CNBC: 

I have two questions. Statistics show that chip and auto production has recovered in recent years. Does this mean that the shortage of chips will be solved soon? What's your outlook for 2022? The second question is about China's "dynamic zero-COVID-19" approach. Some foreign analysts are worried about its damage to China's supply chain. Is the MIIT concerned about the issue? What measures will be adopted to ensure stable production? Thank you.

Luo Junjie:

Thank you. The manufacturing capacity of integrated circuits continued to be strained last year, which led to a knock-on chip shortage through all sectors and significantly impacted the performance of global industries. In particular, the auto industry was hit worst. Many domestic auto producers have cut production or suspended production in the short term. According to our analysis, there are two reasons behind it. On the one hand, with upgrading social intelligence, the demand for chips – the most critical component in smart equipment – continues to grow. On the other hand, as the pandemic spreads globally, some countries are still imposing unjustified sanctions and suppression of enterprises from other countries, which has severely hit the global semiconductor supply chain. These overlapping factors have given rise to the chip shortage. As the market adjustment mechanism gradually plays its role, together with the joint efforts of governments, auto, and chip producers, the chip shortage in the auto sector is easing gradually. But we should also see that the stability of the global supply chain of integrated circuits is still facing severe challenges, and the chip supply will remain strained for a long time to come.

The integrated circuit (IC) industry is highly globalized. China has the world's largest integrated circuit market, and the Chinese government is committed to boosting close global cooperation to build sustainable and stable industrial and supply chains based on the principle of openness and development. Therefore, the MIIT has been keeping a close eye on the automobile chip shortage issue and actively responding to it by taking multiple measures to ensure chip supply and maintain the steady operation of the automobile industry. Next, we will also strengthen communication and cooperation with relevant countries and regions, encourage leading domestic and foreign enterprises to increase investment in a coordinated manner, and enhance the supply capacity of the whole chip industrial chain. In addition, we need to effectively implement the "Several Policies for Promoting High-quality Development of the Integrated Circuit Industry and the Software Industry in the New Era" No. 8 document for 2020 issued by the State Council and related supporting policies. By doing so with full efforts, we aim to promote a free flow of various resources, create a fair and just market environment, achieve high-quality development of the IC industry, and help build a global industrial system featuring co-existence and win-win cooperation. Thank you. 

Tian Yulong:  

Let me answer your question about the impact of the dynamic zero-COVID-19 approach. I noted that some foreign media wrote articles on the policy's negative influence on the industrial economy. As we all know, China has been following the anti-pandemic principle of preventing inbound cases and a domestic resurgence, which has so far generated remarkable results. In accordance with the requirements of the CPC Central Committee and the State Council, China has taken the lead to bring the COVID-19 under control by putting people and their lives first. It is fair to say that China has led the world in both economic growth and pandemic prevention and control.  

As I said just now, China's economic growth, especially in the industrial sector, shows that the country's anti-pandemic policy is beneficial to the industrial and supply chains. It is by adopting the right pandemic prevention strategies that China has led the world to resume work and production and ensure the stability and security of the industrial and supply chains. As a result, China's economic development, export, and some other sectors are all growing smoothly on the whole. In my opinion, the stability of the industrial and supply chains can be attributed to our effective anti-pandemic endeavors. Of course, you may be concerned about the current multiple sporadic outbreaks in China. Some cities involved have taken control measures, which may exert temporary and small-scale influences on the industrial and supply chains of some regions. However, the short-term effects in a limited scope did not have a big impact on the macro-industrial chain. In particular, with the increasing precision of China's pandemic prevention and control policies, there will not be a big impact on the industrial and supply chains, especially on industrial enterprises, and the stability and security of the chains can still be guaranteed. Certainly, the pandemic is still spreading internationally and has yet to be effectively controlled, making the external environment of the industrial and supply chains uncertain, which will impact China's industrial and supply chains to some extent.  

I believe that by adhering to the anti-pandemic policies and taking more precise and effective measures to ensure the safety of supply and industrial chains, China's industrial and supply chains will become more resilient. We will also make greater efforts to keep the global supply chains smooth, which I deem essential to the stable operation of our industries, the production-marketing coordination, the unimpeded domestic and foreign trade, and the industrial economy's steady development this year. Coordinating pandemic prevention and control with economic and social development, especially industrial economic growth, remains a priority this year.