China will take forceful measures to support the development of high-end manufacturing, President Xi Jinping said in first comments at the closely watched National People’s Congress.

The manufacturing industry must always be a pillar of strength for China, Xi told delegates from Jiangsu province. The country must ensure its self-reliance in technology, foster small and medium-sized enterprises and build global centres for innovation, state-run CCTV cited Xi as saying on Sunday.

The commentary, also conveyed in a Xinhua report Monday, comes against a backdrop of accelerating shifts of production capacity from China to neighbouring nations like India and Vietnam.

Big electronics assemblers from Foxconn Technology Group to GoerTek Inc. are responding to demand from their customers for a diversified supply chain and setting up more facilities outside China. That’s in addition to crippling US trade sanctions on China that are challenging the world’s second-biggest economy’s plans for growth and development. Xi, however, sounded a resolute note about China’s role as the world’s factory.

Also read: Foxconn’s sales decline despite China reopening

“I’ve always said there are two critical areas for China: one is to safeguard our rice bowl, and the other is to build up manufacturing,” the president said. “As a great nation with 1.4 billion people, we have to rely on ourselves to resolve those two issues. We can’t rely on international markets to save us.”

India has been particularly successful in emerging as an alternative site for electronics factories that assemble gadgets — including Apple Inc.’s iPhones — as Beijing and Washington drift further apart. Production of the latest generation of iPhone came much quicker to India this year than with prior iterations, and exports of the handset doubled. Foxconn plans a new $700 million plant in India, Bloomberg News reported last week.

To secure its self-reliance, China could accelerate the localisation of information and communications technology and add new supportive policies for its chips sector, according to a Jefferies note by analysts including Edison Lee. Those measures could come in the second quarter of this year, the analysts added.

The Biden administration’s campaign to cap Beijing’s technological advancements last week included a new list of blacklisted Chinese tech giants. Among them were server maker Inspur Group and genetics company BGI, barring them from accessing certain US technologies. Inspur has been a partner for US giants like Intel Corp. and Cisco Systems Inc., helping them gain a foothold in China.

Chinese officials have said that massive domestic demand will help keep the global tech supply chain centred on the country. Outgoing Premier Li Keqiang, in opening the NPC, called for a “whole nation strategy” to achieve breakthroughs in key technology fields such as semiconductors and advanced machinery.

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