What is driving China’s tech dominance? How are they innovating today? Who are some key tech industry leaders? How is technology caught up in the US-China trade war? We answer these, and more, questions here as we look into how China rose to become a global tech powerhouse.
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What is fuelling China’s tech dominance?
The Chinese government is not afraid to invest in sectors of interest, such as technology, renewables, etc. They also have the political might to make long-term strategic decisions and see them brought into action because the government is also long-term.
They have set up different economic zones, such as free trade zones, around China, which sometimes focus on specific industries. Businesses are often incentivized to set up shop in these zones by tax breaks, subsidies, free premises, etc, to spur the development of those industries there. This type of government investment allows them to gather specific industries in one area and support them to develop and grow.
STEM education is also a driver of tech dominance because China has a large population of children being pushed to excel in Science, Technology, Engineering, and Mathematics. This is a veritable conveyor belt of talented graduates who are potential tech workers, inventors, and entrepreneurs.
Finally, Chinese e-commerce websites are booming (sales topped 3.335 trillion USD in 2023) and are huge and powerful platforms that allow shoppers to buy almost anything. This gives tech companies in China a huge base of consumers to build from and be able to sell internationally. Most businesses in manufacturing worldwide will have heard of Alibaba, for example, as a platform to source any material and component. (06:18)
The story of Huawei.
Huawei is one of China’s modern tech success stories and is worth hundreds of billions of USD today. Starting as a lesser brand selling in Africa, the Middle East, and other developing regions, they now occupy the top spot in China for local phone brands and are comparable in quality to the Apple iPhone as well as only being slightly behind in terms of overall sales. To add some context, no other Chinese phone brand comes anywhere near the market share of Apple and Huawei, with both exceeding 20%.
This dominance has not gone unnoticed in the West, though, and Huawei (and other Chinese brands) have been banned from sale in the USA since 2022, or removed from the telecoms infrastructure as was decreed by the British government in 2020 (with work to remove its equipment to be completed by 2027) amid the mistrust of powerful Chinese giants having too much see in local infrastructure and telecoms equipment. (12:40)
Other Chinese tech success stories.
DJI the drone-maker is also dominating its space and has grown rapidly since 2006 to become a multibillion-dollar company. It’s a testament to its success that the average consumer possibly can’t even name any other drone brands, so perhaps it is on the way to being a household name like Hoover became with vacuum cleaners. They’re more than just toys, today’s DJI drones are used for photography, agriculture, education, and more. The ‘Phantom’ series of drones are probably the best-known consumer versions.
Baidu was founded in 2000, is China’s premier search engine and is their version of Google (as Google is blocked in China), and is also a modern tech success story as in just over two decades it has grown to a multinational company worth hundreds of billions of dollars. In the Chinese population alone, they have more than a billion potential regular users and hundreds of millions use their various mobile apps each month, too. Baidu is much more than just a search engine, as it also operates travel companies, a music division, social media, digital TV, mobile payments, and many more functions. For many Westerners, it’s probably one of the largest tech companies you’ve never heard of. (20:32)
Is Chinese technology a privacy risk for users?
People are concerned that Chinese tech could be spying on them. It’s probably fair to say that many of today’s smart devices, regardless of their origin, are monitoring users in some way or another. We’ve all probably been shown ads based on something that we were talking about using our non-Chinese brand phones, for example. It’s creepy, but it shows that being monitored by technology is not a China-specific action.
We cannot say if the Chinese government harvests user information from devices, and even if it does, whether that is any different to the data on citizens that is obtained by foreign governments in the same way. Some online sources suggest that Chinese phones harvest more user data than, say, Apple does with its iPhones. (23:30)
How does the US-China relationship affect technology?
The US-China trade war has led to a worsening of relations in the past decade or more, and the semiconductor industry where the US is still arguably dominant is a key battleground. Semiconductors are essential for most modern tech products and the USA probably worries that if China gains the upper hand access to chips could be reduced, hence the attempt to contain China’s access to the most advanced technology. The world has already seen China become the dominant force in Lithium-ion batteries (controlling 60% of the world’s lithium refining capacity and being the third-largest producer), and this probably worries countries that are not its traditional allies, as both batteries and chips are so important. (26:22)
A couple of interesting new technologies coming out of China to be aware of.
Huawei’s new Mate 50 phone includes satellite connectivity which allows users to send text messages using the China BeiDo satellite network even if they have no terrestrial mobile network signal. Will this become the new normal for other smartphones who will follow Huawei’s lead on this?
They have also been developing the ‘All-analog Chip Combining Electronic and Light Computing (ACCEL)‘, which delivers over 3.7 times the performance of an Nvidia A100 in an image classification workload. While this chip is specifically used for vision tasks like self-driving vehicles and AR, it shows that the Chinese technology industry is innovating at a rapid pace and is capable of bringing out cutting-edge products, even in this case semiconductors. (33:43)
More semiconductor manufacturing to happen in the USA?
The Biden administration’s CHIPS and Science Act seeks to bring advanced chip manufacturing back to the USA to reduce reliance on places like Taiwan. This act has seen billions of dollars provided in grants and loans to companies like Intel to innovate and manufacture in the USA, as well as foreign firms like Taiwan’s TSMC to build new factories there, too. Understandably, America wishes to protect its own semiconductor supply, probably even wisely, but do initiatives like this lead to the worsening of relations between them and China? It is possible because mistrust of China is at least one catalyst for doing this. (36:10)
Closing questions.
- How do YOU feel that China’s rise in technology affects the global balance of power?
- What ethical considerations should we take into account when dealing with emerging technologies from China? (37:16)