Dragon in the room: China’s technology strides augur well for developing world

By: | Updated: February 9, 2019 7:27 AM

There are allegations that China’s practices force foreign companies to part with technology—a backhanded intellectual theft that has been at the heart of the China-US discord. There have been ethical concerns, too (the 2018 gene-editing trials, for example). But China’s strides will, no doubt, be harnessed by the global community, giving billions in the developing world access to quality goods at cheaper prices

china, intellectual capital, america, europe, Huawei 5G technology, MateBook X Pro Laptop, beijing, Communist Party, World Economic ForumChina’s majority of R&D personnel (78%) are in enterprises (higher than South Korea, Japan and Germany), and only 9% are in the higher education sector, less than half of that in Germany, Japan and South Korea.

Decades ago, scientists, engineers and doctors preferred to journey West—to America and Europe. In a quiet reversal of sorts, a trickle—7,600 scientists and engineers—have begun heading East, to China, partly in response to China’s Thousand Talents Plan (2008). The lucrative scheme offers Chinese returnees and foreign experts (non-Chinese) generous research funds, opportunities to set up labs, tenured positions and salaries comparable with America. Is China the next big destination for intellectual capital? And what is the import and implication of its growing prowess in science and technology?

China has been catching up—but think past Huawei’s 5G technology and MateBook X Pro Laptop. China’s satellite Micius made a spectacular breakthrough (2017) with a videoconference between Vienna and Beijing—the world’s very first quantum-encrypted intercontinental video link. Chinese scientist Jian-Wei Pan, the man behind the project (who collaborated with Austrian physicist Anton Zeilinger), is the man of the times, feted as China’s ‘father of quantum’. He is also the man behind the Beijing-Shanghai quantum link (Beijing-Jinan-Hefei-Shanghai) currently in use to transfer sensitive data.

Other breakthroughs include Zhong Zhong and Hua Hua (the first cloned primates), the cotton seedling that grew on the moon aboard Chang’e 4 lunar lander (in 2019), scientist Tu Youyou (who made a breakthrough in the treatment of malaria with artemisinin and won the Nobel Prize in 2015), deep-sea submersible Jiaolong, the fastest bullet train in the world—all out of China’s stables.

China’s transformation has neither been an overnight phenomenon nor come without help from the Communist Party (CCP). China has long been positioning itself as a knowledge-based economy and innovator—not a ‘me-too’ imitator or a ‘back office’. China has made remarkable strides in innovative products, technologies, business processes and business models. China’s popular mobile payments where Chinese customers tap (their smartphone) to pay has obliterated the need for cheques, ATMs and credit cards (Alipay, WeChat Pay), and home-grown e-commerce giants (JD, Tencent, Alibaba) have transformed the landscape of B2C business.

More than a decade ago (in 2005), China targeted indigenous innovation with a commitment to step up funding in R&D and limit China’s dependence on foreign technology. This was through the Medium- and Long-Term Plan for the Development of Science and Technology (2006-2020).

Keeping the ambition apace was growing R&D investment, from 0.9% of GDP in 2000 to 2.05% of GDP in 2014—lower than South Korea, Japan, Germany and America (4.3%, 3.4%, 2.9% and 2.7%, respectively, in 2018), but formidable still. By way of comparison, India’s R&D spending is frugal, stagnating at below 1% and hovering at 0.69% of GDP in 2014-15. Back in the day, 1950s till 1970s, China’s R&D investment was 1.4% of GDP.

But China’s political reforms are stagnating under President Xi Jinping—he sought to implement an innovation-driven development. In 2015 came ‘Made in China 2025’, a plan inspired by Germany’s Industrie 4.0, to initiate China’s jump from Industry 2.0 (mass production) to the fourth industrial revolution, Industry 4.0 (technologies). The plan sought out critical focus on 10 selected industrial sectors—information technology, aerospace technology, computerised machines and robots, medicine and agricultural machinery, among others. Xi also sought to shape the ‘Chinese Dream’ by aiming to make China an innovative nation by 2020, place China at the forefront of innovative countries by 2030, and make China an innovation power by 2050.

Achieving the above may be a possibility. China’s R&D statistics are impressive—it boasts of 6.21 million R&D personnel (largest in the world), an enviable R&D spending (approaching the level of OECD countries), citations of Chinese papers exceed Germany’s and the UK’s (Essential Science Indicators, 2017), and it has the largest number of invention patent applications (2017).

Even a critic cannot ignore the World Economic Forum’s (WEF) Global Competitive Index 4.0 (2018), based on the “microeconomic and macroeconomic foundations of national competitiveness.” Out of 140 countries, China ranks 28th with a score of 72.6 (India ranks 58th with a score of 62.0). In the Global Innovation Index 2018 (co-published by INSEAD, World Intellectual Property Organisation and Cornell University), out of 126 countries, China ranks 17th and India is at 57th. While China’s economic gap with the West, notably America, remains wide, as China is still a middle-income country (with a per-capita GDP of $8,000), there is no doubt that China is getting there.

Interestingly, the highlights of China’s R&D, as academic Zhao Litao calibrates, is that the government contributes 20% and enterprises (industry) play a major role with a contribution of over 70%. This is also the case with Germany, Japan and South Korea. In India, the major R&D funder is the government (central and state), not the enterprises that contribute 38.1%.

A simple look at WIPO reveals that the major Chinese patent applicants are Huawei, ZTE, BOE Technology, Le Holdings, Shenzhen China Star Optoelectronics, Alibaba, Tencent Technology, Guangdong Oppo and Xiaomi—names that we are familiar with in India.

In India, the top applicant is the Council of Scientific and Industrial Research (CSIR), followed by Sun Pharmaceutical, Dr Reddy’s Laboratories, Lupin, IIT, Wockhardt and Hindustan Petroleum—a fairly different and mixed scenario where the R&D led by the public sector focuses on defence industries and the private sector on drugs and pharmaceuticals.

China’s majority of R&D personnel (78%) are in enterprises (higher than South Korea, Japan and Germany), and only 9% are in the higher education sector, less than half of that in Germany, Japan and South Korea. The good part in China is the support of the Party, with central ministries and the National Natural Science Foundation (NSFC, absorbed by ministry of science and technology in 2018) backing R&D expenditure. The Thousand Talents Plan is directly under the heavyweight Organisation Department of the Central Committee of the CCP, which speaks of long-term commitment.

China does have a few disadvantages. As a ‘closed’ state, its (structured) systems, processes and thirst for immediate results are not conducive for talent; China’s lack of respect for diversity, and immigration policy, also needs to reform (several steps are being taken such as the introduction of the R Visa, 2018). Israel, for example, admits that innovation that has made Israel famous, stemmed from the crucible of the ‘kibbutzim’—the collective of immigrants that congregated from all over the world, affirming that diversity, collaboration and openness are critical factors. America, too, as the land of immigrants, stands testimony to the enabling power of diversity and democracy over homogeneity and control.

When it comes to China, there is discomfort in the media, with allegations that China’s practices force foreign companies to part with technology, a ‘forced technology transfer’, a backhanded intellectual theft that has been at the heart of the China-America discord. E-commerce marketplaces Pinduoduo, Alibaba and JD.com sell counterfeit goods. There are also allegations that China’s technology companies are ‘tools of China’s intelligence’ or ‘used in espionage’—and they bear the cross of circumventing ethics, spreading their footprint in Europe via lobbying, donations to trusts, engaging the right people at the top, and hefty scholarships.

There have been other ethical concerns, too. In 2018, scientist He Jiankui (funded by Thousand Talents Plan), in a secret clinical trial, edited the genes of twin girls Lulu and Nana using a gene-editing technology—without adequate understanding of future implications—causing uproar in China and across the world. In 2007, the debris in space emanating from China’s anti-satellite test sparked concerns.

Some of this, no doubt, has come about because Chinese has emerged as the biggest cheerleader—about China. Chinese citizens themselves are sceptical and uncomfortable about China (prematurely) bragging about itself; the documentary ‘Amazing China’ (2018), which sang praises (about China), created a backlash within. There have been calls for (the once-blue-eyed) economist Hu Angang to step down following his ‘China in 2020: A New Type of Superpower’. Some of western media’s discomfort is also tied to this.

China has made advances, is ahead of India, but is still behind America’s quality research and breakthroughs—including NASA’s New Horizons completing the most distant space flyby in history (in 2019). China’s strides will, no doubt, be harnessed by the global community—not Chinese citizens in China per se—among others, giving billions in the developing world access to quality goods at better, cheaper prices.

The exaggerated threat—provocative and prognostic—is really not about China’s advancements in science and technology or even technology companies per se, but rather comes from the sum of many parts. It comes as a convoluted, backhanded attempt to check and corner minus arms and ammunition—an eye on the future and ahead of two critical eventualities—the looming deadline (March 2) that seeks to resolve the trade dispute between China and America, and the second summit (February) between America and North Korea.

The author is Singapore-based Sinologist and adjunct fellow at the Institute of Chinese Studies, Delhi. Views are personal

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