Can China regain its lead in innovation?

Andrew Sheng says the question of 'how' is what preoccupies policymakers the world over

PUBLISHED : Saturday, 08 December, 2012, 12:00am
UPDATED : Wednesday, 28 September, 2016, 8:44am

History moves in funny ways. Watching a BBC programme on the power of science, I learned that a retired British East India Company civil servant called John Walsh financed a naval expedition in 1772 to discover whether the torpedo fish, which stuns its victims using electricity, was producing the same electricity as that generated by lightning discovered by Benjamin Franklin. The dissection of the fish's cells inspired the creation of the first battery by the Italian scientist Alessandro Volta.

The storage of electricity helped create telegraphy, which, together with the invention of the steam engine, launched the industrial and telecommunication technology revolution in the West.

How was a former civil servant able to finance such an expedition? Walsh was the former secretary to Robert Clive, the conqueror of India for the British empire. Walsh was rewarded for his contribution to the British victory at the 1757 Battle of Plassey, and he returned to England with an estimated fortune of £147,000.

At the end of the 18th century, the difference in population and gross domestic product between the East and the West was amazing. According to the economic historian Angus Maddison, the population of western Europe in 1820 was only 133 million, whereas China had 381 million and India 209 million. The United States' population was only 10 million. At that time, China accounted for 32.9 per cent of world GDP, compared with 16 per cent for India, 23 per cent for Europe and 1.8 per cent for the US.

By 1950, when China and India became new republics, their numbers had declined respectively to 4.6 per cent and 4.2 per cent of world GDP, whereas the US accounted for 27.3 per cent and Western Europe 26.2 per cent.

The contrast could not have been greater in terms of knowledge and economic power. The Chinese imperial encyclopedia, commissioned by Emperor Kangxi in the 1600s, comprised all extant knowledge in China at that time and was made up of 10,000 volumes. But that knowledge was useless in the face of the West's superior scientific technology.

Why China did not build on its scientific achievements to compete with the West is a question that has puzzled many historians. The Sinologist Joseph Needham, who compiled the famous Cambridge Science and Civilisation of China, did not fully answer that question, today called the "Needham puzzle".

One historian who worked with Needham was Professor Ray Huang. In his book, China: A Macro History, he argued that despite the achievements of the three Qing emperors, they were, in governance terms, "anachronistic". They did not invent modern fiscal tools or monetary policy, and governance remained mathematically unmanageable. In short, China may have been large in size, but did not advance institutionally.

Simon Winchester, a biographer of Needham, argued that the sum of conclusions of Western historians on why China failed to hold on to its early advantage in science was that "China, basically, stopped trying". Western historians blame it on the state being too large, the lack of scientific curiosity of Confucian training, groupthink, or simply because the West achieved critical mass in terms of competing in scientific research.

Scientific innovation was central to the rise of the West, since the US and European states competed vigorously. The incentives for imperialism were also driven by religion. But the reality was that the rise of the West was created by merchant/adventurers like Christopher Columbus and Clive who took huge risks and had little to lose.

The most interesting answer for the Needham puzzle is provided by the self-taught historian Qian Mu. He argued that the Chinese state became inward-looking because the Qing dynasty was essentially a colonial administration, with the Manchu government more concerned with maintaining domestic control over the Han masses, rather than any threat from external forces. The focus of attention of the Qing emperors was therefore on maintaining Manchu control of the military, the civil service and social stability, rather than any scientific and industrial revolution that may undermine their domination. The Qing dynasty took no risks and imploded.

Technological innovation is clearly central to national economic policy today. The internet has transformed the game because knowledge has become widely available to all, but it is not clear which countries are able to exploit that knowledge. Today the commercialisation of knowledge enables small and medium-sized enterprises to play in global markets. Incubating scientific, technological and commercial innovators is clearly the next Great Game.

But can innovation be created by deliberate policy, or will it be spontaneous accidents of history, funded by former civil servant-scientists like John Walsh? That is the 64-trillion-dollar question.

Andrew Sheng is president of the Fung Global Institute