China may lead in technology, but not just yet

China has grand schemes for its technological development. In addition to the country’s AI plan, which the country hopes will make it a world leader in artificial intelligence by 2030, the “Made in China 2025” initiative highlights the nation’s development roadmap for next few years.

The program, which has drawn Donald Trump’s ire, aims to shift China’s economy to high tech industries, including robotics and chipmaking. But as the country moves towards more advanced manufacturing, it is thrust into a fierce contest of nations, one which developed countries are used to winning.

China began to ponder its over-reliance on foreign technology in 2013 when Edward Snowden exposed the clandestine relationship between the National Security Agency and American tech companies. Five years later, in 2018, this reliance was again called to attention after ZTE was temporarily sanctioned from sourcing components from American manufactures for violating a US export ban.

This competition with other nations and self-consciousness have led to the country taking great strides in its technological abilities in the past five years. But has it exceeded the abilities of its international rivals?

“I think we should make a distinction between technology and innovation,” Harry Hui, founding partner at ClearVue Partners, said at RISE in Hong Kong. “The US clearly does lead in this regard as far as technological innovation in the digital realm globally.”

He explains that within the Chinese market, domestic companies are seeing exponential growth in adoption. “They have this large domestic market base and access to vast amounts of data, and they can react so much quicker.”

In China, the failure of foreign tech companies has at times been attributed to protectionist policies that promote the development of local companies to the detriment of their international counterparts. There may be some truth to this, but these companies also try to enter the market while approaching it as an additional source of income, rather than their primary market, unlike their Chinese competitors. 

The answer as to whether Chinese tech has overtaken that of the rest of the world is not a simple one and depends on which aspect the technology industry is being scrutinized.

“Yes and no,” Bessie Lee, founder of Withinlink, said when asked whether China is, in fact, more advanced. Lee explained that while the country may be technologically advanced, it lacks basic protections to keep its citizens safe from the technology that is being developed.

“In certain areas, China is doing really well, like mobile, e-commerce, and social,” she said. “But in other areas like users’ privacy protection, they’re not,” adding that technology can be used to best protect users’ privacy, but it is not being developed in China.

Chen Lei, CEO of Xunlei, believes that is not the regulation that governs the use of technology that is the problem, but more social issues that affect development. “There are way too many schemers and people who are not responsible with the technology that they are handling,” he said.

He believes that while China has been late in developing existing technologies, it will become a leader in current emerging technologies. “[China has] a lot of catching up to do. But in blockchain and artificial intelligence, I think China does have a big opportunity to overtake at the corner.”

The Chinese government has been actively pushing blockchain projects in the country. The technology was even written into the country’s 13th Five-Year Plan in 2016. China subsequently filed the world’s highest number of blockchain patents in 2017. It has been looking at solutions for blockchain-based identity, begun issuing blockchain-backed tax invoices, set up a system to monitor ex-prisoners, and created a number of research facilities.

China’s government is harnessing its data to make blockchain-based identity a reality

“I also see a lot of Chinese startups and entrepreneurs are really focused on the application of blockchain and the related technologies to change the world and benefit society,” said Chen.

He said that China allows for innovation by letting businesses grow and develop before trying to regulate them. “I think that has given Chinese companies plenty of time to develop the technology itself.”

Lee believes that while China may be lacking behind in technology like chipmaking now, in a few years that won’t be the case. “There is actually quite a lot of effort, investment, and devotion on the central government level into the areas where now on the surface it may look like China is lacking behind the US. Give them a couple of years and the game will turn,” she said.

“Chinese are going to take on the US market, but the US are not going to take on the Chinese market the way we do,” she commented.