When the US administration shut down Chinese telecoms equipment maker ZTE in April — putting the future of a $17bn company and 75,000 jobs at risk after sanctions cut the supply of key microchips — it highlighted a vulnerability in the Chinese economy: it depends on foreign-made chips.
The country remains dependent on imports to build the phones, telecoms gear, computers and other devices that account for almost one-third of its exports: at $227bn in 2016, the country spent more on the items than it did on oil, iron and basic plastics combined, according to the World Bank and Chinese government data.
The US is set to unwind the ZTE sanctions after Chinese leader Xi Jinping pressured Donald Trump, but Beijing remains desperate to end its reliance on foreign chipmakers. It has already committed $150bn to build its domestic semiconductor industry over the next decade via the Made in China 2025 development programme.