• Toby Irwin

Chinese Innovation and the Goal of Technological Parity

For years the Chinese Communist Party suffered from severe isolationism. Being a communist state, and yet still one distinct from the USSR, did it no favours in allowing international investment and technology diffusion into the country. However, since the slow opening of the economy in the 1970s, Beijing has been flexing its innovative muscles.

Concurrent with the rise in GDP, Research and Development funding as a percentage of GDP has risen steadily. From 1996 to 2007 the ratio increased from 0.6% to 1.5%. In 2018 that figure reached 2.2%. For comparison, US funding ratio stands at 2.8% and the UK at 1.72%. In tandem with a significantly inflated GDP this translates into real funding parity between the US and China. While there are multiple factors relating to innovation the raw numbers suggest that Beijing has a strong benchmark to launch from. On top of this Chinese universities have been producing far more graduates in natural sciences and engineering compared to the West, which has become bogged down in producing humanities graduates. In 2006, Chinese universities were producing around four times as many science and engineering graduates as the US, and around eight times as many as the UK. Scholars such as Santacreu and Peake note that R&D funding is a proxy for technological advancement, and therefore an indicator of looming congruence.

China still suffers from some problems. Notably, the 'brain drain' still sees many Chinese graduates go abroad. However, this is likely to change as will be explained later. In the past, Beijing has been heavily reliant on foreign technology, especially for defence related technologies. Further, the Chinese state, despite centralised control, still suffers from in-fighting between firms and provinces; not to mention corruption.

The key to Chinese innovation lies in Dual-use technologies, these being the technologies that can be developed for both civilian and military purposes. Chinese strategy currently appears to be to attract foreign firms to the country, it does this by offering tax incentives, periods of free rent, government subsidies, and good lease terms. Attracting foreign firms and increased FDI to the country serves the long term purpose of advancing zizhu chuangxin, 'indigenous innovation'. Xi Jinping has prioritised three changes:

- a greater role for market forces

- prioritisation of original innovation

- integration of dual-use technologies

If some indicators are to go by, then this is already paying off for Beijing, throughout the 2010s China has not only been catching up to the United States in terms of R&D intensity, but also in diffusion rates of Chinese innovations/intellectual property. All things considered, the West should be cautious about China being able to achieve its 2050 goal of 'leapfrogging' into leading position in technological innovation

At the time of writing, Toby Irwin is a fourth year student at the University of St Andrews. He is studying International Relations. Areas that interest him the most are UK foreign policy and the defence/aerospace industry.