Explaining China’s Fast Rise as an Innovative Country
By John F. Copper

Explaining China’s Fast Rise as an Innovative Country

Jan. 28, 2018  |     |  0 comments

In the last few years, China has climbed to the pinnacle of nations of the world in terms of creativity and innovation, especially in the realms where it matters. In fact, China has spurted ahead in the race to the top to the degree it has become noticed and admired but also feared by some.

In two areas this has special salience: artificial intelligence and quantum computers. Breakthroughs in these two realms are thought to give China a big advantage in terms of its global power and influence that will propel it to superpower status and beyond.

In 2017, China’s State Council approved a blueprint to lift China’s artificial intelligence (AI) capabilities such that it will be ahead of all competitors. AI, Chinese leaders believe, and many others agree, will be the key to progress overall in technology in the future.

In 2016, China demonstrated its scientific prowess to the world when it successfully tested a quantum computer that gave it the ability to send messages without worrying they might be hacked. This technology allows things to be at two places at the same time and move through space beyond what seems possible, and accords China a rare strategic advantage.

The world also witnessed China’s preeminence in a number of other cases before this. In 2010, China’s Tianhe-1A was pronounced the fastest computer in the world. In 2012 China set the record for a manned submersible craft, descending more than seven thousand meters into the Mariana Trench. In 2016, China’s Baidu bested others in human facial recognition; it was rated top in the world in this technology. That year China also put into use the world’s largest telescope.

This is but a short list. China excelled or passed others in a number of other spheres.

All of this appears to be evidence China has jumped ahead of itself or has exceeded its own and other countries’ rate of progress in science and technology, and this will impact the nature of the evolving new world order in China’s favor.

How does one explain China’s sudden and quite unpredicted rise in creativity?

One explanation is that China and Chinese have always been innovative. It is in their DNA. According to Joseph Needham, the renowned author of the multi-volume work Science and Civilization in China, historically China was the font of half or more of the world’s important inventions.

But China lost this edge several centuries ago. Why? John Fairbank, the noted Harvard Sinologist, contends it was China’s political system. Jared Diamond writes that there was little competitive spirit in China and labor was too plentiful and too cheap, thereby discouraging labor saving inventions. Others say that examinations for government jobs and entrance examinations to universities were too humanities-oriented and the Chinese language so difficult it crowded out other learning. Still others suggest it was China’s isolationism and/or its self-complacency.

At any rate, owing to recent reforms, China has eliminated most or all of these impediments and is once again highly creative and innovative. One might say it has returned to what it once was.

Another account is Deng Xiaoping’s reforms made after 1978. Deng terminated Mao’s extreme leftist egalitarianism. He replaced central economic planning with a free market, opened China to trade and foreign investment, and pushed China to become a strong competitor in the international economy and beyond.

Deng’s policies also ended poverty and created a middle class of educated citizens. China’s colleges and universities were set free from too much oversight while the central government and the party transferred power downward to provincial and local governments. This was a policy of decentralizing decision-making writ large.

Deng’s models were the United States beginning two-plus centuries ago and Japan early in its modern history and post-World War II. But Deng’s thinking was first and foremost pragmatic. He tried new policies and adopted the best ones.

Deng’s successors maintained his policies. Under Jiang Zemin and Hu Jintao, China became a moderately prosperous country. It had funds to invest, build and innovate. Of special note, China’s economic boom continued after 2008 when Western countries entered a recession followed by slow growth (Japan having experienced both after 1991).

Third, Xi Jinping’s rise to the position of China’s top leader and his keen promotion of innovation.

In 2012 and 2013 Xi became respectively head of the Chinese Communist Party (China’s ruling party) and president (head of state). At the time China’s economy was booming and it seemingly did not face serious internal or external problems. Yet, China encountered some very urgent matters: corruption, growing wealth disparities, industrial and environmental accidents, health and safety problems, and concerns about access to certain natural resources.

Most important, though, was the issue of China’s economy being squeezed between lower labor cost countries and the technologically advantaged more modern countries. Exports, upon which its continued economic growth are linked, were under challenge.

In addition, relations were strained with the United States while the Western media had become hostile toward China, seeing its rise as a threat to the Western liberal world order.

President Xi quickly assumed more authority to govern and deal with these concerns. Xi also had to wrestle with the reality that China’s policy established by Deng and continued by his successors to be humble and hide China’s accomplishments was no longer sustainable.

President Xi thus promoted his “China dream.” There were grounds: China had become an economic leviathan, a fully modern country in many ways, and a contender for global influence with the United States. Xi’s Belt and Road Initiative (BRI) launched in the fall of 2013 that would link more than sixty countries at a projected cost of $4 to $8 trillion (America’s biggest project ever was the Marshall Plan to rebuild Europe after World War II at a cost of just over $100 billion) gave China the title of the world’s builder. China’s continued growth in defense spending, coupled with weapons acquisitions and new advanced aircraft and ships, made China a regional power and a contender for global power.

President Xi promoted his dream and linked it to innovation in his 2014 book The Governance of China. He talked about it in public speeches and in formulating new policies. He allocated funds to various innovative projects. It was a central theme in his keynote speech to the 19th Party Congress last year: He called for efforts to turn China into a “country of innovators” and reach “frontier areas of science and technology.”

The European Union has allocated slightly less than a billion euros over the next ten years to quantum research. The US is spending $200 million a year. China is investing $10 billion in just one project that it will complete in the next two and a half years.

Given Xi’s enhanced political power after the party meeting and his high public approval ratings (the highest among thirty important countries according to the Kennedy School’s Ash Center for Democratic Governance and Innovation at Harvard University), he not only leads but inspires others as well.

Fourth, China’s political system is a meritocracy, which embraces a template that searches, chooses, trains, and retains talented personnel. It promotes the best of these to more important jobs with greater responsibilities.

Chinese leaders are also instilled with nationalistic and patriotic sentiments and espouse views for improving the country so that China’s status and influence in the world will steadily improve.

This seeps down. Political surveys in China show that there is backing for China’s meritocratic system among China’s “best and brightest.” A recently done survey at Qinghua University, China’s MIT, showed 28 percent of undergrads, 43 percent of graduating seniors, and 55 percent of graduate students join the Communist Party.

This builds public confidence. A study published two years ago on trust in government done by the Pew Foundation and based on opinion polls taken in a host of countries concluded that public trust in China was consistently in the 80 percent range; in the United States it was below 40 percent.

The Chinese also make comparisons. Officials in Western democracies have become self-serving, corrupt, and out of touch with their citizens. As a consequence, a diminishing portion of the population of the US, European countries, and Japan feel that democracy is a good political system.

A fifth reason for China’s leap forward in science and technology is its formidable financial power, in other words it has the money to finance research — which is often very expensive. Some say this is the main reason for China’s success in science and technology.

This happened because Deng’s economic reforms generated impressive GDP growth. GDP increases were annually double digit (called miracle growth). But a high savings rate and a large favorable balance of trade were also important. Saving rates reached 60 percent — the highest rate ever recorded for a big country. China’s global trade became the largest of any country in the world, and exports exceeded imports by a large margin.

By the turn of the century, China had become a large holder of foreign exchange while household and company assets had also grown exponentially. In 2006, China passed Japan to become the world’s foremost bearer of gold and foreign currencies — those having increased six-fold since 2001. The next year, China’s foreign exchange amounted to one and a half trillion US dollars.

Today, China’s foreign exchange totals over three trillion dollars (not including Hong Kong’s four hundred-plus billion). This figure is more than two-and-a-half-fold Japan’s (that is number two in the world). The US is not on the list of the top twenty countries.

Because of this, China is able to finance large increases in research and development. In fact, Chinese R&D has been growing by 17 to 18 percent annually, while the US, Europe and Japan are increasing their R&D spending by 2 to 3 percent a year.

China can also allocate billions of dollars to big scientific and technology projects. It is a matter of record that China is outspending the United States, Europe, or Japan in critical areas. According to Arthur Herman, a senior fellow at the Hudson Institute, the European Union has allocated slightly less than a billion euros over the next ten years to quantum research. The US is spending $200 million a year. China is investing $10 billion in just one project that it will complete in the next two and a half years.

To advance its work in artificial intelligence, China has also allocated billions of dollars. American scientists have noted that the US has neither the money nor a plan to win.

A sixth explanation for China’s leap in innovation and its technological progress is the fact that China was humiliated by the West for a hundred and fifty years since the Opium War. Both China’s leaders and the Chinese people are driven to rectify this.

Ironically, the liberal Western media amplifies this feeling with its biased reporting on China’s rise that it sees as portending the destruction of the Western-built liberal world order. This prompts the Chinese to recall more vividly their past victimhood and view the Western media’s ill treatment as disdain of China, jealousy, and racism. It motivates them to aim higher and do better.

Interestingly, the Chinese regard prejudice as not necessarily bad and even a positive thing — they use it to advance nationalism. Specifically, they cite it as the basis for China and its citizens’ strong desire to excel.

A seventh point is that the Chinese are a networking people and government policies that encourage the use of the Internet and other means of communication makes this a contributing factor in China’s boom in innovation.

John Naisbitt, the famous futurologist and author of Megatrends: Ten New Trends Transforming Our Lives and the book China’s Megatrends: The 8 Pillars of a New Society argues that networks help the Chinese succeed in not only business but in other endeavors as well, including work in science and technology.

The Chinese indeed interact easily with other Chinese and with foreigners in their work and in particular in their drive to innovate. This amplifies China’s advantage in its sheer numbers of people online, its bountiful talent, and massive data collected, and codes written. It gives China a special edge over other countries such as Japan that are highly technology-oriented and do advanced research in many fields but do not network well.

Speaking of networking, China also sends more students abroad than any other country in the world. Most go to the United States where they can learn about creativity. This amplifies their proclivity to interact. Yet they remain focused on mathematics, physics, and chemistry to fulfill the old Chinese adage that these fields open them the world.

In conclusion, China is on the cusp of becoming an innovation powerhouse. The world will be a different place, a better place, for it. Of course, there are detractors.

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