China's New Technology Spending Plan Is Larger Than Qatar's Entire Economy

China’s New Technology Spending Plan Is Larger Than Qatar’s Entire Economy

The $14.6 billion Internet Investment Fund

In a pledge to support the economy’s online sector, the Chinese government on January 22 launched the 100 billion yuan (about $14.6 billion) Cyberspace Administration of China and Ministry of Finance fund. The National Development and Reform Commission and the Ministry of Industry and Information Technology in China (FXI) had released guidelines in mid-January which reflected plans to allocate about 1.2 trillion yuan (nearly $170 billion) towards building China’s information communication technology infrastructure. The funding would mainly include improvement on broadband and mobile network, which will help bring the country’s remaining 700m non-internet users online.

The fund aims to boost China’s standing in the global internet technology market. The fund has already raised 30 billion yuan from state-owned banks and enterprises, including the Industrial and Commercial Bank of China (IDCBY), China Mobile (CHL) and China Unicom. The ICBC (IDCBY) is one of the biggest investors in the fund having contributed 10 billion yuan to it. The ICBC, together with the China Development Bank and the Agricultural Bank of China (ACBGY), will provide financial services and 150 billion yuan of credit to enterprises that have attracted investment from the fund.

Earlier attempts

This isn’t China’s first attempt at providing financial leverage to its ICT sector. In August 2016, China had launched a 200 billion yuan ($30 billion) venture capital fund to support the development of technology in state-run firms. Then in September 2016, China’s top internet search firm Baidu (BIDU) also launched Baidu Venture, a $200 million fund to invest in the fields of artificial intelligence, virtual reality and augmented reality. Later in October 2016, Baidu also set up a 20 billion yuan ($3 billion) ‘Baidu Capital’ fund to focus on mid- and late-stage internet sector firms, with individual funding amounts ranging from $50 million to $100 million.

What lies ahead: 5G

Currently, several Chinese telecom and wireless carriers are also investing in infrastructure and technology to bring to consumers the benefits of 5G connection services over the next four years.

The largest wireless carrier, China Mobile (CHL) is working to provide 5G services by 2020. In its Weibo post on November 2, 2016, the company said that it has established 5G innovation center in Qingdao, in Shandong Province, with 42 partners from related industries such as the Internet of Things, driverless cars, and virtual reality.

Meanwhile, China Unicom (CHU) also demonstrated its capabilities in driverless cars and smart logistics using 5G during a conference held in Qingdao. According to a (November 8, 2016) Global Times report, the company has built an R&D center for 5G, in preparation for its applications in 2020.

Aside from telecom carriers, Chinese hardware manufacturers such as Huawei Technologies and ZTE (ZTCOY) are also putting in efforts in this area of development. According to Huawei Technologies’ CEO Hu Houkun, the company plans to invest about $600 million for 5G development and half of the company’s employees are set to undergo research and development training in 5G technology.

According to Xiang Ligang, chief executive of telecom industry portal cctime.com, “China now has the ability to play a leading role in developing new standards for the next generation of mobile networks, as we have achieved many technological breakthroughs for 5G. Meanwhile, the large population of Web users in China and their strong needs for connecting things around them will facilitate the application of 5G there.”

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