Tech blockade just counterproductive

The 20th National Congress of the Communist Party of China, which concluded on Oct 22, officially confirmed China’s shift from high-speed growth to high-quality development, which is a sensible and reassuring strategic policy choice.

Despite the China-US trade war, Washington’s technology crackdown on China, the COVID-19 pandemic and China’s somewhat tense relations with the West to some degrees, China has been focusing on high-quality development. This is to be welcomed. The longer China stays focused on high-quality development, and more egalitarian and sustainable growth, the faster it will become an advanced nation, even though the next 30 years are likely to be very difficult, both geopolitically and economically, for China.

China’s growth over the past decades has been beneficial for the country as well as Asia and the world. China is the world’s largest manufacturer, but still much of what it manufactures gets consumed in the West, including in the European Union and the United States. The next stage is for China to become a significant global consumer, which will provide ballast and stability for the international economic architecture as well as the developed and developing worlds.

So, the world should cheer for China’s pivot to high-quality development model, which epitomizes common prosperity and the “dual circulation” development paradigm, in the new era over the next 30 years.

Speaking of tough competition, it’s become very clear over the past two to three years that the US’ strategy with regard to China is no longer to create reciprocal, beneficial exchanges, as much as it is to constrain China’s rise.

In fact, at some level it’s a difficult issue for China to face, because it still lags behind the US in terms of advanced technology. So, it has to create a more self-sufficient technology ecosystem, and depend less on foreign core technologies. But China is a rising giant, and after completing its overall development, it will have no peer and no reason to compete with any country, because it will stand economically head-and-shoulders above its competitors.

The US’ actions, the technological embargo imposed on China included, will over the long run come back to haunt itself, because despite being an intellectual property superpower, it needs the rest of the world to accrue the benefits from its technology ecosystem. There are huge intellectual property revenues to be obtained by sharing cutting-edge technologies with other economies within an undivided technology ecosystem. If one divides that ecosystem, one also cuts off oneself from the revenue that the ecosystem generates, which can be ploughed back into the development of the next generation of cutting-edge technologies.

The US is likely to face this dilemma in the years ahead. And in the process of trying to kneecap China’s technological rise, it will end up, to some extent, recapping its own intellectual property prowess and its capability to retain its cutting edge in a number of core technologies.

Besides, there is tremendous science and technology innovation in China. For example, despite the US basically cutting China out of space technology cooperation in the early 2000s, China is on the way to becoming a space technology giant, sending spacecraft to the moon and Mars, and building a space station.

So the US’ attempt to block China from space cooperation has failed to affect China’s research in space science and technology. Perhaps the same applies to the technology ecosystem. But from China’s perspective, a tit-for-tat may not be the best response, for it could undermine its efforts to develop its own science and technology ecosystem.

The Chinese government therefore needs to play a larger foundational role in science and technology development. It should focus on basic as opposed to applied research and in areas in which it has not invested rather than on the commercialization side. And it should incentivize larger outlays in corporate R&D too so that China’s dynamic large as well as small and medium technology enterprises are less dependent on overseas core technologies.

In a larger scheme of things, what the US has done may hurt China in the short term. But in the medium to long term, it will significantly strengthen China’s research capabilities across a broad swathe of science and technology applications.

In the late 1950s, when the Soviet Union cut China off from the atom bomb development project, China went ahead alone and in six to seven years it built an atom bomb on its own. The same could happen in the advanced science and technology sector today, especially because the West’s embargoes will force China to focus inward as far as science and technology development is concerned.

China can certainly respond in kind against hostile Western forces. But does China want to go down that route? Or does it want to use resources to achieve high-quality development and stand taller? A quarter century later when China may not have any peer, who will deny China access to advanced technologies?

I think China is already answering these questions. And I hope China will bring its best minds to keep answering such questions and take intelligent decisions in this regard.

This commentary was originally released on China Daily on November 16, 2022