Opinion
The View by Winston Mok
Why China’s next big tech leap is faltering, even with financial muscle and
talent to spare
·
China can do more to polish its appeal
as a home for global tech talent, but must ultimately rely on its own, which it
has in abundance
· The obstacle lies in persuading them that China’s restrictive environment offers them the best opportunities for creative growth
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Published:
6:45am, 14 Apr, 2021
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An AlphaDog
quadruped robot runs in a workshop at the Weilan Intelligent Technology
Corporation in Nanjing, Jiangsu province, on April 2. Technology holds the key
to China’s ambition to be a world-leading nation. Photo: AFP
China won’t become the world’s leading
country on US President Joe
Biden’s watch, even though it is already the world’s top manufacturing and trading nation.
China’s gross domestic product in terms
of purchasing power is the world’s largest, but its nominal per capita GDP is less than
one-sixth of the US’. Even if China’s nominal GDP surpasses America’s later
this decade, as projected, China will still be a much poorer country. It
may take a generation for China’s per capita GDP to approach even half the US’.
The crux of the matter is
technology. The world’s five technology powerhouses, in terms of
spending on research and development,
are the US, Germany, Japan, South Korea and China. Among them, how much can
China improve and how fast? Although China has the benefit of scale, after
adjusting for the size of its population and economy, it actually appears a
laggard among the five. It is South Korea that punches above its
weight.
The outcome of the
technology race is shaped by at least three factors: investment, human capital
and institutions.
Although China’s
corporate-driven R&D spending has grown rapidly, as a proportion of its
economy, it still lagged behind that of many East Asian and Western
counterparts. South Korea, Japan and Germany have higher R&D intensity
while the US is still the foremost in scale. And, contrary to common
perceptions, a lower proportion of R&D in China is directly funded by the
government than that in Germany or the US, according to OECD data.
China has been
producing many science and engineering graduates; in 2016 it produced 4.7
million graduates in STEM (science, technology, engineering and mathematics),
greatly surpassing America’s 568,000, according to World Economic Forum data.
However, despite the rapid expansion of its higher education system, the
overall quality of Chinese universities still lags behind the US, which boasts
some of the world’s best.
Further, China’s
population is ageing while the US’ is replenished by immigrants. The US
has a distinct advantage in attracting talent from around the world. From
graduate students to faculty members, foreign-born talent represents a key
force in US universities. Can China attract international talent?
Scheme to
attract overseas talent is ambitious but just what Hong Kong needs
Hong Kong is the
obvious destination of choice in China for global talent, especially in finance
and law, given the city’s open media access, low taxation and wide English
usage. By contrast, Hong Kong’s draw is limited for engineering talent. The
city is not known for its hi-tech industries and is a very expensive place to
live. Before it can think about providing affordable housing for foreign
tech talent, Hong Kong must address local people’s housing needs.
How does China’s
economy impact the world?
There are vibrant
hi-tech ecosystems in many mainland Chinese cities, where, compared to Hong
Kong, housing is more affordable. Preferential housing for talent, already
in place in Shenzhen and elsewhere, is politically acceptable. But taxes are
much higher and access to the global internet is restricted.
China may consider setting up “special
innovation zones” – in, say, the
or Hainan – where international
internet access is unfettered and qualified foreign talent may pay low
taxes. Good and affordable international schools are essential to make
these zones attractive.
Inside Huawei’s
lakeside campus that replicates 12 European cities
And if talented people won’t come to
China, China can go to them. Chinese companies could set up R&D centres
around the world, as Huawei has. Just as multinational corporations have
set up R&D centres in China to access its large pool of engineering talent,
Chinese firms may do the same overseas. Russia or Spain, for example, may offer
value for money. Importantly, what China needs is quality rather than
quantity.
Besides financial
reward and career prospects, global talent is also attracted to
lifestyle. China could set up international innovation parks in places
such as Bali, Jeju Island in South Korea, or New Zealand.
International and
Chinese talent could collaborate in these “neutral” third-country locations.
China may send its promising young talent there on rotation. At the same time,
while based in resort-like facilities near beaches or mountains in these locations,
international talent could do short stints in China.
Whatever measures are
put in place, the fact is that China is neither an immigrant country nor an
open society. Thus, it faces obvious limitations in attracting global talent.
To illustrate: Rafael Reif, the president of MIT, one of world’s top
universities, is foreign born. While China can offer fat pay checks and huge
research budgets, such advancements for foreign talent is impossible in today’s
China.
MIT president Rafael Reif (left) and
former New York City mayor and commencement speaker Michael Bloomberg attend
the university’s commencement exercise on June 7, 2019, in Cambridge,
Massachusetts, US. Photo: Reuters
China’s best bet
remains talent born on its own soil. Tsinghua University and Peking
University have long been top feeder schools for science and engineering PhD
programmes in the US. China just needs to attract more of its best and
brightest to return.
Whether trained
locally or overseas, China has the largest pool of young engineers and
scientists. The issue is whether they can develop their potential to the
fullest. Limited freedom has not stopped China’s engineers from achieving
formidable technological progress so far. But for the next stage of
radical innovation, which may well require challenging the status quo, would
their creativity be hampered by China’s restrictive environment?
Academics ‘need
freedom to speak’ for China to become ideological powerhouse
China has the financial and human
resources. In its technological competition with the US, success hinges on
institutions. In controlling the coronavirus pandemic, China’s
command-and-control system has worked well. But, for radical innovation, the
US system is proven while China’s is not.
For the
innovation-driven growth required to propel China to a first-rate country, the
key constraint lies in its institutions. For much of the past decade,
freedom has been in retreat on many fronts in China. In this context,
China faces uncertain prospects in its technological aspirations, regardless of
the extent of state investment and coordination.
This may be the
fundamental dichotomy facing China: ironclad political control or
innovation-driven national development.
Winston Mok, a private investor, was previously a
private equity investor
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