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Opinion
Shuli Ren

China's Chip Quest Is All Heart, Not Enough Brain

The country is wasting billions of dollars and causing debt strains by pursuing too many semiconductor projects.

More than 50 projects with $243 billion of investment? That's a craze.

More than 50 projects with $243 billion of investment? That's a craze.

Photographer: STR/AFP/Getty Images

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.