Why Would China Win the Tech Race?

Why China may be the future of tech?

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We could start from the part where it is a widespread misconception that China is not yet a technology superpower, at least in the traditional paradigm of innovation and knowledge. This is not Confucian-styled pseudo-humility. It is what it is, a fact, truism, or whatever you deem fit as the perfect description for an empirical statement.

We see that in terms of countries with highest promise of becoming technology leaders, China was not placed among the top ten. There are reams of data (not necessarily fake news) to support this position. The Economist Intelligence Unit, for example, doesn’t rank China in its top-ten list of countries best suited for technological innovation. In its 2016 list, the Global Innovation Index put the country at 25th, lower than Luxemburg and Estonia.

But, things are not always what they seem. And China has already proven that miracles are not impossible.

But what does it really mean to be a technology superpower (TS)? This is a question with an answer that breathes, moves, and evolves. In hunter-gatherer societies, perhaps it was the tribe with the best stone tools. In the medieval age, what mattered was ships and guns and, as some (like the Harvard economic historian, David Landes) have suggested, eyeglasses. In the 20th century, you needed the atomic bomb and a satellite in space to even be considered for the title. Today, too, things are different.

To be considered a TS in the digital age, a country needs to lead in technology with certain characteristics such as artificial (intelligence), mobile technologies (miniaturization) and process efficiency (speed). This is not news to anyone vaguely interested in technology and the frontiers it has set to unlock in the future.

At the base of all of this is information and knowledge. How do you make a commuting machine that runs at 1,500km per hour? Well, you must possess the knowledge behind it first. So, a (potential) TS, is a country that has the willingness, the capability, and the patience to learn new things. These triad of factors are not mutually exclusive.

Five months ago, I arrived in China with two bags. Like anyone who moves to a new country to write about it, I had read a number of books on China and had followed its news closely; but I had a vague sense of what it was. My ignorance was so staggering that I was surprised to hear English translations of the airport shuttle’s voiceover. China, to my never-been-in-china mind, was an Orwellian state where Chinese was the only form of communication and life had no color. We can argue about the ‘Orwellian’ character, but boy was I wrong on so many fronts.

Now, my having-been-in-China mind is less ignorant but disoriented, as it grapples with the complex nuances of daily life in a country with an ancient, rich, and beautiful history. It is a country committed to the narrative and recuperation of a certain identity that pushes it into the realm of a TS.

Perhaps this – the idea of a narrative that goes back more than 5,000 years – is China’s greatest weapon in achieving a TS status in the 21st century.

But it is not a coincidence that every developed country in this age has a strong sense of national identity. So, touting a Chinese sense of identity as something that will set the country apart as a technology leader is specious, shallow. The question, rephrased, is what does China have that others do not possess? What, in its politics, its society, its geography, will allow the country to leapfrog its contemporaries? There are no clear and straightforward answers to this, but we can give it a shot.

In China, everything follows on the visions of its political leaders. This alone, of course, does not make the country unique. But the mathematics should be immediately obvious. China has a relatively high population-to-leader ratio compared to other countries in the world. It is quite incredible.

Now, this leadership spirit has had varying results across centuries of Chinese histories. It has brought peace, war, prosperity, hunger, everything. In the 21st century however, it brought the creation of a TS. And, this is the interesting part, the methods do not matter.

In May 2015, the Chinese government launched its Made-in-China strategy, which was aimed at bolstering the country’s technological capabilities. Since then, it has worked with private investors to buy overseas tech firms. In 2014, Chinese investments in U.S. Tech startups, for example, had totaled $2.3 billion, according to the economic research firm CB Insights. In 2015, the figure rose to $9.9 billion. The idea was simple: buy your way into greatness. This, no doubt, infuriated foreign governments, the U.S. especially, which is now making it increasingly difficult for investors with links to the Chinese government to purchase American startups. Still, in 2017, there were as many as 165 Chinese-backed deals that were closed with American startups. This was only 12 percent less than the 2015 peak. Thus, the old Roman adage is true, pecunia non olet – money does not stink.

But China’s strategy isn’t just limited to buying up foreign companies. In 2011, Richard Florida, a co-founder at CityLabs and a thought-leader in technological innovation, co-authored a report that noted that China wasn’t a threat to the U.S’s technology hegemony as much as Europe and Israel. This August, seven years later, I sent him a message asking him what had changed. The answer was “a lot”, as it turned out.

“Large Chinese cities have made great strides,” he told me. “The Bay Area is still number one and maybe NY number two, but Beijing and Shanghai have really come a long way. I think the long run winners will be the places that stay open to global talent.”

Last month, I took a trip to Shanghai’s Zhangjiang Hi-Tech Park. It is in the northern district of Pudong and has been described by some as China’s Silicon Valley. When I asked the Deputy Director-General of the Zhangjiang Administration Bureau, Jun Wu, what sort of innovative work had been done at the Park since it was founded in 1992, he touted ground-breaking research in several fields, especially in biomedicine. This July, a Chinese research group with roots in the Park announced progress in developing a drug, GV-971, which can be used to treat Alzheimer’s disease after a 21-year study.

But, Mr Wu was careful to note that the Park’s future was just about getting started. There are plans for expansions to make it more attractive to foreign talent. “Come after the year 2020,” he said, “you will experience an even bigger transformation.”

This sort of optimism, backed by a vigorous political will, is what I have come to expect from those operating in China’s technology space. And maybe optimism won’t take you to Mars just yet, but it sure is a damn good place to start.