Chinese businesses boost self-reliance as trade war rolls on

Whether Beijing and Washington reach a trade deal or not, China is already speeding up efforts to break its reliance on a country that is one of its biggest economic partners but also its biggest adversary.

The effort has gained greater urgency for Beijing after more than a year and a half of protracted negotiations, painful tariffs and US sanctions against leading Chinese technology companies.

Negotiators are working towards a potential "phase one" deal but tensions could escalate again if President Donald Trump goes through with a planned tariff hike on Sunday.

To fortify themselves for future levies or political waves, Chinese companies are looking to new markets, adapting supply chains, sourcing homegrown parts and shifting to domestic suppliers.

President Xi Jinping issued his own directive in May, calling for self-reliance in "key core technologies" while warning of a "Long March" against foreign challengers — a reference to a now-legendary 1934-35 strategic retreat by China's Communist revolutionaries.

A manager surnamed Liang at Weipai Industrial Ltd, a tablet computer maker in the southern tech hub of Shenzhen, said the company was diversifying supply chains to reduce reliance on US parts, and looking for a Chinese company to provide semiconductors.

But other industries have also had to rethink their plans.

A sales executive surnamed Lu at textile exporter Zhejiang Zhuang En said after shipments to the US almost halved this year they were targeting European and African fashion brands instead.

Tech leads the drive

Samm Sacks, China digital economy fellow at think tank New America, said the trade war "has added fuel to the fire of the Chinese government's ambitions to duplicate industries inside China that they in the past got from the outside world".

Joerg Wuttke, president of the EU Chamber of Commerce in China, said the two countries were in the process of "decoupling" — a term that has regularly sprung up during the trade war.

"China has realised that it can't rely on some of the foreign suppliers," Wuttke told reporters on Monday.