US-China tech war: state-led economy crucial to meet challenges of American sanctions, says prominent economist
- China’s government will play a crucial role in the development of ‘chokehold technologies’, which America has weaponised, says economist Bai Chong-en
- Combination of market forces and government direction to drive technology development important, but state-led approach could stifle innovation, Bai says
China’s socialist economic model that mixes strong government direction and support within a market economy is the key to faster development and meeting technology challenges posed by US sanctions, according to Bai Chong-en, dean of the School of Economics and Management at Tsinghua University.
The private sector cannot be relied upon to supply the technology – most of which is only available in advanced economies – because of the extremely high costs and risks associated in developing such innovative products. This requires the state to step in, Bai said at a Credit Suisse sponsored conference in Hong Kong on Monday.
China’s state-led economic model is at the heart of Beijing’s conflict with Washington, which strongly opposes the idea of Communist Party-led, state-run market economics. Western nations have long complained Chinese state firms enjoy preferential treatment compared to international companies operating in the world’s second-largest economy.
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However, a state-run approach could lead to problems in innovation, an area where market forces typically performed better, said Bai, who is also a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), China’s main political consultative body.