China en Route to Technological Supremacy

The scientific publication Next Big Future has this to say: “According to a worldwide technology competiveness study by the Georgia Institute of Technology, China may soon rival the United States as the principal driver of the world’s economy and become the technology development leader… The study’s indicators predict that China will soon pass the United States in the critical ability to develop basic science and technology, turn those developments into products and services — and then market them to the world.” For their part, Thomas Hout and Pankaj Ghemawat, in an article published in the December 2010 edition of the Harvard Business Review, argue: “But almost unnoticed by the outside world, over the past four years China has been moving toward a new stage of development … shifting from a successful low- and middle-tech manufacturing economy to a sophisticated, high-tech one.” What happened?

The answer is in the consistent Chinese strategy. Even though the intention to transform the country into a leading technological power was reflected as a priority in the 17th Party Conference in October 2007, this objective precedes this event. Its realization has been reached through distinct but convergent routes. First, seventeen selected areas and a group of key businesses have combined efforts, investments and synergies. Second, by way of direct investment and development, they have been growing by 21 percent every year over the past ten years, and in 2016 will reach the United States’ rate. Third, through the massive transfer of technology by foreign companies present in China, which resulted from several causes: from fiscal incentives to the obligation to affiliate with Chinese companies, from the exclusion of state contracts that do not transfer technology to the requirements of locally controlled technology. Fourth, by buying companies with useful technology abroad. Fifth, offering generous incentives for the return of Chinese talent abroad in science. Sixth, investing heavily in education and the formation of technological leaders.

The United States has gone the reverse route. Government funding for science and technology has not risen in real terms since 1995. At the same time, this lacks strategic vision and responds to short-term, low interconnection programs. American corporations, where the bulk of innovation lies, have ceded technology to gain access to China’s market and benefits. Since the crisis of the “new economy” at the beginning of the millennium, the country has allowed a fundamental part of its promising technology students of Indian and Chinese origin to escape. Simultaneously, the post-Sept. 11 restrictions for the H1B visa (for highly qualified professionals), has denied entrance to the best minds the world has to offer. Although the quality of the large universities has been preserved, the average level of education has lost its global competitive edge. The lax attitude of the U.S. contrasts with the steely precision of Chinese consistency. If the former does not react, as it did in the 1960s with the space race against the Soviets, it will soon lose its superiority.