Government Assistance Aiding Critical Growth of Chinese Tech Industry

After the 2008 financial crisis, Beijing ensured that massive amounts of financial and fiscal resources were available to important technological business sectors. (Image: Screenshot / YouTube)
After the 2008 financial crisis, Beijing ensured that massive amounts of financial and fiscal resources were available to important technological business sectors. (Image: Screenshot / YouTube)

Beijing’s protectionist economic policies have meant that the Chinese tech sector has evolved differently than in America. In the U.S., the tech industry is driven by private businesses like Google, IBM, Facebook, and so on, who compete in a free market with minimal government assistance. In contrast, the Chinese government plays a much bigger role when it comes to participating in the tech industry.

Government involvement in the tech sector

After the 2008 financial crisis, Beijing ensured that massive amounts of financial and fiscal resources were available to important technological business sectors.

“The Chinese version of Quantitative Easing (QE) generated massive funds to be channeled toward expanding R&D; hiring overseas Chinese experts as well as foreign experts (especially in strategic sectors such as advanced material, electronic chips, and computing, aviation, bio-tech, and A.I. and robotics), importing high-tech capital goods, acquiring foreign technological patents and licenses, and merging with or buying out foreign high-tech companies, especially by state-owned Chinese corporations,” according to The Diplomat.

An immediate ambition of the Chinese government is its “Made in China 2025” plan through which Beijing aims to dominate futuristic technologies like AI, robotics, nanotechnology, aerospace, new energy, and so on. It wants to be the leading global technology superpower by crushing the U.S. and other Western countries like Germany. Here again, the government’s deep involvement in the project is what makes it stand out from America.

A Guide to Shenzhen, China's Tech Megacity 2-14 screenshot

An immediate ambition of the Chinese government is its ‘Made in China 2025’ plan through which Beijing aims to dominate futuristic technologies like AI, robotics, nanotechnology, aerospace, new energy, and so on. (Image: Screenshot / YouTube)

Growing Chinese tech power

A decade ago, many would have scoffed at the idea that the Chinese tech industry would ever pose any serious threat to the U.S. China was seen as an imitator, only capable of stealing other countries’ technologies and reverse-engineering them. But this is not the situation anymore. Experts warn that the gap between China and the U.S. tech prowess in shrinking. Two areas where China seems to be strongly focusing are 5G and AI.

5G is the next generation mobile Internet, promising high-speed connections that can go up to 100 times faster than 4G. The country that first develops and implements 5G will have a technological edge over other nations. In the U.S.-China Economic And Security Review Commission’s annual report to Congress for 2018, Chinese government assistance to 5G companies is outlined as a threat to the U.S.

5G

The country that first develops and implements 5G will have a technological edge over other nations. (Image: Kārlis Dambrāns via flickr CC BY 2.0 )

“Chinese firms have already leveraged strong state support to become global leaders in information technology and network equipment manufacturing, and have strengthened their roles in international standards-setting and deployment of 5G. The scale of Chinese state support undermines the ability of U.S. firms to fairly compete either within China or in third country markets,” said the report.

In the field of Artificial Intelligence, the Communist Party’s absolute dominance over society ensures that it has access to all kinds of data from its billion-plus population. This plays into the rapid advancement of the Chinese AI industry.

For instance, a company that predicts loan defaults of individuals may be given access to financial data of Chinese citizens if the government decides that the project is important for economic planning. Beijing is not bogged down by user privacy issues since it is a totalitarian regime — it can share public data with whomsoever it pleases without any consequence.

The United States is a democracy. As such, it cannot indulge in such actions. However, it should find alternative ways to ensure that the country’s AI firms have access to as much data as possible. The U.S. administration must start focusing on developing a long-term plan to counter China’s technological leaps.

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