China needs ‘groundbreaking’ policy changes to embrace disruptive technologies

This model has also been adopted by other East Asian economies during their development in the second half of the 20th century.

Huang Xiaoqing, a professor of economics at the Antai School of Economics and Management at Shanghai Jiao Tong University, said, “As frontier technologies, no one knows what technologies really have promising potential, and ultimately the competition may be excluded by the market.” In the report.

“Economies of scale are therefore unimportant and even dangerous in the early stages of the development of disruptive technologies.”

In a report published by the English-language Asian Review of Political Economy in October 2022, Huang said that the selective industrial policy regime that brought China’s economic success in the past “is likely to fail in the future. It could even lead to a trap.” .

“How to achieve the transition from a selective industrial policy paradigm to a functional policy paradigm has become important and urgent,” he said in the report. The report was previously published in Mandarin by the Journal of Comparative Research in February 2022.

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The urgency has become more pronounced for Beijing, which says innovation and technological progress are key to countering increased containment efforts by the United States and critical to its ambitions to become an economic and technological power by mid-century. We believe that this is the case.

Peng Peng, executive chairman of the Guangdong Reform Association, said China needs to plan areas where it can apply mature technologies that involve more markets, including areas affected by the US export ban.

“China needs to make breakthrough changes in its industrial policy decisions, otherwise China will never become the world’s technological and economic leader,” Peng said.

“Decision makers need to listen more to private companies, adequately fund industrial research, and put them at the forefront of disruptive industrial exploration.”

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However, since it is impossible to determine in advance which technologies will prevail, countries will only gain an advantage if they develop enough small and medium-sized enterprises (SMEs) to provide a sufficiently diverse range of technology routes. Huang added.

“Only by fostering innovation and entrepreneurship, easing market access, improving the business environment and enabling as many small and medium-sized enterprises as possible to grow rapidly can we ensure that these small and medium-sized enterprises can join the innovation economy,” he said. It can play an important role in development.”

In formulating the National Science and Technology Plan in 2016, the Chinese government vowed to improve tracking of innovative industry developments to help determine in advance “tipping points” where traditional industries could be replaced. .

He added that he would make timely plans for research into disruptive technologies such as AI, quantum information, genome editing, driverless driving, hydrogen power generation, and nanotechnology.

Li Yanwei, a technology consultant in Shenzhen’s computing sector, said disruptive technologies could further widen technological and economic disparities between China’s regions, but more participants could reduce potential obstacles. He said it can reduce costs.

He also said that while small market actors can advise the central government on industrial policy, amid significant external pressures and geopolitical complexity, the Chinese government remains reluctant to allocate resources to large companies and state-owned enterprises. He said there is a possibility.

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“Technocrats also need to have social, economic and political acumen, strong communication skills and be empowered with central decision-making authority,” Lee said.

Basic research accounted for more than 6% of China’s total research and development (R&D) spending over the past four years, lower than the 16% to 18% in the United States and 22% in France over the past 10 years.

According to a February report in Science and Technology Daily, a newspaper sponsored by the Ministry of Science and Technology, basic research by companies accounts for only 0.78% of China’s total R&D spending, lagging behind more than 6% in developed countries.