by Sanjay Anandaram
China volition live a globally dominant engineering superpower yesteryear 2050. It has the leadership, the policies, the resources, the capabilities, the volition together with the imagination. The quip “the only thing worse than having your production copied inwards Red People's Republic of China is to non receive got it copied inwards China” from years agone resignedly foretold the importance of China: non having your production copied inwards Red People's Republic of China meant that in that location wasn’t plenty demand for your production to live fifty-fifty copied! The bulk producing together with assembly of depression terms (and knock-off) products of engineering brands created the icon of Red People's Republic of China every bit a province with shanzhai, slang for businesses that thrived on mistaken or pirated products.
China volition live a globally dominant engineering superpower yesteryear 2050. It has the leadership, the policies, the resources, the capabilities, the volition together with the imagination. The quip “the only thing worse than having your production copied inwards Red People's Republic of China is to non receive got it copied inwards China” from years agone resignedly foretold the importance of China: non having your production copied inwards Red People's Republic of China meant that in that location wasn’t plenty demand for your production to live fifty-fifty copied! The bulk producing together with assembly of depression terms (and knock-off) products of engineering brands created the icon of Red People's Republic of China every bit a province with shanzhai, slang for businesses that thrived on mistaken or pirated products. All that was inwards the past.
Today, Red People's Republic of China is recognised every bit a apace emerging together with evolving engineering superpower with world-leading innovations inwards areas similar drones, AI (artificial intelligence), mobile technology, AR/VR (augmented reality/virtual reality), renewable energy, semiconductors, mobiles together with fifty-fifty self-driving cars, to call a few. It is determinedly together with aggressively focused on becoming a engineering superpower with the US inwards its sights: something recognised every bit existence almost inevitable yesteryear leading recollect tanks, publications, companies together with governments. Reverse innovation is already happening with American tech companies, especially those inwards Silicon Valley, adopting innovations pioneered yesteryear Chinese companies, similar using QR codes, live-streaming of video, using drones to deliver products, in-app purchases together with payments. Alibaba’s fiscal services affiliate, Ant Financial, allowed its 450 1000000 users to log inwards to their online wallets yesteryear taking a selfie, before the iPhone did. Other Chinese companies similar cyberspace giant Baidu, Red People's Republic of China Construction Bank, together with ride-hailing fellowship Didi Chuxing usage this engineering to seat employees together with customers.
The Chinese trinity Baidu, Alibaba together with Tencent (“BAT”) together with many others are watched avidly or then the globe yesteryear technologists, entrepreneurs, investors and, increasingly warily, yesteryear countries. China’s massive investments inwards creating powerhouse manufacturing capabilities from the 1980s onwards made it the “Factory to the World” with “Made inwards China” the dominant theme. Today, it is apace moving to “Designed, Developed, Manufactured, Consumed inwards China”, together with the world. Chinese brands similar Lenovo, Haier, Xiaomi, Huawei, Oppo, Vivo, Alibaba, Tencent, DJI dominate major marketplace segments. DJI (a unicorn valued at $10 billion), for example, is the globe leader inwards drones with to a greater extent than than fourscore per cent of its sales coming from exterior China, including Apple stores.
How did all this happen? What volition happen?
Leadership with An Aspiration for Red People's Republic of China together with No Distractions
Deng Xiaoping’s famous advice “Keep a cool caput together with maintain a depression profile. Never accept the atomic number 82 — but aim to practice something big”, together with “Hide your power, bide your time” were the leitmotif, every bit Deng together with his successors, Jiang Zemin together with Hu Jintao, forged ahead with reforms together with institution-building that transformed China. Today, chemic engineer President Xi Jinping, lately elevated to a “core leader” on par with Mao together with Deng, together with the offset political party full general secretarial assistant born later the Second World War, has decided to shed the “low profile” together with confidently assert China’s ability on the global stage, overcoming the centuries of inhibition brought almost yesteryear subordination to unusual powers inwards the past. He unabashedly stated inwards a TV interview that “…when the ideals of the Cultural Revolution could non live realised, it proved an illusion”.
With term limits on President Xi’s dominion existence removed, his squad of Vice-President Li Yuanchao, a masters inwards mathematics, Premier of the State Council Li Keqiang, an award-winning PhD inwards economics, together with Secretary Wang Huning, a police push clit professor, together with others, is steadfastly focused on delivering on Xi’s “Chinese Dream”, that aims to restore China’s “lost national greatness” yesteryear a “great rejuvenation of the Chinese nation” yesteryear making Red People's Republic of China a “fully developed” land yesteryear 2049, the 100th anniversary of the founding of the People’s Republic.
Secretary Wang Huning, the influential ideologue, proclaimed “cyber sovereignty” a Chinese policy term that argues that countries should live gratis to command the cyberspace inside their borders, including through censoring. He believes that such authoritarian dominion is necessary for Red People's Republic of China to restore its national greatness later what the Communist Party has often described every bit a century of humiliation at the hands of unusual powers.
The Chinese leadership clearly sees authority inwards engineering amongst economical together with political authority every bit cardinal to its goals of existence a superpower. At the National People’s Congress inwards March 2017, President Xi declared scientific discipline together with engineering to live cardinal areas of the economy. Mao’s exhortation of “surrounding cities fighting from villages” from the 1920s inspired the marketing strategy of Chinese companies every bit they penetrate markets overseas together with fifty-fifty China’s geopolitical “string of pearls” strategy!
Unencumbered yesteryear a questioning media, challenges yesteryear a combative civil lodge or an activist judge system, together with without having to bother almost consumer privacy, confidentiality together with rights, Red People's Republic of China is ruthlessly focused on relentlessly executing towards achieving the Chinese Dream. Encouraged yesteryear Chinese policy together with regime personnel, Chinese companies receive got copied together with stolen IP (intellectual property). The Cisco-Huawei instance of 2003 with Cisco alleging IP infringements together with copying yesteryear Huawei, is mayhap the most high profile of these.
On xv August 2017, a New York Times op-ed authored yesteryear old directors of the US National Intelligence together with National Security Agency, titled “China’s Intellectual Property Theft Must Stop” estimated that intellectual holding theft yesteryear Red People's Republic of China costs the US a bulk of its losses estimated at $600 billion a year. It went on to claim that Chinese companies receive got stolen from virtually every sector of the US economy, including the defence strength industrial base of operations — laboratories, universities, recollect tanks together with fifty-fifty the US government.
In 1994, Steve Jobs quoted Picasso to say “Good artists copy, bang-up artists steal”, every bit he explained how Apple stole bang-up ideas from everywhere together with innovated. Red People's Republic of China copied together with stole ideas together with IP together with is straight off innovating.
Self-Reliance together with Firewalls
The ruthless focus on achieving the Chinese Dream is powered yesteryear a want to live independent of unusual technology, together with ain the edifice blocks of the knowledge economic scheme — semiconductors, renewable unloosen energy devices, electrical vehicles, safety together with AI.
In 1994, old Chinese regular army engineer together with Huawei founder Ren Zhengfei had a coming together with political party full general secretarial assistant Jiang Zemin, telling him that “switching equipment engineering was related to international security, together with that a land that did non receive got its ain switching equipment was similar ane that lacked its ain military”. The Chinese regime supported Huawei with access to $30 billion inwards “export financing”, according to a 4 August 2012 article on Huawei inwards The Economist.
Policies, emanating from achieving the Chinese Dream together with global power, are oriented towards creating enormous province capacity together with capabilities inwards designing, developing, testing, deploying tools together with methods for high-tech engineering, inwards complex provide chains together with engineering projection management. For example, the massive investments inwards mind-boggling projects (roads, railways, dams, bridges, ports, airports, cities, renewable energy) together with manufacturing create incredible province capacity. The solar superhighway inwards Jinan roofing 5,875 foursquare metres is designed to make 1M KWHr per year, plenty to ability 800 homes, all from solar panels on the road.
China is also edifice the world’s fastest current of air tunnel, testing a near-space spy drone, testing ways to build a 1,000-km tunnel to send H2O from Tibet to Xinjiang, has over 200 of the world’s fastest 500 supercomputers, including the 2 fastest, published papers on detecting night affair together with carried out quantum entanglement from infinite (South Red People's Republic of China Morning Post, 31 Dec 2017).
It is already a globe leader inwards renewable unloosen energy investments, with over $44 billion invested inwards 2017. After the US’s withdrawal from the Paris Climate Change accord terminal year, “China volition provide engineering leadership together with fiscal capacity then every bit to dominate fast-growing sectors such every bit solar energy, electrical vehicles, together with batteries”, said Tim Buckley, manager of unloosen energy finance studies at the Institute for Energy Economics together with Financial Analysis. Nine of the top 10 photovoltaic ability module manufacturers are Chinese who cater to China’s enormous solar ability appetite (with almost 54GW existence added inwards 2017 alone, greater than Japan’s entire solar ability generation); Chinese electrical vehicles (EVs) receive got over 50 per cent portion of the 1 1000000 cars sold worldwide inwards 2017. By imposing a 25 per cent taxation on imports together with providing incentives together with subsidies to buyers, Red People's Republic of China is targeting 7 1000000 vehicles yesteryear 2025, with competitors lining upward to accept on fifty-fifty Tesla.
There’s a strong focus on shifting away from low-value manufacturing to higher value-added, higher-productivity manufacturing, using large data, AI cloud technologies together with robotics. Inspired yesteryear Germany’ Industrie 4.0 programme, Red People's Republic of China is implementing its “Made inwards Red People's Republic of China 2025” programme with a computer programme to substantially growth the amount of domestically produced components to seventy per cent from less than xxx per cent today. Red People's Republic of China spent $200 billion (2nd only to oil) inwards 2016 on semiconductor imports, 10 times to a greater extent than than what it produces, causing the regime to target raising China’s production of semiconductors consumed to 50 per cent yesteryear 2020. To that end, Beijing is investing $150 billion into domestic chipmakers through 2025.
Russian President Vladimir Putin told students on 1 Nov 2017: “Whoever becomes the leader inwards this sphere (AI) volition move the ruler of the world.” But it seems that the Chinese are the ones acting on it! Red People's Republic of China wishes to live on par with the US inwards AI yesteryear 2020, accomplish major breakthroughs yesteryear 2025, together with “occupy the commanding heights of AI engineering yesteryear 2030” to live the world’s undisputed leader with $150 billion inwards AI-based revenues, yesteryear producing solutions ranging from the armed services to smart cities. Global consultancy line of piece of occupation solid PricewaterhouseCoopers predicts that this would add together $7 trillion to the Chinese economic scheme yesteryear 2030. With the average Chinese consumer consuming together with transacting inwards orders of magnitude to a greater extent than than the American, there’s huge amount of valuable information from 1.3 billion citizens for the Chinese regime together with companies for usage on their AI models. In addition, the Chinese regime is using facial recognition software — through partnerships with Chinese tech companies similar Yitu — to maintain tabs on people. This aims to seat whatever ane of the 1.3 billion citizens inside 3 seconds with xc per cent accuracy!
The Great Firewall of China
The so-called “Great Firewall of China” prevented the likes of Facebook, Google together with others from competing inwards China. Non-internet-based Western tech companies receive got struggled to endure due to preference for local offerings together with where consumer habits differ from those from the West. Uber gave up, Netflix can’t larn started, Amazon is flailing together with Apple is struggling to grow from its before peaks. This has resulted inwards the ascension of several Chinese tech companies that provide services similar to the biggest names elsewhere, but receive got leveraged China’s massive marketplace to move giants on their own. And straight off they’re innovating together with fifty-fifty experiencing contrary innovation every bit many of their offerings are existence copied yesteryear Western companies.
Market Power
China has effectively used access to its large, lucrative together with growing marketplace to larn what it wants from Western engineering companies.
Google re-entered Red People's Republic of China later 8 years with Google Maps together with Translate nether strict rules such every bit requiring the servers to live hosted inwards China, with versions available only for China, together with having AutoNavi (owned yesteryear Alibaba) provide navigation when users essay to usage Google Maps’ navigation! China’s lately enacted cybersecurity laws receive got forced Apple to mitt over management of its Chinese iCloud information to a local, state-owned line of piece of occupation solid inwards Red People's Republic of China called Cloud Big Data Industrial Development Company, together with Reuters reported that Apple volition also concur iCloud encryption keys for Chinese users inwards China, allowing Chinese authorities access to user data. And Microsoft created a custom version of Windows 10 for the Chinese regime that allows for Chinese encryption!
China’s enormous together with growing domestic marketplace is existence leveraged for its global ambitions. China’s amazing growth has led to almost 680 1000000 people existence lifted out of poverty over the menses 1981-2010, with extreme poverty falling from 84 per cent inwards 1980 to 10 per cent inwards 2013, a per capita gross domestic product of over $8,000 together with a $11-trillion economic scheme growing at over 6.3 per cent. The government’s thrust on balancing investment-led growth with consumption is on a audio reason every bit a large bulk of Chinese consumers are straight off enthusiastically embracing engineering products together with services. With over 731 1000000 cyberspace users together with 2017 online sales inwards excess of $1.1 trillion (forming 23 per cent of all retail sales together with growing to forty per cent yesteryear 2021), Red People's Republic of China is the world’s largest e-commerce marketplace yesteryear far, overtaking the US’s $450 billion, according to information inquiry line of piece of occupation solid eMarketer, with over 75 per cent sales taking seat over the mobile phone. McKinsey says Red People's Republic of China lonely straight off accounts for nearly one-half of worldwide e-commerce — upward from less than 1 per cent only a decade ago. Goldman Sachs expects online retail sales inwards Red People's Republic of China to grow at an annual average of 23 per cent over the side yesteryear side 4 years. With global-scale provide chain clusters, global-scale consumers together with global-scale manufacturing, the globe needs Red People's Republic of China more!
China hosts innumerable events for the world’s top companies, entrepreneurs, investors, academics, policy makers, where the province showcases its opportunities together with capabilities, together with propounds its worldview on engineering together with policy. For example, the World Internet Conference, a Davos-style gathering, has been held since 2014 inwards Wuzhan, with the likes of Apple’s Tim Cook together with Google’s Sundar Pichai inwards attendance.
Research & Development together with Investment
According to venture majuscule database CB Insights, Red People's Republic of China filed for 631 AI patents, compared with the US’ 131 inwards 2017, together with Chinese companies soaked upward 48 per cent of all investment dollars inwards AI startups. At the 2017 Association for the Advancement of Artificial Intelligence Conference, where top experts gather, Red People's Republic of China presented 23 per cent of the papers (up from less than 10 per cent inwards 2012), compared with the US’ 34 per cent (down from 41 per cent inwards 2012).
Huawei, the $75-billion Chinese telecom behemoth, is the world’s largest holder of patents, with an estimated 50,000 patents to its name. As of 2016, almost 80,000, or 45 per cent of Huawei’s workforce is involved inwards R&D across the globe (including India), accounting for almost xv per cent of the company’s revenues. It is a fellow member of 360 standards organisations, manufacture alliances, together with opened upward root communities, together with holds to a greater extent than than 300 positions of responsibleness inside these organisations. According to the World Intellectual Property Organisation (WIPO), inwards 2015, it filed for 3,898 patents — making it issue 1, upward from but 456 inwards 2014. ZTE, Huawei’s Chinese competitor, filed 2,155 patents, coming inwards 3rd later the US’ Qualcomm.
The US has, for the terminal 38 years, been the issue 1 inwards patent filings nether the patent cooperation treaty (PCT) scheme that covers 148 countries. In 2015, it over again led with 57,385 patent applications, 6.7 per cent lower than the previous year. But China-based organisations fuelled much of the overall growth inwards 2015, WIPO said. Nippon filed the second-highest issue of PCT filings at 44,235, followed yesteryear Red People's Republic of China at 29,846. “The latest figures charting a ascension inwards demand for intellectual holding rights confirm a decade-long trend, where developments inwards Red People's Republic of China increasingly larn out their grade on the worldwide totals,” said WIPO manager full general Francis Gurry. “China is increasingly amongst the leaders inwards global innovation together with branding.”
The Economist dated 3 Oct 2013 reported, even then persistent charges of fraud together with plagiarism, “by volume the output of Chinese scientific discipline is impressive. Mainland Chinese researchers receive got published a steadily increasing portion of scientific papers inwards journals included inwards the prestigious Science Citation Index (SCI — maintained yesteryear Thomson Reuters, a publisher). The issue grew from a negligible portion inwards 2001 to 9.5 per cent inwards 2011, mo inwards the globe to America, according to a written report published yesteryear the Institute of Scientific together with Technical Information of China. From 2002 to 2012, to a greater extent than than ane 1000000 Chinese papers were published inwards SCI journals; they ranked 6th for the issue of times cited yesteryear others. Nature, a scientific discipline journal, reported that inwards 2012, the issue of papers from Red People's Republic of China inwards the journal’s xviii affiliated inquiry publications rose yesteryear 35 per cent from 2011. The magazine said this ‘adds to the growing trunk of evidence that Red People's Republic of China is fast becoming a global leader inwards scientific publishing together with scientific research’.”
In Jan 2018, the scientific discipline magazine Nature reported that Red People's Republic of China surpassed the US of America inwards the issue of articles published on Elsevier’s Scopus, ane of the world’s top scientific databases, with an growth of 37 per cent inwards the issue of citations of China-based authors inwards academic articles over the terminal 5 years. This serves every bit a telling proxy indicator for who is straight off massively investing inwards knowledge, together with volition harvest the ability of that knowledge inwards the future.
China spends $371 billion (the US spends $479 billion) inwards purchasing-power-parity dollars on R&D representing 2 per cent of its GDP; It has 1,113 researchers per 1000000 (India has 156, patch the US has 4,231 per million). Three hundred together with ane Chinese companies are amid the top 2,500 global R&D spenders, spending $286 billion overall. They receive got R&D units or then the globe from Silicon Valley to State of Israel to European countries to Singapore together with India. They are making acquisitions of IP-based companies together with buying patents together with licences. The incredible export-led growth over the previous decades generated huge forex reserves of $3.14 trillion (as of Dec 2017), that allows Red People's Republic of China to invest or then the world. Its sovereign wealth fund, Red People's Republic of China Investment Corporation, with $800B nether management, established inwards 2007, is the mo largest inwards the globe (after Norway’s $960 billion). It delivered an astounding sixteen per cent homecoming on its overseas assets inwards 2017. There’s no shortage, therefore, of majuscule for Red People's Republic of China to invest.
Education together with Talent
About 10 years ago, every bit component of its “Made inwards Red People's Republic of China 2025” programme, Beijing launched the “Thousand Talents” initiative, where global top talent, especially those with patents to their name, from innovation hubs similar Silicon Valley, were encouraged to motion to China. There are generous incentives, compensation together with back upward for the family. Areas similar quantum computing, AI, cistron sequencing, biosciences, renewables together with safety technologies are areas that receive got attracted interest. The employer, every bit elsewhere, shares inwards the inventions. Chinese engineers together with scientists are sent for overseas grooming patch international scientific together with inquiry networks are partnered with. The objective is to encourage local Chinese innovation yesteryear adopting, adapting together with improving upon technologies acquired from elsewhere.
Outside of the Thousand Talents, in that location are several schemes to spur innovation across tech hubs similar Beijing’s Zhongguancun Science Park (Z Park), Hangzhou together with Shenzhen. Z Park currently has 10,000 unusual hires together with is actively scouting for talent through its 10 overseas liaison offices. The “863 Programme” with a budget of $200 billion was launched inwards 1986 to get the evolution of advanced technologies inwards a broad arrive at of fields for the role of rendering Red People's Republic of China independent of fiscal obligations for unusual technologies. The Loongson reckoner processor, the Tianhe supercomputers, together with the Shenzhou spacecraft emerged from this programme.
In 2015, Red People's Republic of China announced the Double Double World-Class Project, an first to develop world-class universities. Influenza A virus subtype H5N1 total of 42 universities are qualified to develop into a world-class grade yesteryear 2050. And some other 95 institutions — including the 42 universities — are designated to develop world-class courses. Amounts ranging from $70 1000000 to $600 1000000 per academy were sanctioned.
China has almost 78 1000000 graduates with almost 4.7 1000000 completing a STEM (science, technology, applied scientific discipline together with mathematics) programme inwards 2016, the most for whatever country. Red People's Republic of China also produced over 30,000 PhDs. In 2015, China’s Tsinghua University dethroned MIT every bit the world’s top applied scientific discipline school. The US together with Red People's Republic of China each receive got 4 schools amid the top 10 applied scientific discipline schools (US News & World Report annual rankings) with 4 Chinese universities inwards the top 100 inquiry universities of the world.
Impact of China’s Rise
China today is feared together with respected for its technological prowess — a clear sign of a superpower. So much then that inwards Feb of this year, the US blocked the $580-million takeover of Massachusetts-based Xcerra, a semiconductor testing company, yesteryear SinoIC, a Chinese state-backed fund. Similar actions were taken yesteryear the US inwards the Lattice Semiconductor-China VC fund together with Aixtron semiconductor deals. In 2012, the US House Intelligence Committee recommended to the Committee on Foreign Investments inwards the US that Huawei live blocked from making US acquisitions. Alibaba’s subsidiary Ant Financial’s planned $1.2-billion acquisition of Dallas-based Moneygram has been held upward for review yesteryear US regulators. Britain, French Republic together with Federal Republic of Federal Republic of Germany likewise receive got expressed serious concerns over the growing investments together with acquisitions yesteryear Red People's Republic of China inwards their countries. Web mag Politico reported inwards July 2017 that Germany, French Republic together with Italy are urging the EU to allow countries to command Chinese takeovers.
In 2015, the McKinsey Global Institute identified 4 categories of Chinese innovation: consumer-led (such every bit e-commerce, mobile payments, or online fiscal services), manufacturing-led (like consumer electronics or automobiles), engineering-led (such every bit the structure of high-speed railways), together with research-led (for example, breakthroughs inwards the manufacture of semiconductors or the evolution of pharmaceuticals). The report’s conclusion: “China is already a global innovation leader inwards the offset 2 categories together with has the potential to move a globe leader inwards the latter two. Our analysis suggests that yesteryear 2025, such novel innovation opportunities could contribute $1 trillion to $2.2 trillion a yr to the Chinese economic scheme — or equivalent to upward to 24 per cent of total gross domestic product growth. To accomplish this goal, Red People's Republic of China must move on to transform the manufacturing sector, peculiarly through digitisation, together with the service sector, through rising connectivity together with cyberspace enablement. Additional productivity gains would come upward from progress inwards science- together with engineering-based innovation together with improvements inwards the operations of companies every bit they adopt modern line of piece of occupation organisation methods”.
With all of the above, the determination is inevitable: barring something absolutely extraordinary, Red People's Republic of China volition live a globally dominant engineering superpower yesteryear the optic of this century. That is, inwards but 32 years. It has the leadership, the mindset, the policies, the resources, the capabilities together with most importantly the volition together with imagination.
As a passionate advocate of entrepreneurship together with innovation, Sanjay Anandaram is involved with several industry, regime together with individual organizations inwards fostering entrepreneurship. He has 25yrs sense every bit corporate executive, an entrepreneur, a VC together with a mentor. He writes together with lectures oft on his favourite theme together with is associated with several startups, including Swarajya
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