Every one or two months, China’s Politburo, an elite group of China’s top 25 leaders, holds a “study session,” inviting external experts to lecture on topics ranging from archaeology to finance to legal systems. But on Oct. 16, they covered a somewhat novel topic: quantum technology.

The session followed a series of lectures on emerging technology over the past few years. In December 2019, the group studied blockchain technology. A year before that, artificial intelligence (AI). 

The country’s most powerful leaders’ study of these technologies highlights their strategic importance on the national agenda. China has already ramped up efforts to support blockchain and AI development, and experts believe quantum technology will be next.

Chinese President Xi Jinping, who chaired the Oct. 16 session, said that “developing quantum science and technology is of great scientific and strategic significance,” state-run newspaper China Daily reported Monday.

Markets react

Quantum technology is an emerging field of information technology that relies on the principles of quantum mechanics. Its fields of application range from computing to cryptography and sensors.

Xi’s remarks created an uproar on China’s stock markets. Several companies on Shenzhen’s startup board that investors believe are utilizing quantum technology on Monday saw their shares jump by 20%, the board’s daily limit. 

The stocks include component maker Hongfeng Group, which said it is developing quantum-based cybersecurity software; cloud service provider Guochuang Software, which has invested (in Chinese) in a company specializing in quantum measurement instruments; and cybersecurity firm Blueton, which said it had been working on a “quantum communication terminal,” but Chinese media reports the company is mired in debt.

During his speech, Xi also said the central government should “speed up efforts to create a favorable policy environment for the development of quantum science and technology” and “ensure the investment in the field” to drive local governments and enterprises to “increase input,” according to state news agency Xinhua.

What is quantum technology?

Quantum technology is a broad term for efforts to harness the principles of quantum mechanics, which describes minuscule objects that exist in a haze of possibility on a micro-scale instead of in a specific place at a specific time, to create more accurate navigation and timing systems, more secure communications, and more powerful computing.

One of the most promising applications of the technology is quantum computing, which experts say would provide an “explosive boost” to traditional computers. However, the quest for the commercial use of quantum computing is still at an early stage.

Quantum computers are made of quantum circuits that run quantum bits, or qubits, which are similar to the bits in traditional computers. Unlike bits, which represent a logical state with one of two possible values (often represented as either “1” or “0”), the qubits can be in a “1” or a “0,” or in what is known as a superposition of both “1” and “0,” potentially improve the computing power in a massive scale, according to a 2017 article by Mark Jackson, scientific lead of business development at Cambridge Quantum Computing.

However, qubits can only be made under extremely low temperatures and the circuits that house those qubits are hard to scale in a production environment.

Follow the leader

Political endorsements for emerging technology are a powerful force in China’s capital markets. In October 2019, when members of the Politburo were given a lesson in blockchain, Xi made calls to promote the “deep integration” of blockchain with China’s economy and to “to increase China’s influence and rule-making power in the global arena.”

More than 85 blockchain-related stocks rose by 10% the Monday after Xi’s speech. Ten percent is the daily limit on the main boards of the Shanghai and Shenzhen stock exchanges.

Central and local governments in the country moved quickly to put money in blockchain. In December, the southern Chinese island province of Hainan announced plans to set up a so-called blockchain pilot zone and a government-backed fund of RMB 1 billion (around $150 million) to underwrite local blockchain companies.

In February, Chinese media reported that 22 of mainland China’s 31 provincial-level administrative divisions had mentioned blockchain in their 2020 government work reports—official documents that lay out governments’ work plans of the year—vowing to harness the technology to promote digital transformation and industrial upgrades.

Then, in July, Beijing’s government released a blueprint of its plan to implement a blockchain-based programmable government. The plan aims to build a unified blockchain-based framework for digital governance, facilitate data-sharing between agencies and businesses, and enable cross-departmental and cross-regional collaboration.

Xi’s blockchain speech and his quantum speech on Friday both called for comprehensive “policy support” for the two technologies, Qi Aimin, a law professor at Chongqing University, told TechNode.

Qi said that favorable policies towards quantum technology could be similar to those seen for blockchain, and could include setting up tailored industrial zones to incubate quantum companies, similar to Hainan’s approach to blockchain.

Quantum technology today

“China’s quantum science and technology development still has many weak links and faces multiple challenges,” said Xi during his speech. Nevertheless, China has hit several milestones in developing quantum technology ahead of the rest of the world.

In 2017, the country launched the world’s first quantum satellite and built a 2,000-kilometer quantum fiber link, which facilitates the transmission of information in the form of qubits, connecting Beijing and Shanghai. The country is also building (in Chinese) what officials claim will be the world’s largest quantum laboratory in Hefei, capital of China’s eastern Anhui province, which is set to complete by the end of 2020.

In September, a Chinese physicist claimed to have built a quantum computer that is one million times faster than Google’s Sycamore, a model which completed in around 200 seconds a calculation that would take the world’s fastest computer 10,000 years. His claims were widely reported by local official media but were later retracted by him and his team.

Quantum leapfrog

Unlike AI and blockchain, quantum technology is far from commercialization—analysts predict (in Chinese) it will take ten to 15 years. But what it has in common is the potential for leapfrog growth. 

In industries where Chinese industries lag international rivals, disruptive breakthroughs create opportunities to start a new race from scratch. China’s policymakers have already taken the approach in the automobile sector. The country, not a traditionally important car manufacturing hub, pursued an aggressive strategy to support electric vehicles (EV) starting from 2009. Now, China is the world’s largest EV market and home to some of the world’s biggest EV makers.

Semiconductors have been a pain point for China for years, more so as the US has moved to cut off equipment maker Huawei from many vital components. The world’s largest market for semiconductors, it has pledged to produce 70% of chips it uses by 2025. But industry groups have said the goal is “unrealistic.” Semiconductor market research firm IC Insights said in a May report that China will produce only 20.7% of chips it uses in 2024, up only 5% from 2019.

But if qubits replace bits, all bets are off. China is not currently a global leader in quantum technology, as Xi acknowledged. But when the new races start, China may have a head start.

Writing about semiconductors and telecommunications.