China, a country that had dominated the planet many times over the last thousand years, is on track to repeat history once more. Economic reforms introduced by Communist leader Deng Xiaoping in the late 1970s has propelled China to become a country currently deemed worthy to challenge the U.S. for the number 1 title. In 2017, PricewaterhouseCoopers (PwC) reports that the Chinese economy will overtake U.S as the largest economy by 2030. China had averaged a 10% annual growth from 1999 to 2008 and in the last few years, hovered in the 6-8% range. With recent drives for technological inventions, we might see a growth in the figures and eventually, an overtake to be world biggest economy.
“China has been one of the richest, that is, one of 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 announced”Made In China 2025″, a strategic blueprint that details the required actions to equip and alter the nation with local technological inventions and period the Chinese equivalent of the Fourth Industrial Revolution. In reality, a term was invented to describe China’s unique innovation policy and its ability to drive innovation and technological progress 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 of the reasons 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 km and 9.1 million square km respectively, China trumps (no pun intended) U.S with over 1.4 billion citizens, more than 4 times the that of the U.S. China’s population high adoption rate for technology as well as its enclosed ecosystem has created a perfect environment for Chinese enterprises to grow and thrive. With over 772 million Internet users, China is a data haven. Furthermore, taxpayers in China have longed been known to be permissive in the sharing of their personal data, a sharp contrast to the Western nations where personal data policies and regulations are strictly enforced. The current Cambridge Analytica saga regarding Facebook’s user information highlighted the importance of keeping personal data private, but it is one that we might never see in China. However, reports of ’emotional surveillance’ being employed where workers’ brain waves are monitored in military websites and state-owned enterprises appears to have crossed the line in its newest efforts to track its people.
- Support from the Chinese government. Policies like China’s 13th Five-Year Plan (2016-2020) and Made In China 2025 are powerful evidence of China ambitious plans to establish itself as the world leader in the technology leader. Subsidies, low-interest loans and tax breaks are a few of the support tech companies are expected to get as part of China’s strategy to propel research and innovation within the country. Furthermore,
Rather than having Western companies like Google, Facebook and Twitter thrive, the Chinese government nurtured domestic companies through protectionisms and enormous subsidies. Local tech giants like Baidu, Alibaba, and Tencent, commonly called BAT, were able to grow under the sheltered surroundings and having the whole Chinese pie to themselves. Since then, these businesses have expanded overseas through acquisitions and setting up of research and innovation centers, a move that many countries have deemed to be a blatant act of’technology importation’, aka transfer of technologies.
- Lastly, it’s simply sheer ignorance about China. Indeed, many who have very little comprehension of today’s China would still perceive it as a”copy-cat” country thrives on manufacturing counterfeit goods and”Made-In-China” products for the outside world. The simple fact is that 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 many of the companies which produces the tech product we see now, from drone manufacturer DJI to iPhone manufacturer Foxconn. It has positioned itself as a hardware and IoT hub for many electronics manufacturers and a hotspot for Chinese technology startups. Ignorance was bliss when one can freely enjoy the low cost of manufacturing in China; ignorance is now a looming threat of takeover.
“China has a fairly deep awareness of what is happening in the English-speaking world, but the opposite isn’t true.” Quote 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 a part of the future. President Xi Jinping knew the difficulties of sustaining China’s economic growth and understood the potential of technology to scale to millions of enterprises and eliminate inefficiencies while profiting the end-consumers.
However, it will be naïve to conclude that China will overtake U.S. simply on the grounds of superior technology. The possibility 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 industry. The ongoing trade surplus with the U.S is evident of U.S. reliance on China goods, and a trade war will only 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 expanding its political and economic 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 imitation to one of invention, from one of producing products to one of inventing products. Perhaps it is time for the world to take a good look at China and paradoxically, replicate what they are doing now. For the U.S, cooperating might be the best, and only way of moving forward.