China's IT minister under investigation for violating law

Xiao Yaqing had been steering China's chip industry

China's Central Commission for Discipline Inspection and the State Supervision Commission have announced that Xiao Yaqing, the nation's minister for industry and information technology, is "suspected of violating discipline and law" and has been placed under "review and investigation".

The announcement of action against Xiao doesn't give much more detail than the paragraph above.

It's possible that Xiao has done something worthy of a probe. Chinese president Xi Jinping detests corruption and has tried to root it out at all levels. Few corruption probes have focused on people with Xiao's seniority, but Xi's anti-graft sentiment is such that he would be unlikely to give a confidante preferential treatment.

An alternative explanation for the probe is it signals Xiao has fallen out of political favor. Despite a stellar 30-year career during which he was trusted with many leadership positions, Xiao was not included on the list of delegates for this year's 20th National Congress of the Communist Party of China.

The National Congress is held every five years and is the most significant meeting in Chinese politics. It anoints presidents and sets major policy directions. This year's Congress, due in November, is widely expected to take the unprecedented step of giving Xi Jinping a third five-year term as president. No previous Chinese president has served more than ten years in the top job.

That a sitting cabinet minister was not invited to the Congress suggests he's on the outs, politically. That Xiao was excluded from what is expected to be an extraordinary meeting also suggests his opinions may not have been welcome.

Xiao drove China's development of semiconductor and electric vehicle technologies and championed the nation's self-sufficiency policy in both fields. The former efforts have arguably underperformed, as China's silicon capacities remain modest. China is doing better in electric vehicles, with some of the world's first robo-taxis already rolling on its roads.

News of Xiao's troubles came a day after Chinese media outlet Caixin, which is excluded from China's lists of State-approved media, reported that the head of China's largest semiconductor investment fund has also become the subject of an investigation.

Whether that signals a wider crackdown on the sector is, again, difficult to say. But with the United States' CHIPS Act having passed and semiconductor manufacturing therefore set to increase on US soil, and sanctions on China persisting, whoever inherits Xiao's gig has their work cut out. ®

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