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In its 14th five-year plan, China laid out its vision for how the country’s post-pandemic recovery can help assert its economic rise. Central to the plan are robust investments in research and development, in a bid to bolster its prowess in seven “frontier” technologies and ensure its self-reliance in the face of tough competition and alienation from the U.S. 

Here’s what you need to know.

Boosting R&D: The country plans to increase research and development spending by over seven per cent each year until 2025. Spending on basic research will surge to 10.6 per cent in 2021. China had already increased its R&D spending by 10.3 per cent in 2020, amounting to about US$378 billion and representing 2.4 per cent of the country’s GDP. By comparison, Ottawa’s spend on R&D has remained relatively stable over the last 10 years. (It spent $7.6 billion on R&D in 2010 and $7.94 billion in 2020, according to Statistics Canada.) 

A focus on the frontiers: The plan outlines support for key technologies in which China wants to lead: artificial intelligence; quantum computing; brain science; semiconductors; genetic research and biotechnology; clinical medicine and health; and space, sea and polar exploration, including building a “Polar Silk Road.” Improving its semiconductor sector is particularly important for the country’s position as a tech leader. The country relies heavily on the global supply chain for microchip parts to build its electronics. But retaliation from the U.S. has barred China’s largest chip manufacturer from accessing U.S.-made parts. Washington also issued sanctions limiting the sale of U.S.-made chips to Chinese tech darling Huawei, in a move one analyst called a “death sentence” for the firm. Bolstering its domestic microchip supply chain could eliminate major vulnerabilities for the country’s technology companies. 

Supporting small businesses: The country called on large banks to increase loans to small businesses by over 30 per cent this year. The financing should be focused on companies affected by COVID-19, said Premier Li Keqiang. The plan dovetails with a push to tighten regulations in the fintech sector, which has been a key funding source for small enterprises in the country. 

Why it matters: China’s latest quinquennial plan underscores the schism between China and the U.S. that had grown under the Trump administration. Trump’s concerns with China had centered on the latter’s mounting dominance in the technology sector, thanks to policies Washington deemed unfairly advantageous to local firms at the expense of foreign ones. While U.S.-China relations were expected to improve under President Joe Biden, Paul Evans, a public-policy professor at the University of British Columbia, said the new plan suggests otherwise. “This is a continuation of the Trump-era technology battle with competing techno-nationalisms—this competition for who’s going to have the leadership position in the fourth industrial revolution,” Evans told The Logic Friday. “And that’s been codified in this new five-year plan.”

What it means for Canada: Ottawa has served as a battleground in the conflict between its two largest trading partners, as seen through the extradition hearings of Huawei executive Meng Wanzhou in Vancouver and the detainments of Canadians Michael Kovrig and Michael Spavor in China. The federal government has long delayed its decision on whether to allow Huawei in its 5G networks, amid pressure from the U.S. to ban the firm. Evans said the new plan spells more of the same in terms of Canada’s fraught relations with China. In priority sectors “where China is going to go mainly on its own,” he said Canada may try to align more closely with the U.S. amid what he calls “selective decoupling and bifurcation of systems” in the countries’ technology sectors. “We thought that it might take a different form under the Biden administration and that there might be more room for maneuvering on things like our 5G decision,” said Evans. “But the game is on, the game isn’t going to change, and it’s going to be a hard-fought one.”