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Where China’s plan to be a global tech leader collides with Trump’s trade war

President Trump's trade war with China escalated Thursday as the U.S. imposed a 25-percent tariff on nearly 300 more Chinese goods, including the high-tech products China is seeking to grow as part of its "Made in China 2025" initiative. As special correspondent Katrina Yu reports, critics of the Chinese plan say it harms American companies – and the international market.

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  • Judy Woodruff:

    But first, today saw another escalation in President Trump's trade war with China, with the United States imposing 25 percent tariffs on nearly 300 more Chinese goods.

    Beijing responded immediately. Many of the U.S. tariffs target China's high-tech industries, part of their government's Made in China 2025 initiative, which they say is aimed at transforming the country from the world's factory into a global innovation leader.

    As special correspondent Katrina Yu reports, the plan's critics say that it will harm American companies and the international market.

  • Katrina Yu:

    An army of robots dancing to coded choreography, these automated entertainers are on display in Beijing at an expo showcasing the latest in Chinese consumer technology.

    A.I., artificial intelligence, medical devices, transport, these are just some of the 10 sectors that make up the country's technology master plan, Made in China 2025, an initiative that aims to transform the country from a manufacturer of cheap goods into an innovation powerhouse.

    And as Jake Parker from the U.S.-China Business Council explains, the list doesn't end there.

  • Jake Parker:

    It's primarily focused on raising their capabilities in advanced I.T. and tech-focused industries that are important strategic industries for the future, areas like airplane manufacturing, I.T., automotive new energy vehicles.

  • Katrina Yu:

    By setting strategic targets and spending billions of dollars on state subsidies, China hopes to build a technology empire that competes not only with the United States, but Germany and Japan.

    And this Southern Chinese city is at the center of it. In less than two decades, Shenzhen, across the border from Hong Kong, has transformed from a sleepy fishing village to China's Silicon Valley.

    It's the home of Chinese tech giants such as mobile phone manufacturer Huawei, a company whose products are deemed a cyber-security threat by the U.S. Congress and bad for government use, and drawing company DJI.

    Today, Shenzhen's GDP alone is around $400 billion. That's more than Hong Kong and Singapore. Shenzhen's development is thanks in large part to this man, Deng Xiaoping. He's considered the father of modern China and the chief architect of the economic reforms which began opening up the country 14 years ago.

    China's leader from 1978 to 1989, Deng Xiaoping dismantled the disastrous economic policies of Maoist China. He made it possible for companies to privatize and eventually relaxed market controls.

    Thanks to these reforms, China is now one of the leading global hubs for artificial intelligence.

    This is our smart vending machine solution.

    Companies like Malong are leading the charge in developing technologies aiming to disrupt the way we work and shop. This artificially intelligent cabinet is programmed to monitor stock and process payments.

    Here, facial recognition technology is being applied to fashion, making trend-spotting effortless. The company is expanding internationally and opened its first U.S. office this month.

    Malong business development vice president Xia Bing says China is closing the technology gap with the United States.

  • Xia Bing:

    The development of the last 40 years has been incredible. And we're happy to see that some of the Chinese companies today are capable now of leading some of the most cutting-edge technologies, not just in China, but also in the world.

  • Katrina Yu:

    Amid the made-in-China push, money is pouring into sectors like A.I.

    Last year, China's A.I. market was worth $3.5 billion, a figure expected to double this year. But investment is just the beginning. Beijing ultimately wants to become less reliant on foreign suppliers, a mission stressed by Chinese President Xi Jinping earlier this year.

  • Xi Jinping (through translator):

    I hope to see continuous healthy development of the enterprises of our nation and country. And we must depend on ourselves in developing core key technologies, the vital treasures of our country.

  • Katrina Yu:

    China has set targets for 70 percent of basic core components and materials and 40 percent of smartphone chips to be produced domestically by 2025.

    Today, it buys most of these from the U.S. The squeezing out of foreign suppliers has raised red flags for those trading with China.

  • Jake Parker:

    For the overall industry within the China market, there's an expectation that Chinese domestic brands, not foreign brands, will make up a certain percentage of all of that market in the China market. There's also targets internationally as well.

  • President Donald Trump:

    These countries have been ripping us off for decades.

  • Katrina Yu:

    The Trump administration says the policy is protectionist and potentially damaging to the U.S. and international economy.

    It's been branded such a threat that Washington's first salvo of trade war tariffs was aimed squarely at China's high-tech sector, a misfire, according to some Chinese analysts, including Zhong Wei, who believes Made in China 2025 has been blown out of proportion.

  • Zhong Wei (through translator):

    The Made in China 2025 plan has many problems. It's too vague, too comprehensive, and too urgent. So it isn't a national strategy. It's merely an agency document.

  • Katrina Yu:

    He says targets are aspirational, rather than enforceable, and pose little threat to the U.S.

  • Zhong Wei (through translator):

    It's impossible that China can ever dominate these industries, because these 10 industries include all technical-related industries in the country.

  • Katrina Yu:

    Beyond Shenzhen's skyscrapers, the city's grittier outskirts reveal the other side of the country's high-tech drive.

    At San He labor market, migrant workers bid for ad hoc work at chip and smartphone factories. The backbone of China's tech sector, most are paid just over $20 a day, working under rough and often unregulated conditions. They refused to appear on camera, but told the "NewsHour" they were happy at least to be getting work.

    Despite lagging behind the developed world, China's high-tech industries are pushing forward, from made in China to made by China for China. Trade war or not, 2025 will be here before we know it.

    For the "PBS NewsHour," I'm Katrina Yu in Shenzhen, China.

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