china’s technology superpowers -- 9/20/22

Today's selection -- from China's Next Act: How Sustainability and Technology are Reshaping China's Rise and the World's Future by Scott M. Moore. A new book by Scott Moore discusses China's future, including how it is emerging as a science, technology, and innovation superpower:
"China is famous for its well-laid central plans. Since the 1950s, five-year plans have been the basic organizing principle for state policy and economic pla­nning, guiding allocations of funding and resources and, at least in theory, the work of millions of bureaucrats and employees across the country. Abroad, though, few plans have attracted as much attention, or concern, as the one known as 'Made in China 2025'. First put forward in 2015, the plan aimed to combat a 'two-way squeeze' of automation, on one hand, and growing com­petition from low-cost manufacturing rivals like Bangladesh and Vietnam, on the other. In true centrally planned fashion, Made in China 2025 set out several key indicators for the nation to achieve by 2025, including increases in the number of patents filed and internal firm expenditure on research and development.

"Given China's Made in 2025 plan, coupled with unfair mercantilist policies it is no exaggeration to suggest that, without aggressive action, leading economies such as ... the United States will, within two decades, likely face a world wherein their industry firms face much stiffer competition and have fewer jobs.' In its report justifying the imposition of tariffs against Chinese goods in 2018, the Office of the US Trade Representative specifically cited the Made in China 2025 industrial policy and its threat to leapfrog the United States in advanced technologies. In 2019, the European Union likewise branded Beijing an 'economic competitor in pursuit of technological leader­ship and a systemic rival promoting alternative forms of governance.'

"To be sure, the growth of China's scientific research and development ap­paratus after the late 1970s was astonishing. Beijing made high-technology sectors a high-level priority, and scientific research and development enjoyed lavish investment to boost both economic growth and Chinese military power. In the twenty-first century, Beijing began to place special emphasis on breakthrough technologies it believed would be integral to the economy of the future. The 13th Five-Year Plan (2016-2020) pledged to 'move faster to make breakthroughs in core technologies' like energy, materials, and bi­omedical research. Just as important, these plans were backed by massive infusions of state funding. Total research and development expenditure increased approximately 30-fold from 1991 to 2016, to some US$410 billion, accounting for roughly 20% of the world total.

"By some estimates, the Chinese government pledged some US$350 bil­lion to support strategic scientific research and technological develop­ment initiatives through 2025. China's research and development (R&D) spending accounted for some 2.1 % of gross domestic product (GDP) in the late 2010s -- not far behind the United States, which as the world leader spent approximately 2.7% of its GDP on scientific research and technolog­ical development. Perhaps most meaningfully, China's R&D spending as a percentage of GDP was higher than would be expected given its level of per capita income, suggesting that Chinese firms as well as the state viewed it as an unusually high priority relative to their counterparts in other devel­oping countries. Meanwhile, university research spending in China increased at an average rate of some 15% -- a pace equaled in history only in the United States after the launch of Sputnik in the 1950s.

"Just as in the Sputnik era, the scale of this investment created a seem­ingly serious challenge to America's leadership in science and technology. In 1980, the United States accounted for 37% of the entire world's science and engineering publications, but by 2011, it produced only about one-quarter, a relative decrease due mostly to a boom in Chinese research activity. A land­mark shift occurred in 2016, when for the first time, China surpassed the United States as the source of the single largest number of science and en­gineering publications, producing some 19% of the world's total, compared with 18% for the United States. Over roughly the same period, China be­came the first developing country to form a manned space program, acquire the ability to design and build supercomputers, and give rise to world-class technology firms like Alibaba and Huawei (more on Huawei in Chapter 5). It also became one of the few developing countries to feature multiple startup ecosystems, centered on Beijing, Hangzhou, Shanghai, and Shenzhen.

"This last feature, a partial embrace of market economics and American­style entrepreneurial capitalism, made technological competition be­tween China and developed democracies decidedly different from its Sputnik-era equivalent. Unlike the West and the Soviet Union, China and developed economies became highly interdependent, technologically as well as economically. The extent of this interdependency was evident even in advanced microchips, often held up as an example of technological com­petition. Despite decades of effort and billions of dollars spent to develop an independent capacity to produce advanced chips, Chinese manufacturers remained dependent into the 2020s on American vendors for a type of soft­ware known as electronic design automation tools needed to design and an­alyze electronic circuits and the semiconductors that made them work. This dependence created a temptation to try to cement America's techno­logical advantage in chip design by restricting Chinese firms' access to for­eign technology, capital, and other resources -- part of an approach known as 'decoupling.'

"Though it could be effective in slowing the development of China's sem­iconductor sector, it was also costly: US chip companies obtained a signifi­cant share of their sales and profits from the Chinese market. At the same time, US firms were themselves largely reliant on foreign supply chains for production of advanced semiconductors. While technological compe­tition meant that decoupling and related strategies became a growing part of Sino-American ties, the reality of technological interdependence meant they would inevitably be limited in scope. As Richard Danzig and Lorand Laski wrote, 'Rather than eliminating interdependencies, Chinese and American leaders appear to be trimming and policing them.' In early 2021, the Chinese Semiconductor Industry Association announced it would create a joint working group with its American counterpart to discuss intellec­tual property protection, trade policy, and other contentious issues -- a sure sign that Chinese firms, at least, were keen to avoid decoupling. It also re­flected China's decidedly mixed track record on the development of other technologies -- so much so, in fact, that it remained unclear whether it would ever be able to declare true technological independence."



Scott Moore


China's Next Act


Oxford University Press


Oxford University Press 2022


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