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China & Western Decline

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Since the beginning of the Industrial Age, Western nations have dominated the invention and production of technology. Today, the West experiences low economic growth, while Asian countries like Japan, South Korea, and especially China develop and manufacture an increasing share of technological products.

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KLAUS Æ. MOGENSEN

Senior Futurist, Editor

Posted Jul 29, 2019 in Megatrends Article from Scenario 02:2019

Throughout history, new inventions and scientific discoveries have been made by different civilisations across the world. Ancient civilisations flourished, studied nature and science, and invented new technology. Ancient Egypt built massive monuments and invented the steam engine (though it wasn’t used for much else than impressing people by having massive temple doors seemingly open on their own accord) as well as taxation. Greece gained naval supremacy through ship design, and later Rome invented among other things the dome, advanced siege engines, and a type of concrete that has lasted millennia. China invented paper in the 2nd century CE, the mechanical clock in 725 CE, paper money around 800 CE, gunpowder, rockets, and the movable type for printing around 1000 CE, and the magnetic compass around 1100 CE. Around this time, the Arab world also made numerous inventions, including windmills, algebra, advanced surgery, and optics, as well as impressive advances in science. The world’s first university was founded 859 CE in Fez, Morocco, and the world’s first hospital was founded in 872 CE in Cairo, Egypt.

During the Renaissance, naval technology and superior gunpowder weapons were major drivers for European expansion. Gutenberg’s printing machine led to the world’s first mass-printing of books in the 15th century CE and later newspapers and journals, and efficient steam engines inaugurated the Industrial Revolution in the late 18th century CE.

Since the Industrial Revolution, the West has maintained global technological dominance. While it can be argued that most of the inventions made in Europe during the Renaissance and early Industrial Age had been done before in other parts of the world, Europeans certainly made more effective use of them, arguably because Europe consisted of several diverse, competing nations rather than being a single empire. Europe and the United States have been world leaders in the development and use of new technology for more than two centuries, and we can argue that the growth paradigm that has characterised Western civilisation is largely based on the development and commercialisation of new technology in competition
between companies.

It looks, however, as if the West soon may be losing out in the battle for technological dominance, with the East (particularly China) in ascendance. China isn’t the only non Western technology superpower. South Korea is a world leader in consumer electronics and cars, and Japan is the world leader in robotics, with 4 of the global top 6 robotics companies by revenue, including the biggest, Mitsubishi. China, however, looks to be the dominant Eastern technology superpower by far, and hence, China is the focus of this article.

According to The Economist, China is rapidly overtaking the United States, as well as Europe (including Russia) in spending on research and development (R&D), measured as purchasing power parity (ppp). Chinese R&D spending in fact grew tenfold between 2000 and 2016. Though Chinese R&D spending as a share of GDP still is lower than in the US or Germany, the share is growing, and with much faster growing GDP, overall GDP spending looks to quickly surpass any competitors. China isn’t set to lead just in terms of spending, either; China also produces more doctoral degrees than the US and more than three times as many people with degrees in engineering and natural science – and these numbers grow faster than in the US or the EU.

In 2008, China launched a program to attract talented researchers, particularly Chinese that studied at foreign universities and decided to stay there. More than two million expat Chinese have answered this call. All this means that China is well suited to maintain its fast pace of technological development – and while so far, this development has mainly been one of catching up, we may soon reach the tipping point where the rest of the world must struggle to catch up to China.

High-performance computing

The microchip, the internet, and the mobile phone were all invented in the United States, and the West has dominated modern information and communication technology. This looks to be changing. South Korea and China produce most of the world’s smartphones, with Samsung, Huawei, Xiaomi, Vivo, and Oppo having a combined market share of 59 percent in the third quarter of 2018. Apple, the largest Western smartphone producer, holds a measly 12 percent of the market.

5G networks are the next major step in wireless communication, promising data transfer speeds up to 100 times higher than the current 4G networks, as well as faster response times with negligible latency (down to milliseconds). 5G also allows the use of a much more thorough encryption than today, since the rapid transfer of data allows a far higher proportion of transmitted data to be dedicated to encryption while still achieving faster data transmission. 5G networks are expected to carry a lot of data produced or used by artificial intelligence and connected machines such as self-driving cars.

China is expected to be first in offering 5G networks and commercial services and looks to become cost leader due to the size of the Chinese market. The Chinese company Huawei is world leader in 5G equipment, and the United States, UK, Australia, New Zealand, and Canada have decided to prohibit or restrict Huawei in their domestic markets, in part to protect their markets, and in part because of worries that China may monitor and abuse the wealth of data moved by 5G networks operated by Huawei. Germany is considering a ban due to security concerns after being warned by Washington. While these bans are grounded in security worries, they demonstrate that China is expected to be a major player, even global leader, in 5G networks.

China is also doing well in the race for having the world’s fastest supercomputers. Supercomputers, or High-Performance Computing, are computers capable of handling computations orders of magnitude faster than typical office computers. They are useful for tasks such as weather forecasts, geological studies, and machine learning. Supercomputers are particularly important in developing advanced artificial intelligence, which is seen as perhaps
the most important technological field over the next decades, with applications in warfare and intelligence, robotics, education, and smart-city solutions. PwC estimates that by 2030, artificial intelligence products and systems will contribute up to USD 15.7 trillion to the global economy, with China and the US as the leading developers.

As of November 2018, the United States operates the world’s two fastest supercomputers, the Summit and the Sierra, but China holds the next two places with Sunway TaihuLight and Tianhe2A. However, if we measure by the number of supercomputer installations in the global top 500, China is in the lead with 227 supercomputers, more than twice the 109 US supercomputers, and 45.4 percent of the world total.

PwC estimates that China will reap the most benefit from AI over the next decade, with roughly USD 7 trillion in GDP gains by 2030. In 2017, China declared AI a strategic national priority for the country and aims to create a national “deep learning laboratory”. China has no less than three supercomputer projects that may achieve performance in excess of 1 exaflop. It looks as if China is investing strongly in taking the lead in supercomputers, and it remains to be seen if the US will respond by investing more in AI.

CHINESE TRANSPORT TECHNOLOGY IS OUT OF
THIS WORLD

The West may have dominated the development and production of internal combustion vehicles, but when it comes to electric vehicles (EVs), China looks to be in the lead. Of the top 10 global producers of EVs, 5 are Chinese, with 2 more being fully or partly Asian. In addition, China produces 56 percent of the lithium-ion batteries that drives EVs, with plans to expand the production to a capacity to three times that of the rest of the world combined. Since 2013, almost 500 electric-vehicle companies have launched in China. Heavy subsidies and restrictions of combustion vehicles drive up domestic demand for electric cars.

The uptake of electric vehicles has been slow, especially in the West. Even so, few deny that EVs are the personal vehicles of the future, given the environmental importance of phasing out fossil fuels and the rapidly declining costs of electricity from sustainable production.

China is even the world leader today in high-speed rail. At the end of 2018, China had over 29,000 km of high-speed railway lines capable of between 250 km/h and a world record 350 km/h. This is two-thirds of the world’s total, with 4,100 km added in 2018 alone. In 2019, China plans to put another 6,800 km of new track into service. In 2019, depending on the results of a feasibility study, China may also begin 1,700 km of high-speed rail from Sichuan to Tibet, across some of the deepest valleys in the world. This stretch alone has a budget of at least USD 35 billion. Nearfuture plans also include a pan-Asian railway network, stretching south through Laos, Thailand and Malaysia to Singapore. China has earlier aired ambitions about building high-speed rails across Russia to Europe, capable of transporting goods and people between the two regions in a few days.

China is also investing heavily in airship technology. Airships have lower construction and operating costs than traditional airplanes, are less harmful to the climate, and don’t require runways. On the other hand, they are far slower, with operating speeds on the order of 80 km/h, but that is not a problem for freight, being twice the speed of a typical container ship and the ability to fly directly across land and sea.

Some will even say that Chinese transport technology is out of this world. In fact, China recently landed a spacecraft and rover on the far side of the Moon; something that has never been achieved before. While this may not sound impressive compared to the US landing rovers on Mars, flying probes close to Pluto, or sending craft into the atmosphere of Jupiter and Titan, the feat was complicated by the fact that direct communication between the Earth and the far side of the Moon is impossible. Communication had to be relayed by a relay satellite carefully placed in one of the Lagrange 2 point behind the Moon, something that also hasn’t been achieved before.

Over the next decades, China plans to build a new space station by 2022 (at a time when the US-led International
Space Station is winding down), followed by a manned Moon research base and missions to Mars. The Chinese space program is advancing at a moderate pace, with a focus on steady advances over prestigious one-shot projects – but that may turn out to be the better longterm strategy.

Over the next decades, China plans to build a new space station by 2022 (at a time when the US-led International
Space Station is winding down), followed by a manned Moon research base and missions to Mars

INVESTMENTS IN BIOTECHNOLOGY

As a part of the country’s Made in China 2025 strategy (see factbox), China is betting big on biotechnology and aims to have the biotech sector make up 4 percent of the nation’s GDP by 2020 – roughly double what it is in the United States. China has more than a hundred biotechnological science parks working to that end, with 93 in Guangzhou alone. Chinese investments in life sciences have grown from less than USD 1 billion in 2013 to more than 20 billion in 2018, a trend that does not appear to slow down (investments nearly doubled from 2017 to 2018).

China's State Drug Administration (CFDA) recently overhauled its regulatory process to expedite the approval of new drugs, among other things accepting clinical trial data from other countries. This has increased the approval of new drugs sixfold. CFDA is in the process of being modernised to live up to international standards, making foreign approval of Chinese drugs more likely. While China has 20 percent of the world’s population, it has 30 percent of global cancer cases, including 36 percent of global lung disease cases, as a result of pollution and a high rate of
smokers. This makes cancer research a high priority, and biotechnology like T-cell therapy is an important part of this strategy.

Perhaps the most touted biotechnology currently is the CRISPR-Cas9 gene editing tool. Between 2014 and 2017, China published more CRSPR-related articles than the US and Europe combined, and while China generally lags far behind the US in terms of patents, as of 2016 China had almost as many CRISPRrelated patents (410) as the US (447).

China doesn’t just invest in biotechnology at home, the country also invests heavily in biotechnology startups in the United States. According to Reuters, in 2018, China venture capital invested USD 2.9 billion in US biotech companies, with an additional 1.4 billion invested by other Asian nations. This makes Asia responsible for 43 percent of foreign investment in US biotech, up from just 11 percent.

China doesn’t just invest in biotechnology at home, the country also invests heavily in biotechnology startups in the United States

One concern is the lower (or perhaps merely different) ethical standards for biotechnology in China compared to the West. In November 2018, global headlines were made when the Chinese scientist, He Jiankui, of Southern University of Science and Technology in Shenzhen announced that he had edited the genes of newborn twin girls with CRISPR technology, with the aim to improve resistance to HIV infections. This sparked strong response from western scientists, with some calling the experiment “unconscionable”, “not morally or ethically defensible” or even “monstrous”. In January 2019, Chinese authorities denounced Jiankui’s experiment, declaring it illegal, and he was fired from his university; yet the fact that the scientist wasn’t stopped before speaks of poor oversight of biotechnological research.

WHAT DOES IT ALL MEAN?

What are the causes of this shift of technological dominance from West to East? Is it simply a matter of China’s impressive economic growth? If so, why don’t countries such as Libya, Bangladesh, Ethiopia, Malaysia, Senegal, and others with higher economic growth than China have any significant impact on world technology? The size of China’s population is a factor, but India’s population is equally big with few signs of achieving technological dominance, while South Korea, with moderate population and economic growth, has had a far greater impact on global technology?

Investment in R&D is of course important, but China’s R&D investment as a share of GDP is quite moderate, well below that of Western tech superpowers like Germany and the US, and even farther behind Japan and South Korea. Nor does how much of the spending is private versus public seem to really play a role. Government spending on education doesn’t seem to be a factor, either, with the US and Western Europe spending a greater GPD share on education than China.

Lacking solid numbers, we are left with conjecture, with all the dangers of erroneous assumptions that may contain. However, one possibility for the success of China and other Asian countries like Japan and South Korea when it comes to technology may be a willingness to focus research investments on the long term. China’s “Made in China 2025” plan, which aims to turn China into a leading manufacturing power by the year 2049, is certainly longterm planning, whereas the investment horizons of most Western companies are rarely more than a handful of years. Not being a democracy may in fact aid China in this, since changing governments in Western democracies regularly shift the focus of investment and focus on projects that may produce results before the next election.

We mentioned in the beginning of this article the theory that Western technological dominance may be the result of competing companies, but paradoxically, this may now be the reason for the loss of dominance: Companies have neither the funds nor the patience for the massive, long-term ‘moonshot’ projects that may be the key to technological leadership in the 21st century.

During WW2 and the post-war years, the United Stated undertook such projects, most notably the Manhattan Project leading up to the atomic bomb (with nuclear power as a spinoff) and the Apollo Program leading up to the Moon landing in 1969. However, NASA funding has declined from more than 4 percent of the federal budget in the mid 1960s to less than half a percent today. No other major public project has taken the place of the space program, even though the value of such moonshots is generally believed to be great. Even the much-touted Human Genome Project had a total cost of a measly USD 5 billion, roughly a quarter of the much-depleted annual NASA budget. The Large Hadron Collider and the upcoming James Webb space telescope are on the same order of magnitude. Though Google’s “Google X” department claims to do moonshot projects, their budgets remain far below the Apollo Project.

The West might retain technological dominance despite the above factors if enough is done to support education and research. The question, however, is: Will it matter that the East assumes technological dominance over the West, other than a shift in economic power? Perhaps not. Some may argue that in the West, technological research is subject to democratic control, which may not be the case in China. However, since most Western research is done by private companies pursuing their own agendas, democratic control is limited. Others may point to how China, through dominance of technology like the coming 5G networks may collect a lot of sensitive data on citizens – but is that very different from what Western tech giants like Facebook, Google, and Amazon do today? China censors internet communication, but so do Facebook and Apple, if for different reasons. The greatest danger may lie in monopolies. The US and the EU have regulations to prevent trusts and monopolies, but this is not the case in China.

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