Does China find itself trapped in a middle-technology trap amidst the US tech war? Is it about time to let more people in?

Spread the love

China’s top science academy has warned of a potential “middle-technology trap,” with the senior analyst who published the notion urging the country to “open its doors” in order to avoid becoming stuck at a critical stage required to fuel long-term economic growth through innovation. The Chinese Academy of Sciences report, released in early December, came at a crucial time when the US has tightened technological controls and Chinese businesses are finding it increasingly difficult to climb up the value chain.

The “middle-technology trap” describes a scenario in which developing countries benefit from industrial transfers because of their low-cost advantages, but face long-term economic stagnation as those advantages fade and local firms struggle to catch up with the core technologies retained by developed countries.
 
“The countries that develop later usually have difficulties in industrial upgrading and transitioning to high-income countries because they lack original technological advances after technology importation, imitation, absorption, and tracking,” the authors of the paper stated. Zheng Yongnian, a senior political scientist at the Chinese University of Hong Kong, Shenzhen, and his research team first proposed the notion in March, but it has now become a source of concern for Beijing following a recent tone-setting meeting.
According to a survey by the Chinese Academy of Sciences, China’s manufacturing added value accounted for about 30% of global manufacturing added value, close to the combined total of the United States, Japan, Germany, South Korea, and India. China’s top leaders pledged to mobilize a variety of resources to break technological containment, prioritize tech innovation to improve the resiliency and security of key manufacturing chains, and identify future areas of growth, including commercial space flights, biotechnology, and artificial intelligence, in a statement issued following the central economic work conference this week.
“It is necessary to promote industrial innovation through scientific and technological innovation, especially subversive and cutting-edge technologies, to spawn new industries, new models and new momentum,” the agency said in a statement.
 
The “middle-technology trap” notion emerges amid an intensifying tech war with the United States, global supply chain diversification, and China’s efforts to obtain an advantage in the global tech race to generate new economic growth areas. Meanwhile, its R&D spending placed second only to the United States, and China’s technological capability remained in the third tier globally. “China’s manufacturing sector is still in the downstream of the global value chain, and it faces a risk of being hamstrung at the low and mid-end by developed countries such as the United States, Germany and Japan,” the research said.
 
In addition to additional spending to address choke points such as semiconductors, the world’s second-largest economy must embrace a more open policy and broad reforms to accomplish technical advancements, according to Zheng of the Chinese University of Hong Kong.In a July study, Zheng stated that China needs a broader open-door policy, or even to unilaterally open up to the rest of the world notwithstanding decoupling.
“China needs to open its doors to attract international talent, and if it is not capable of attracting European and American scientists, it should at least try to attract scientists from Russia, Eastern Europe, India and other developing countries,” he stated in the letter. Zheng also stated that Beijing should let more private companies to use its national industrial experimental facilities.He went on to say that China should change its enterprise system so that state-owned enterprises and major private corporations can pool resources to extend supply and manufacturing chains.

Spread the love