Technological Advancement of China

Technological Advancement of China

The question has often surfaced: What makes China's technological advancement superior to many other countries? A long time back, China already opened a front and initiated a campaign to take its place as the world's most powerful economy. To date, China continues on an unrelenting path to attain the much-desired high-tech dominance.

Today, the People's Republic of China flaunts all the confidence of a country that has gradually overcome its midlife economic crisis. Interestingly, China was virtually unaffected by the world's most recent financial crises. Soon, pundits expect China to reclaim a coveted spot among the world's preeminent economies. While China's days of double-digit economic growth passed, the country's economy expanded significantly, reaching 9%; from 2008 to 2010.

Also, in 2010 China overtook Japan as the world's second-largest economy. Soon, China is expected to shove away the US and claim its place as the world's biggest manufacturer. This reminds us that China held this spot for more than 1,500 years, up until 1850. At this time, Britain overtook China and assumed this leadership during the industrial revolution.

Notably, when this passed by almost unnoticed, China (very quietly and deliberately) moved towards a new development stage. The country moved from a booming low and middle-income economy to become a sophisticated high-tech economy. China did this by co-opting, coercing and cajoling Western and Japanese businesses. The Chinese government also plans to increase the nation's R&D expenditures from 1.7%; of GDP right up to 2.5%; by 2020. In the US, the figure is currently 2.7%;. And just like some Western governments, China is currently funding many mega projects in several sunrise areas, including new generation nuclear reactors, quantum physics, nanotechnology, water purification and clean energy.

Meanwhile, the Chinese government is now forcing multinational companies to share technological resources with specific state-owned enterprises; they consider this a requirement to operate in the country. This situation is triggering tension between Beijing and many companies and foreign governments. It also raises the issue of whether China's brand of socialism can coexist with Western capitalism.

Studies show that the Chinese government has-since 2006- been working to implement policies that seek to transfer technology from many multinationals operating in technology-based industries (including power generation, air transportation, information technology, high-speed rail and electric automobiles). The government-imposed rules generally limit the foreign companies' investment; they also limit the companies' access to Chinese markets by stipulating that there must be a high degree of locally produced content in their equipment.

All these regulations are designed to transfer technological knowledge and skills from the companies to China's state-owned enterprises. Indeed, the new government regulations are both unpredictable and complex. The rules are an apparent reversal of several decades of granting these companies much access to Chinese markets. Thus, the companies' CEOs are put in a big dilemma- they can choose to comply with the rules requiring them to share technical knowledge with Chinese competitors; they can decline and miss an opportunity to share the world's fastest-growing single market.

Unsurprisingly, the unorthodox strategy used by the Chinese government has already provoked disputes between the government and foreign companies. Some companies were forced to review their internal strategy. For instance, many companies have been working out how to minimise competitive and security risks that threaten their technologies. Other companies try to determine in advance the innovations they are required to develop in China to gain advantage in this fast-changing, large global marketplace.

Think of it: In 2009, through its Ministry of Science and Technology, the Chinese government announced that all new technologies utilized in products sold to the (Chinese) government must be developed in China. This rule practically forced many companies to relocate more of their research and development activities to China- unfortunately, China has a notorious record as a country where intellectual properties are pretty unsafe. The Ministry finally backed down from this repressive policy after much protest from multinational companies and governments. But the Chinese authorities did not stop there- they created new regulations that sought to compel multinational companies to relocate most of their sophisticated projects and facilities to China. Of course, the Chinese hoped such policies would help them catch up with the technological pace of the world's leading economies like the US. Will the Chinese government succeed?