China, a country that had dominated the planet many times over the past thousand years, is on track to repeat history once again. Economic reforms introduced by Communist leader Deng Xiaoping in the late 1970s has propelled China to become a nation currently deemed worthy to challenge the U.S. for the number 1 title. China had averaged a 10% annual increase from 1999 to 2008 and in recent years, hovered in the 6-8% range. With recent drives for technological inventions, we may see a growth in the figures and finally, an overtake to be world biggest economy.
“China has been one of the richest, that is, among the most fertile, best cultivated, most industrious, and most populous countries on earth.” Quote from Adam Smith magnum opus “The Wealth of Nation”. Indeed, over the last few decades, China has taken concrete actions to made a reality. In 2015, China declared”Made In China 2025″, a strategic blueprint that details the necessary steps to equip and alter the country with local technological innovations and stage the Chinese equivalent of the Fourth Industrial Revolution. In fact, a term was invented to explain China’s unique innovation policy and its ability to drive innovation and technological advancement within its own geographical boundaries. Termed”Indigenous Innovation”, China has primed itself to be the next world’s capital of technology and innovation. Below are some reason why China is able to or rather, will dethrone the U.S. over the next decade or so.
- Size matters. China is a enormous nation, whether its geographic size or population. While China and U.S are equally big at 9.3 million square kilometers and 9.1 million square km respectively, China trumps (no pun intended) U.S with over 1.4 billion citizens, over 4 times the that of the U.S. China’s population high adoption rate for technology in addition to its enclosed ecosystem has created a perfect atmosphere for Chinese enterprises to grow and thrive. With over 772 million Internet users, China is a data haven. Furthermore, citizens in China have longed been proven to be more permissive in the sharing of their personal data, a sharp contrast to the Western countries where personal data policies and regulations are strictly enforced. The current Cambridge Analytica saga regarding Facebook’s user data emphasized the importance of keeping personal data private, but it’s one that we may never see in China. However, reports of ’emotional surveillance’ being used where employees’ brain waves are monitored in military websites and state-owned enterprises appears to have crossed the line in its latest efforts to monitor its people.
- Support from the Chinese authorities. Policies like China’s 13th Five-Year Plan (2016-2020) and Made In China 2025 are strong evidence of China ambitious plans to establish itself as the world leader in the technology leader. Subsidies, low-interest loans and tax breaks are some of the support tech companies are expected to receive within China’s strategy to propel research and innovation within the nation. Furthermore,
Rather than having Western companies such as Google, Facebook and Twitter thrive, the Chinese government nurtured domestic companies through protectionisms and huge subsidies. Local tech giants such as Baidu, Alibaba, and Tencent, commonly referred to as BAT, were able to grow under the sheltered environment and having the whole Chinese pie to themselves. Since then, these companies have expanded overseas through acquisitions and setting up of innovation and research centers, a move that many countries have deemed to be a clear act of’technology importation’, aka transfer of technology.
- Lastly, it’s simply sheer ignorance about China. Indeed, many who have very little awareness of today’s China would still perceive it as a”copy-cat” country thrives on producing counterfeit goods and”Made-In-China” products for the external world. The fact is they are now producing innovation leaders and are the ones to beat. A prime example is Shenzhen, which has evolved along the way to become its own innovation hub. Referred to as China’s Silicon Valley for hardwares, Shenzhen houses lots of the companies that produces the technology product we see now, from drone producer DJI to iPhone manufacturer Foxconn. Ignorance was bliss when one can freely enjoy the low cost of manufacturing in China; ignorance has become a looming threat of takeover.
“China has a fairly deep awareness of what’s happening in the English-speaking planet, but the opposite isn’t correct.” Quotation by Andrew Ng, co-founder of Coursera and one of the pioneers in Artificial Intelligence.
The future is going to be one dominated by technology, and China has prepped itself to be part of the future. President Xi Jinping knew the problems of sustaining China’s economic growth and understood the potential of technology to scale to millions of businesses and eliminate inefficiencies while benefiting the end-consumers.
However, it will be naïve to conclude that China will overtake U.S. only on the grounds of superior technology. The chance of a trade war between the U.S. and China only benefits China, for it has the advantages of economies of scale and a single, independent market. The ongoing trade surplus with the U.S is evident of U.S. reliance on China goods, and a trade war is only going to harm the country with price hikes in consumer goods. The trade surplus for the first quarter of 2018 spiked nearly 20% to hit $58.25 billion, citing the potential for a trade war. Furthermore, China has been extending its economic and political influence with the Belt and Road Initiative (BRI). Expected to cost over a trillion dollars and impact 60% of the planet’s population, the BRI is the biggest undertaking by the Chinese since the Great Wall of China. All signs point to the fact that China has the money, technology and influence to take over the world.
In general, China has evolved from a state of fake to one of invention, from one of producing products to one of inventing products. Perhaps it is time for the world to have a good look at China and ironically, replicate what they’re doing now. For the U.S, cooperating might be the best, and only way of moving forward.