China Strengthens Its "Core and Soul" How Leading Companies Drive Technological Self-Reliance

This week, global attention was drawn to a meeting between Chinese President Xi Jinping and representatives of the private sector. During the event, Huawei's founder, Ren Zhengfei, stated that concerns over China’s lack of domestic semiconductors and operating systems are gradually diminishing. His remarks underscore China's ongoing pivot toward technological self-sufficiency despite external pressures and sanctions.

China's Transformation Into a Technological Powerhouse  

1. The Historical Context of "Core and Soul"  

The phrase "lack of core and soul" first emerged in 1999 when a Chinese technology official used it to highlight weaknesses within the country’s information industry. In this context:  

- "Core" refers to semiconductors, essential components for modern technology.  

- "Soul" refers to operating systems, the backbone of software ecosystems.  

For many years, China remained reliant on foreign suppliers for these crucial components. However, the nation is now fully committed to modernizing and filling these gaps:  

- Developing world-class semiconductor alternatives domestically.  

- Launching and optimizing open-source-based operating systems.  

- Relying on industry leaders like Huawei, BYD $002594.SZ, and Xiaomi $1810.HK to spearhead these advancements. 

2. Huawei's Role in Achieving National Goals  

Huawei has been a cornerstone of China's push toward technological independence. Despite U.S. sanctions, the company has successfully developed its own advanced chips and operating systems, symbolizing the resilience of Chinese innovation.  

Breakthroughs in Other Sectors  

During the meeting, other prominent business leaders also shared insights into China’s progress across various industries that hold strategic importance.  

Key Remarks by Industry Leaders  

1. Electric Vehicles (BYD)  

   - Wang Chuanfu of BYD highlighted how China’s EV industry began "from scratch."  

   - Today, the country has positioned itself as a global leader in EV production, with a growing focus on international markets.  

2. Consumer Electronics (Xiaomi)  

   - Lei Jun of Xiaomi expressed confidence in overcoming challenges under Xi Jinping’s leadership, stating, "There is nothing we cannot overcome."  

   - Xiaomi continues its efforts to innovate globally while maintaining affordability for consumers.  

3. Semiconductors & AI  

   - Will Semiconductor $603501.SS advances cutting-edge chip manufacturing technologies.  

   - Unitree focuses on developing humanoid robots, further strengthening China's position in global innovation.  

4. Agribusiness  

   - New Hope Group contributes significantly as the nation’s leading animal feed producer, ensuring food security.  

Recent Achievements Across Industries  

- A significant rise in domestic components used in vehicle production.  

- Rapid advancements in artificial intelligence and robotics.  

- Growth in exports of cutting-edge technology, boosting international competitiveness.  

Takeaways from the Meeting  

The meeting’s format stood out for its exclusivity: six founders were chosen to directly address Xi Jinping, while other prominent figures, like Alibaba’s Jack Ma $9988.HK, observed silently. Despite the controlled nature of the event, crucial messages were clear: China’s march toward technological self-reliance is unwavering, fostered by collaboration between the government and private sector giants.

The gathering sets the stage for further innovation and growth as the country underscores its commitment to strengthening semiconductor development, electric vehicle production, and operating systems. By investing in these sectors, China signals that it is ready to overcome external challenges and expand its influence on the global stage.