News that Chinese President Xi Jinping has assumed the right to rule for life, effectively turning him into a dictator, is not the only shock wave emanating from the mainland. It’s also clear that China has obtained the technology necessary to leapfrog the United States in some key sectors. And China’s One Road/One Belt initiative, combined with intensified military pressure against Taiwan and Japan, means it is clear China does not accept the world order that the United States and its allies established after World War II. It is determined to change that world order.
The fact that Xi has set himself up as a new Mao Zedong, which no one foresaw, means that all traces of human rights and civil society that the West once perceived in China are endangered, if not already eliminated. Foreign influences are being wiped out. Xi is proving that he can use the Internet not to set his people free, but to create a national scoring system and a national facial recognition system that will give him unprecedented control over peoples’ lives.
On the technology front, I attended a very good panel discussion at the China Institute in lower Manhattan last week that featured Paul G. Clifford, author of The China Paradox, and Ann Lee, author of a book entitled Will China’s Economy Collapse? (Her answer is that it won’t.)
Much has been written recently, including on this blog, about how much technology China has acquired from American start-ups and from buying failing subsidiaries of Western technology firms. But Clifford and Lee make it clear that the largest flow of technology has probably come from foreign companies operating in China. As part of its Made in China initiative, the government basically says to many powerful companies: if you want continued access to this market, we want your technology.
“In Artificial Intelligence, China and the U.S. are probably neck and neck right now,” said Lee. “If you look at the government sector, China has actually created vehicles that are hypersonic. They can reach speeds that are 10 times the speed of sound. They are working on fusion, which would be so revolutionary. It would put all other forms of energy out of business. They are the first to implement quantum computing. That would allow them to have communications that are completely untappable. And they are working on a quantum computer that would be 10 million times more powerful than all the world’s computers combined.”
China may have obtained so much technology that they are scaling back on their efforts to steal it, she added. “At this point, they have acquired so much knowledge they don’t need to do it (stealing) so much any more,” she said.
One hugely important indicator is that China has learned the Venture Capitalist model from the United States and is using it extensively to fund start-ups. “China has actually crossed the bar from just being copy cats to actually innovating,” Lee said. “Most Silicon Valley VCs are spending more time in China than they are in Silicon Valley.”
Clifford noted that China collaborated with Bombardier and other makers or railway cars and engines to gradually develop its own technology. And it did much the same in nuclear power. “Westinghouse gave away tens of thousands of documents to Chinese providers to get up to speed on that,” he said. “The foreign companies are very much complicit in this regard.”
There clearly has been a shift in tone in the U.S.-Chinese relationship. “Today China is coming out of the closet and saying more clearly what it wants to be,” Clifford said. “The gloves have come off. China is a much more assertive country now.”
Bob Davis, in a very fine essay in today’s Wall Street Journal, noted that China is surprising the world because we all assumed that an authoritarian model would not allow innovation, but in fact it is. It’s like the moment when the Russians launched their Sputnik in the 1950s. They had capabilities no one suspected. Davis quoted Loren Graham, an emeritus MIT science historian as saying, “Can a country like China with lots of money combine repression, creativity and economic success based on that creativity? If the answer is yes, then we will have to rethink everything.”
I agree. We have to rethink everything. I’ve started part of that rethinking in my 2011 book, “The Next American Economy.” We need to rev up our wealth creation and technology commercialization efforts or we will be blown away.
