Chinese officials are revising a government program aimed at securing global technology dominance in a bid to address one of President Donald Trump's chief complaints about China's trade practices, according to two individuals briefed on the plans.
Officials are retooling the "Made in China 2025" plan to offer foreign companies greater opportunities to participate, though details have not been finalized.
China unveiled the 10-year strategic plan in 2015 with a goal of achieving global primacy in 10 advanced-technology industries, including robotics, quantum computing and artificial intelligence.
The road map, a signature element of President Xi Jinping's tenure, sets specific goals for reducing China's dependence on foreign sources of critical materials such as semiconductors. By 2025, China aims to be 70 percent self-sufficient in key high-tech industries, according to the U.S.' Council on Foreign Relations.
The individuals spoke on the condition of anonymity because they were not authorized to discuss the potential change in plans.
Trump administration officials have zeroed in on "Made in China 2025" as a key irritant in the ongoing trade dispute between Washington and Beijing. The two sides are conducting talks aimed at resolving U.S. complaints about such structural elements of China's economic model under a March 1 deadline.
The program represents a "top-down state-directed approach to technology development" that is at odds with genuine market competition and unfair to foreign companies, according to a March report by the office of U.S. Trade Representative Robert Lighthizer, who leads the U.S. negotiating team.
"We don't object to them trying to become more involved in high tech," Commerce Secretary Wilbur Ross told CNBC. "We do object to using inappropriate methods like stealing secrets, like forced technology transfers, that sort of thing. We're perfectly happy to compete with them toe to toe as long as it's a level playing field."
If Xi endorses significant changes to the program, it could help pave the way for a trade deal. But some analysts remain skeptical.
"I'm still not convinced the replacement will be any less interventionist," said Scott Kennedy, a China expert at the Center for Strategic and International Studies. "It's a positive sign, but it doesn't guarantee that China will fundamentally change the role of the state in the economy."
The Chinese government engages in a range of economic planning via other channels, including the 13th Five-Year Plan. The planning document, which covers the period through 2020, emphasizes innovation as the key to converting Chinese manufacturing to higher value production by setting goals for increasing the number of patents and research spending.
Proposed revisions in the centerpiece of China's industrial policy could be discussed at the annual Central Economic Work Conference expected later this month. Xi also is expected to give a major speech this month marking the 40th anniversary of China's economic overhaul.
Tensions between the two countries have been heightened by the arrest Dec. 1 by Canadian authorities of a top Chinese technology executive at the behest of the U.S. government.
Explanations from Canadian and U.S. officials that the arrest of Huawei Technologies executive Meng Wanzhou was not a political stunt, just a matter of legal process, were upended Tuesday when Trump said that the criminal case against the daughter of one of China's wealthiest tech billionaires could become a bargaining chip in trade war negotiations.
To some, Trump seemed to have handed the Chinese a major propaganda boost by suggesting what Beijing has argued all along -- that Meng's arrest was political. Others took his comment as confirmation that Meng was being used as a hostage in the trade talks to exert pressure on China.
"If I think it's good for what will be certainly the largest trade deal ever made -- which is a very important thing -- what's good for national security -- I would certainly intervene if I thought it was necessary," Trump told Reuters in an interview.
Responding to Trump's comment, Canadian Prime Minister Justin Trudeau said Wednesday: "Regardless of what goes on in other countries, Canada is, and will always remain, a country of the rule of law."
"Are we now saying: 'You violated U.S. law but if you're willing to buy more U.S. soybeans we can look the other way?'" asked Wendy Cutler, a former U.S. trade negotiator who is now vice president at the Asia Society Policy Institute.
A Canadian court on Tuesday released Meng on bail, confining her to Vancouver and its suburbs while she awaits possible extradition to the United States. The U.S. accuses Huawei, the biggest global supplier of network gear for phone and Internet companies, of using a Hong Kong shell company to do business with Iran in violation of U.S. sanctions.
In what appears to be retaliation against Canada for arresting Meng, Chinese authorities on Monday detained a former Canadian diplomat, Michael Kovrig, in Beijing.
"Trump's comments were very unfortunate and probably did not reflect a great deal of thought," said Roland Paris, a former foreign policy adviser to Trudeau. "We have a judicial process underway and it will take its course. ... Canada is paying a significant price for doing the right thing by upholding the rule of law and discharging its treaty obligations. President Trump should be aware of that."
Information for this article was contributed by David J. Lynch and Danielle Paquette of The Washington Post; by Robyn Dixon of the Los Angeles Times; and by Paul Wiseman and Rob Gillies of The Associated Press.
Business on 12/13/2018