Technology Oct 23

China seeks first-mover advantage in quantum technologies

Quantum stocks soar after top leaders say high-tech areas will be a priority under the country's 14th Five Year Plan, details for which will be set out next week

by Iris Hong and Jim Pollard
China seeks first-mover advantage in quantum technologies
A data tunnel in quantum computing. Image by Sakkmesterke / AAT/ Science Photo Library via AFP (March 2020).

(ATF) Chinese government officials say the country will accelerate the development of quantum technologies, striving to gain first-mover advantage.

China already has 4,200 businesses in the quantum field, and these remarks have caused prices for stocks linked to the industry to soar.

During a group session of the Political Bureau of the Communist Party of China's Central Committee last Friday, President Xi Jinping said that China will advance the development of quantum science and technology with more strategic planning, supportive policies and investment.

Developing quantum science and technology, Xi said, was of “great scientific and strategic significance."

A few days later at a press briefing by the State Council, Qin Yong, director of the Department of High and New Technology at the Chinese Ministry of Science and Technology (MOST), told reporters that China will include quantum technology as one of the new high-tech focus areas in its 14th Five-Year Plan for 2021-2025.

China's five-year plan is one of the most important policy blueprints that sets medium-term goals for the country's economic and social development. Developing self-reliant technologies is expected to be a top priority in the 14th Five-Year Plan. 

Qin said China would be more forward-looking and would vigorously get into the new generation of high-tech such as 'intelligent' and quantum technologies over the next five years, in a bid to gain the advantages of first-mover status.

Efforts should be made to bridge the gap between the demand for high-quality development and insufficient technological innovation capabilities, he said.

Satellite & train line with quantum-encrypted communication

During the 13th Five Year, China set up its first prototype of a quantum-encrypted integrated satellite-terrestrial communication network through experiments with Satellite Micius and the Beijing-Shanghai Trunk Line, Qin said. 

China claims Micius, which was launched in 2016, to be the world’s first quantum communications satellite. It is named after a Chinese philosopher and scientist from the 5th century BC, also known as Mozi, who has been credited as the first person in human history to conduct optical experiments.

The 2,000-kilometer Beijing-Shanghai Trunk Line (also known as the Jing-hu Trunk Line or Beijing-Shanghai Backbone Network) went into operation in 2017 and is claimed to be the world’s first secure quantum communication trunk line. It links Beijing, Jinan, Hefei, and Shanghai, and is connected with Micius through a station in Beijing. Some banks in China are able to send "ultra-secured" transactions along the Beijing-Shanghai Trunk Line.

Spurred by Xi’s speech, stock prices of quantum technology companies such as Advanced Fiber Resources, Bluedon Information Security Technology, GuoChuang Software, and QuantumCTek soared. Advanced Fiber Resources recorded the largest price surge, of 20% on Monday. 

The buzz also had its impact in the convertible bonds market. The convertible bonds of debt-laden information-security solution provider Bluedon had a price surge of 64% on Monday, and the surge continued in subsequent days even when the company clarified that it has no quantum operations or any income in the field. 

A large number of companies in the quantum technology field have emerged over the last five years, according to data from the Chinese business credit reporting platform Tianyancha. The word “quantum” is mentioned in the business scope of 4,200 enterprises, and 87% of them were founded within the last five years. Guangdong province hosts about a third of these companies.

Quantum science and technology is the study and application of the physical properties of matter at the scale of atoms and particles. The foundational theory of quantum physics is quantum mechanics, and the current three major applications of quantum physics are quantum communication, quantum computing and quantum precision measurement.

Quantum technology can also lead to the creation of ultra-powerful computers that can simulate extremely complex models, allowing new discoveries in fields ranging from medicine to material sciences, as well as greatly improving the accuracy of weather and financial forecasting and the efficiency of machine learning and artificial intelligence.

Jack Hidary, director of AI and quantum computing at Alphabet X, speaks at the DLD conference, Europe's big innovation get together, in Munich in January 2020. Photo: Hubert Burda Media/ dpa via AFP.

'No longer weird science'

Morgan Stanley, in a research report put out in July (Disruption Decoded - Computing Renaissance), said "quantum computing [is] no longer weird science".

"After years of hype with no promise of success, quantum computing is suddenly making large advances and moving closer to the commercial stage. There is an increasing number of players in the quantum computing market with full-scale quantum systems with different technical solutions – IBM and Intel have announced quantum computers with 50 and 49 qubits, respectively, and Google has claimed Quantum Supremacy with its 53-qubit computer.."

It noted that: "Quantum computing is an important part of national security because quantum computers eventually may be able to break internet encryption, putting all government and commercial data at risk."

But it added: "We estimate China lags the US in quantum computing by four to five years, based on our conversations with industry experts in China."

In regard to areas where this research may be most applicable, Morgan Stanley's experts said, "industry participants think AI and quantum chemical system simulations are the most promising areas." 

There was also "high potential for quantum to be used in cloud computing – hybrid quantum most likely".

"Chinese tech and internet companies are keen to improve their cloud computing offerings and performance, and quantum computing can provide a big boost. Chinese tech firms such as Baidu, Alibaba, Tencent, and Huawei are all positioned and investing in quantum computing development. Based on our conversations with industry participants, we believe hybrid quantum computing solutions with conventional computing are likely in the near term; ie, using expensive quantum computing equipment to complete core computing while leaving the rest to traditional computers." 

'At the forefront'

Meanwhile, Song Jiaji, an analyst from Guosheng Securities, said in a commentary that “China is closing the gap with world-leaders ... In terms of quantum communications, China is at the forefront of the world. 

“As China accelerates its development of quantum technologies, we expect substantial growth and investment opportunities in quantum computers and quantum chips at the foundation side and quantum communications and quantum cloud at the application side,” he said.

Quantum communications are unhackable and highly secure because the encryption keys are encoded in particles that are in a delicate, entangled quantum state. Any attempt to intercept them would disrupt that state and signal the presence of an eavesdropper. 

For decades, scientists have believed that this mode of ultra-secure communications can be used for political, economic and military purposes. 

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