China has made developing its own chip industry a matter of patriotic pride. It helps that “China chip” and “China heart” sound the same in the local language. The strain of this 1.7 trillion yuan ($243 billion) endeavor may be too much for the debt-clogged arteries of its municipal governments, though.
Over the past decade, Beijing hasn’t hesitated to deploy its fiscal might in pursuit of economic and social objectives. After the 2008 collapse of Lehman Brothers, the government spent 4 trillion yuan building roads and railways to bolster the economy, sending growth into overdrive. Between 2015 and 2018, authorities poured roughly 3.5 trillion yuan into shanty-town developments to aid the poor.