Biotech, Clean Energy Sectors in China Face Uncertain Future, Insider Says

News Analysis

China’s biotechnology and clean energy sectors may be the next targets of U.S. sanctions, according to the president of a high-tech corporation in Japan.

Such sectors will probably face a downturn following China’s hard-hit semiconductor industry, the president, who for security reasons only wanted to be identified as Desen, told The Epoch Times on Jan. 5.

These sectors will become stagnant as the technology decoupling between the U.S. and China continues, Desen said.

During this process, Chinese enterprises in these areas, he said, will lose the basis on which they learn and imitate.

The broader economic decoupling is also speeding up the outflow of international capital from China, he said, adding that this will apply further pressure on the economy.

Decoupling with the United States will affect China’s cheap commodities as they will lose their main market. New energy battery factories, for example, will need to decrease their production capacity.

It will become a situation where small and medium-sized enterprises will face the risk of survival and may be taken over. Large enterprises will lose the incentive to expand production, Desen said.

A technician processing samples in a lab at Chinese biotech company Coyote, before testing it in the Flash 20, a machine developed as a fast test for the COVID-19 coronavirus in Beijing, on Sept. 27, 2020. (Greg Baker/AFP via Getty Images)

Clean Energy, New Energy Technology

China makes up a big portion of the global market in clean energy and new energy vehicles.

Chinese state media has claimed that China’s new energy vehicle production and sales volume have ranked first in the world since 2015. Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), said in August 2022 that “China has basically achieved its goal of overtaking the world in new energy vehicles,” according to CCTV.

But its touted prospects for clean energy and new energy vehicles in China may not be so promising, according to Desen.

Chinese chip design lines were booming before it was sanctioned by the United States. For example, in 2018, Huawei’s chip plant Hisilicon ranked fifth in the list of the world’s top 10 integrated circuit (IC) design companies, but after Huawei was added to the U.S. Entity List in 2019, Intel, Qualcomm, and Xilinx cut their deals with Huawei, Hisilicon has since fallen out of the top 10, dwindling production values.

Starting in 2022, the U.S. Biden administration has ramped up sanctions on China’s semiconductor industry. As a result, the growth rate of the number of Chinese semiconductor design companies has slowed.

U.S. National Security Advisor Jake Sullivan, on Sept. 16, 2022, raised concerns over biotechnology and clean energy technology.

Sullivan said three technology areas would be particularly important in the next decade. These three technology areas are computing-related technologies, including microelectronics, quantum information systems, and artificial intelligence; followed by biotechnology and biomanufacturing; and finally, clean energy technologies.

Desen believes this could be a sign that the U.S. is focusing on high-end technologies in biotechnology and clean energy at the national security level, in addition to semiconductor technology.

Workers checking laptop parts in a factory in the Hangyong Auto Industrial Park, in Lu’an City, in China’s Anhui Province, on Nov. 19, 2018. (STR/AFP via Getty Images)

Chinese Chip Industry

On Oct. 7, 2022, the U.S. government announced a raft of export controls that not only prohibit U.S. companies from exporting advanced chips and technology to China but also prohibit certain semiconductor chips made with U.S. equipment and tooling from being supplied to China, regardless of their origin in the United States.

The export controls are considered the largest policy shift in U.S. technology exports to the Chinese Communist Party (CCP) since the 1990s and are regarded as the most comprehensive and stringent export control measures.

Wei Shaojun, chairman of the IC design branch of the China Semiconductor Industry Association, said in a speech at a summit on integrated circuit design on Dec. 26, 2022, that the sanctions on China’s semiconductor industry are “getting more and more severe” and that “in the face of the severe external environment, one should not be blindly optimistic that one can do anything.”

Wei is a leading figure in China’s semiconductor industry and a professor in the Department of Micro and Nano Electronics at Tsinghua University, where he has long been involved in research and development in IC design technology.

In addition, on Dec. 15, 2022, the U.S. Department of Commerce placed 36 technology companies and entities with CCP links on the blacklist, including Shanghai Micro Electronics Equipment (SMEE), a leading company in China’s lithography industry.

Regarding the current status of the U.S.-China technology decoupling and its impact on the future, Peking University’s Institute for International Strategic Studies published a research report on Jan. 31, 2022, on its official site, concluding that the decoupling would lead to losses for both sides. But the report added that China’s losses would be significantly greater than those of the United States and that China might be caught in a bottleneck in some key technological developments, making it difficult to break through.

The report was only online for only a few days until it was taken off, according to a report of VOA on Feb. 4, 2022.

The U.S. mainstream will take a tougher stance against China as it comes to realize that the CCP, once it swells economically, will become a ticking time bomb over the Taiwan Strait issue and a growing threat to the rest of the world, said Desen, citing the CCP’s attempt to mislead the nation away from universal values.

Ellen Wan contributed to this article.