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China economy
Opinion
Winston Mok
Winston Mok

The View | Why China’s next big tech leap is faltering, even with financial muscle and talent to spare

  • China can do more to polish its appeal as a home for global tech talent, but must ultimately rely on its own, which it has in abundance
  • The obstacle lies in persuading them that China’s restrictive environment offers them the best opportunities for creative growth

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An AlphaDog quadruped robot runs in a workshop at the Weilan Intelligent Technology Corporation in Nanjing, Jiangsu province, on April 2. Technology holds the key to China’s ambition to be a world-leading nation. Photo: AFP
Winston Mok
China won’t become the world’s leading country on US President Joe Biden’s watch, even though it is already the world’s top manufacturing and trading nation.
China’s gross domestic product in terms of purchasing power is the world’s largest, but its nominal per capita GDP is less than one-sixth of the US’. Even if China’s nominal GDP surpasses America’s later this decade, as projected, China will still be a much poorer country. It may take a generation for China’s per capita GDP to approach even half the US’.
The crux of the matter is technology. The world’s five technology powerhouses, in terms of spending on research and development, are the US, Germany, Japan, South Korea and China. Among them, how much can China improve and how fast? Although China has the benefit of scale, after adjusting for the size of its population and economy, it actually appears a laggard among the five. It is South Korea that punches above its weight. 
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The outcome of the technology race is shaped by at least three factors: investment, human capital and institutions.

Although China’s corporate-driven R&D spending has grown rapidly, as a proportion of its economy, it still lagged behind that of many East Asian and Western counterparts. South Korea, Japan and Germany have higher R&D intensity while the US is still the foremost in scale. And, contrary to common perceptions, a lower proportion of R&D in China is directly funded by the government than that in Germany or the US, according to OECD data.

China has been producing many science and engineering graduates; in 2016 it produced 4.7 million graduates in STEM (science, technology, engineering and mathematics), greatly surpassing America’s 568,000, according to World Economic Forum data. However, despite the rapid expansion of its higher education system, the overall quality of Chinese universities still lags behind the US, which boasts some of the world’s best.

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