Xi's tech mantra

Hello, this is Sarah in Hong Kong. I’m just back from Beijing’s annual meeting of the China Communist Party elite, which pledged to pool the [View in browser]( [Bloomberg]( Hello, this is Sarah in Hong Kong. I’m just back from Beijing’s annual meeting of the China Communist Party elite, which pledged to pool the nation’s resources into tech. But first... Three things you need to know today: - China is testing an [AI assistant for neurosurgeons]( - Reddit launches IPO with [$748 million target]( - French government agencies were [hit by cyberattacks]( Tech will save us, maybe At the Great Hall of the People last week, members of China’s ruling party gathered to talk about how to boost innovation, particularly in “disruptive and frontier technologies.” That came with a 10% increase in this year’s national budget for science and technology, to $51.6 billion. Now, after Beijing’s bruising crackdown on the internet sector, it seems that President [Xi Jinping](bbg://people/profile/4648789) is looking to other segments of its vast tech industry — like chips and AI — for answers on how to revive growth. But it was difficult to find those answers in the Great Hall itself. The meeting this year was more muted than in times past, which appears to have been by design. Attendees in Beijing waved away questions about Premier Li Qiang’s [canceled]( press conference or geopolitical tensions, with one telling journalists simply to “study the premier’s work report.” Others avoided answering because they were “pressed for time.” In pre-Covid years, I recall delegates being chattier and more willing to mill about the Great Hall, even if only to promulgate the Party’s message. After taking a break from multiple rejections for tea (served in a customized Great Hall paper cup), I finally managed to stop a member of the Chinese political advisory body from Guangdong, who said his focus this year was on promoting “[new productive forces](” through technological innovation. But when asked about how this would help China deal with US curbs on chip and tech imports, he paused before mustering: “I have not thought about this deeply yet.” Then he quickly dashed off. A few reporters later cornered a delegate from the National People’s Congress, who initially tried to escape after just a few questions. I threw in a query about US tech sanctions, and he couldn’t resist an answer about how it was a sign of Washington’s desire to suppress China’s rise, meaning that self-sufficiency was the only path forward. Yet. when I followed up to ask about why Li Qiang was no longer speaking to the press, the delegate said he had nothing to say. I also got a microdose of information from 360 Security Technology Inc. Chairman [Zhou Hongyi](bbg://people/profile/6308508) while he was exiting the hall. Walking in lockstep, he told me that China’s AI companies had developed quickly and basically managed to catch up to OpenAI’s ChatGPT capabilities, but declined to comment more specifically about the AI gap between the US and China. The Party’s delegates are not in an easy position. On the one hand, no one wants to say anything politically incorrect in this restrictive climate; on the other, there are no easy answers. “New productive forces” may be the catchphrase of the day, but there is only so much that can be said on how those forces will be unleashed on the economy and tech sector. China’s facing the prospect of [tighter]( US chip export controls, higher [limits]( on Chinese access to Americans’ personal data and official [probes]( of security risks in Chinese vehicles. That could ding everything from apps like [ByteDance Ltd.](bbg://securities/1774397D%20CH%20Equity)’s TikTok to AI development efforts by [Baidu Inc.](bbg://securities/BIDU%20US%20Equity) and the rise of EV makers like [BYD Co.](bbg://securities/1211%20HK%20Equity) The external pressure is driving money into things like the state-backed Big Fund — which is [raising]( more than $27 billion for its largest chip fund yet — and eliciting ripostes like mandates for staffers at state-affiliated institutions to ditch their iPhones. For many Chinese tech companies, de-risking from the US has become a matter of survival. In private conversations, you’ll hear little confidence that relations between Beijing and Washington will improve, regardless of which way the US election in November swings. That will make it harder for Chinese-origin players like ByteDance, which is facing a new bill in Congress that could ban TikTok in the US, and the now Singapore-based Shein, which has hit bumps on its path toward a US public listing. Domestically, the mood in China has also shifted. In the days before the pandemic, I remember crowds of journalists surrounding tech leaders like Baidu’s Robin Li and [Tencent Holdings Ltd.](bbg://securities/700%20HK%20Equity)’s Pony Ma at the Great Hall. Since last year, the internet moguls have mostly been [replaced]( by chip researchers and engineers. Local residents speak of layoffs at internet companies, greater scrutiny of foreign consultancies, and disrupted visa applications to the US. There’s also pent-up frustration over how the government has steered the tech sector, including the back-and-forth last year of regulators’ pronouncements on [gaming curbs]( and [cross-border data flows](. And although there are growing signs of revival for the sluggish economy, weak consumption is putting the focus on discounted spending and triggering [price wars]( in everything from EVs to cloud computing. All this makes it understandable why the Party wants to unleash “new productive forces” and to pool talent into tech innovation. That may be key to achieving the country's 5% GDP growth target this year — a goal many economists argue may be unrealistic. How to do so effectively, however, remains an unanswered question.—[Sarah Zheng](mailto:szheng244@bloomberg.net) The big story The Implanted Brain Computer-Interface Collaborative Community, or iBCI-CC, is an industry group being [created by major implanted brain-computer interface firms]( to address issues facing the emerging field in attempts to build confidence among regulators, patients and the general public. The Food and Drug Administration will be a member. One to watch Khosla Ventures founder Vinod Khosla joins Ed Ludlow and Caroline Hyde to discuss his thoughts on Elon Musk's OpenAI lawsuit. Get fully charged Xiaomi’s EVs have a release date, though [no pricing yet.]( Alibaba will roll out a new employee incentive plan starting April [as stock languishes.]( Singapore startup Silicon Box will invest $3.5 billion in Italy [to build a chip factory.]( Abu Dhabi is targeting $100 billion in assets under management [for AI investment firm.]( More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Q&AI]( for answers to all your questions about AI Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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