With the help of the state, Chinese technology is booming

<pre><pre>With the help of the state, Chinese technology is booming

But it won't be a smooth path to global dominance, says Hal Hodson

Technology quarterlyJanuary 2, 2020 edition

FOR MOST China has been the most advanced technological power in the world in human history. The blast furnace and thus also cast iron were built there. Other breakthroughs were porcelain and paper. His gunpowder drove on the first military missiles when the spear or arrow could fly. The compasses magically showed the magnetic north when the stars were hidden.

It was only in the Middle Ages that Europe began largely to imitate Chinese ingenuity and skills in these areas. Only with the growth of the European machine industry and overseas empires in the 18th century did the Westerners become their rivals. In the centuries that followed, China was struck by the pressure of its own suffocating education system in the Opium Wars, suffered terrible unrest and a catastrophic revolution that made the country a technological viewer and "Made in China" an epitome of gimcrackery.

Now China is back, leaving behind clouds of smartphones, high-speed trains, hidden airplanes, Bitcoin mines and other high-tech flair. The parts of the world that have overtaken it are concerned. In 2015, leaders announced the $ 300 billion 10-year “Made in China 2025” plan to make the semiconductor, electric vehicle, and artificial intelligence industries (and many others) as good as possible worldwide , This declaration that China was no longer satisfied with being a factory for American high-tech products created a new tension between the two largest economies in the world. As the plan approaches its half-point, this conflict appears to be exacerbated.

America accuses China of stealing and spying on the technology supply chain and limping American technology by keeping it away from the Chinese market. The Ministry of Defense fears that military operations can be carried out via networks with Chinese components. Senators are concerned about how China is using technology to oppress its own people. The American political establishment fears that the trend of connecting previously unconnected objects such as trains and cars to computer networks will at least give the Chinese government greater geopolitical leverage – and in the worst case, direct control over parts of the infrastructure of other countries. China's perspective is clearer: America is wrongly using its existing power to restrict China's legitimate technological return.

A lot of thinking about these issues focuses on what technological capabilities China has and what not, where it is ahead of America and where it is lagging behind. But this piecemeal account is of little help in understanding China's ability to promote new technologies or dominate the supply chains and standards on which they are based. The key question is not what technologies China currently has access to, but how it has built that access and how its ability to promote new technologies is evolving.

That is the focus of this report. Obviously, it is important how the correlation of forces between the two powers ends. But to understand that you have to deal with Chinese technology on your own. Details of the processes behind the country's technological development are critical to assessing the long-term challenge of a technologically emerging China. You can get lost in an overarching geopolitical discussion that's hyperbolic and polarized.

This understanding begins by considering older technologies such as high-speed trains and nuclear power plants. The indigenization of these technologies is almost complete, and the Chinese companies and state-owned companies behind them are about to export to the world. In this respect, they represent a model for successful state-led development, in which the state's oppression against its citizens and the power over the economy were used to use technology on a large scale.

It is my party

No government controls an economy worth controlling more than China. Around 51,000 state-owned companies employ around 20 million people and, according to a 2017 analysis, have a total value of $ 29 trillion OECD, a club of mainly rich countries. Many private Chinese companies claim that they do not receive state support, and this is often the case in purely monetary terms, but free land from provincial governments and a side business in property management are the norm. The Communist Party's ability to ensure the successful use of technology is not limited to funding. The state secures the risk, squeezes NIMBYism and pays for the infrastructure.

Two other factors are replacing raw state power as the engine of Chinese technological development. One of them is where companies are located in many of the world's most important supply chains, and which gives them easy access to all kinds of technological know-how. As a workshop for the world, China – and in particular the Pearl River Delta region with the booming cities of Shenzhen and Guangzhou – produces components for almost everything, understands how to assemble them, and is ready to bring the right components together as quickly as possible. This geoepistemological advantage explains why the only successful smartphone companies founded since 2010 are located in the Shenzhen area. (They are all non-governmental companies.) Their success has expanded to new markets based on similar components. The consumer drone market is dominated by China, since drones are basically rotors-based phones.

Second, the size and peculiarities of the Chinese market have become independent drivers of innovation. WeChat and Alipay who use QR Codes for paying by phone emerged in China and have become established because payment cards have not yet been established. As a result, Chinese cities are becoming cashless. The Communist Party's need for social control has stimulated an entire industry of machine learning technologies that serve security services. The West likes the applications to which China AI Businesses – mostly non-governmental businesses too – apply their algorithms, but the extent of their ambitions cannot be denied (although their success has some underestimated foundations).

Not every peculiarity of the Chinese system is an advantage. State support is often given to companies or industries for non-commercial reasons. Ignorance and corruption screw things up; Likewise a thirst for prestige. In the crucial battlefield of semiconductors, Beijing's investment policy is largely based on chasing the most valuable parts of the supply chain by pumping money into Chinese versions of the foreign companies that now have these limits. Really innovative and effective semiconductor companies sometimes only suffer because they are less sought after by party officials.

The study of Chinese technology development shows that it is not just about China, but also about global trends. Some are obvious. A government that is able to shape and ignore public opinion can do things that governments that are forced to listen to, including voting minorities, cannot. If China's technocrats want nuclear power and genetically modified organisms, they will get it.

Some trends are more subtle. China's failure to familiarize itself with technologies such as internal combustion engines, civil aviation and semiconductors shows how difficult it is to develop humanity's most complex mechanisms. Organizations that do this rely on arcane insights and baroque practices that have been carefully nurtured by corporate hierarchies for decades. The fact that even a powerful economy like China can hardly catch up should give reason to think about the possibilities for innovations elsewhere.

The potential of new technologies to strengthen and project Chinese power and the threat to an American-led world order depend on China's technological development. However, this is not the only inspiration. China is struggling with an aging population, environmental degradation and a slowing economy. The strengths and weaknesses of its attempts to solve these problems technologically will teach lessons for other countries in similar difficulties and for those who see China not only as a competitor but as an increasingly complex market.

For countries that want to coexist with China, the weaknesses are a good place to invest in developing their own skills. For those who want to reduce or restrict Chinese technology, knowing its strengths and weaknesses is critical.

Technology in China A new revolution

This article was published in the "Technology Quarterly" section under the heading "With the help of the state, Chinese technology is booming".

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