds are already sown. This means America, and all nations, will increasingly turn to Chinese companies for the purchase of products with high intellectual content, and not just products with high labor content. Huawei supplying the core telecom infrastructure in Iraq is one example, but we will likely see it in other technologies like wind energy, solar, and others. This will make our trade deficit problem even more challenging than it already is.