China must face up to its weaknesses to escape the ‘middle technology trap’
- Amid a tech war with the US, China is boosting its war chest by 10 per cent and focusing on basic research, moves that could establish its tech supremacy
- But internal challenges remain, including an unbalanced tech work culture, low cultural appetite for risk and a higher education geared towards practical engineering rather than basic science
The key message in this budget is the sense of crisis, determination and momentum-building. China realises it can no longer rely on being able to buy from the best suppliers in the global tech supply chain but will have to master its own destiny.
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China’s affordable innovation is backed by state capitalism, the relatively low cost of land in China and abundant low-wage labour. It mimics the basis of Japan’s post-war industrial success, which saw it rise as a global leader in electronics, toys and cars, before it became stalled by a decades-long recession.
China’s focus on affordability was not accidental. It was carefully orchestrated and then gradually overlaid with industrial upgrading, with a policy emphasis on quality innovation. As China’s engineers and scientists climbed up the innovation learning curve, they began to churn out high value-added, high-tech-value goods and services, from drones and electric vehicles (EVs) to spacecraft.
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One factor of China’s success is its highly competitive domestic science and tech sector, which ensures only the best prevail and can go on to seek a global market.
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The low tolerance for risk in Chinese culture is another risk. In the United States, there is a bigger appetite, especially among the big tech companies, for high-risk science and technological opportunities that may not guarantee immediate returns, thus balancing “exploration” (the search for new possibilities with a long-term view) with “exploitation” (the optimising of existing possibilities with a short-term view).
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Another risk is in China’s execution of its science and technology funding. A big budget is promising but how that budget is distributed could become problematic if the funding only or mainly went to a few elite individuals or institutions.
Last but not least, China’s higher education has long favoured practical engineering at the expense of “basic” or pure science. This requires a fresh look.
How will this affect the rest of the world? For the Global South and most other economies including the G7, it would create a more democratised market for innovation where consumers, investors and governments have far greater options on what to procure in the global science and technology markets.
It is hard to predict the outcome of the US-China science and technology rivalry. But there will be clear winners in the short to medium term. Money spent on science and technology development are never a waste.
Dr Yanto Chandra is an associate professor at the City University of Hong Kong
