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China’s Innovation Wall: Beijing’s Push for Homegrown Technology

China’s Innovation Wall: Beijing’s Push for Homegrown Technology

In the recent article by Adam Segal entitled “China’s Innovation Wall: Beijing’s Push for Homegrown Technology,” the author talks about Chinese policy for indigenous innovation and how it impacts Homegrown technology. How does moving from a model of “made in China” to one of “innovated in China” break Beijing’s dependence on foreign technology?

To discover the reason why Chinese business policies aggravate Western commerce leaders and governments, look no further than one of your favorite electronics; chances are they have ‘made in China’ stamped on it somewhere. However, though the Chinese produce a great deal of Western products, their leaders view this production as piece of China’s economic problem. For each Chinese-produced product, the manufacturer has to pay a substantial royalty fee to the foreign company that patented the parts of the unit. As costs of production rise, these foreign companies rake in large profits, while the Chinese receive a much smaller cut, despite the fact that they are actually manufacturing the items the West heavily depends on. As Chinese leaders grow increasingly unsatisfied with their rank as the world’s manufacturer, they look to find ways to bolster China’s economy.

What is the Chinese solution to the problem? Shift away from manufacturing foreign goods, and instead focus on Chinese innovation.

Zizhu chuangxin, the term for Chinese innovation, was first implemented in a 2006 in a government report. The report consisted of an amalgamation of top-down, state-directed policies with bottom-up efforts aimed at generating technological innovation. Though somewhat ambiguous, these strategies make it clear that China plans to become a completely innovative nation over the next fifteen years—and a major player in worldwide sciences and technologies. Because reliance on foreign countires, especially Japan and the United States, threatens China’s economic and national well-being, the paper recommends that China does not purchase any technologies in key fields that affect the heart of the nation, such as next-gen Internet products, complex, numerically controlled machine tools, and high-resolution Earth observation systems.

The new policies set in motion by the report have stirred up the political and technological scene. China’s government announced in 2009 that in order to be an eligible vendor for their procurement catalog, a company would have to prove that the products they produce were of indigenous innovation and had no foreign intellectual property included in the design. However, research and development is typically a collaborative effort involving many different countries, making it difficult for Chinese vendors to get their products approved. Furthermore, in 2020, Chinese officials demanded that high-tech businesses desiring to have products in the catalog must submit all encryption codes for their products.

In short, the Chinese government is no longer content being touted as the world’s manufacturer. They believe that the solutions is to change from “made in China” to “innovated in China” by stopping dependence on other countries’ technologies. This attitude, in conjunction with rampant intellectual piracy, has prompted global leaders to speak out about their concerns with China’s new policies. The GM CEO stated that he really worries about whether China wants anyone to be successful. Located in a US Chamber of Commerce report, James McGregor said that the new Chinese guidelines are simply a plan for technological theft on a grand scale.

Because of the global protest, China has backed down on some of their policies. Last year, a minister of the Ministry of Science and Technology, Cao Jianlin, claimed that the 2009 procurement policy was still in its infancy, and that they plan to add revisions in light of the IPR protection concerns. The Chinese government also intends to join the World Trade Organization’s Agreement on Government Procurement, to ensure that discrimination of foreign companies does not occur.

There is some hope in the fact that some of China’s bureaucracy is lobbying for increasing their technological capabilities in a trade-friendly manner, especially by enforcing IPR-protection regulations. These bureaucrats remember that the progress China has made in opening its doors to the global economic system has generated billions of dollars, as well as new customers worldwide. Furthermore, many business in China are looking to develop branches globally, in light of the fact that their ability to compete on an international scale will be limited if the Chinese market becomes isolated. The United States must learn to support these actions as they fight against mercantilist dogmas.

It is not difficult to see a world where intellectual property battles prevent collaborative efforts to fix climate change, promote global public health, or ensure energy security. Both sides must foster common goals and understandings regarding technological development and trade, otherwise the decades to come will be fraught with turmoil.

Note: The preceding is a summary of an article found though our research, and is provided here with editorial comment for members only. Please see the full article at the following link for full original content.

The New Asia Innovation Team