Two years ago, I listened to a conversation in Silicon Valley about whether or not China had taken the lead in technological innovation:
“China is still behind.”
“How far behind?”
There is a 16 hour time difference between California and Beijing. In other words, time is now the only gap that separates Silicon Valley from China.
China’s technological innovations have been striking enough to put Silicon Valley on edge. Advances in mobile payments and bike sharing have given momentum to Chinese-style innovation. Mobile payments have transformed financing in China, while bike sharing has drastically altered the landscapes of Chinese cities.
These Chinese-style innovations have been driven by artificial intelligence — and the data training that makes artificial intelligence smarter by the second by fueling machine learning algorithms. Every day, data from over 1 billion users pours through WeChat, Tencent’s social networking service.
Half of the venture funding for AI-related startups now comes from China. In 2018, researchers in China published 25 percent more AI-related papers than their American counterparts. Chinese papers were cited twice as often as American papers, and resulted in three times as many patents.
Platformers such as Alibaba, Tencent, and Baidu are leading the charge in Chinese-style innovations. Tencent — not the automobile manufacturers — has played a leading role in the development and implementation of autonomous driving technology. Tencent also partners with hospitals in cities like Chengdu to enable patients to receive diagnosis and treatment through a single mobile app, furthering the digitization of medical care and uploading data from 80,000 to 100,000 patients to the cloud each day.
Tencent is supported in this venture by the Chinese government: China’s Ministry of Science and Technology designated Tencent as a medical care platform in 2018. In his recent book, “AI Superpowers: China, Silicon Valley and the New World Order,” Kai-fu Lee writes that “[a]rtificial intelligence will be the first GPT [general purpose technology] of the modern era in which China stands shoulder to shoulder with the West in both advancing and applying the technology.”
In addition to AI, China has boldly pursued social implementation in such fields as autonomous driving and 5G, the next-generation wireless network. China is making maximum use of the “leapfrog effect” (completely bypassing existing business models), the “feedback effect” (the collection and analysis of customer data), and the “social credit effect” (promoting voluntary obedience among citizens through a social credit ranking aimed at perfecting China’s system of social surveillance).
The “visible hand” of the Chinese state plays a major role in Chinese-style innovations. When Chinese banks used pressure tactics to resist the advent of mobile payment technology, the Chinese government threw its weight behind the technological innovation, and promoted alliances between platformers and the banks. It has relaxed intellectual property rights and operational protocols, and tacitly consented to the use of loopholes by private companies.
Kai Kajitani, a specialist in the Chinese economy at Kobe University, says the confluence in China of an “authoritarian government, nondemocratic society and free market” has produced “relationships of complicity.”
Chinese-style innovations could also be described as “gray innovations,” proliferating within the “gray zone” of these “complicit relationships.”
However, Chinese-style innovations have some structural flaws. Can “mass entrepreneurship and mass innovation” (in the words of Premier Li Keqiang) really take hold when innovation is state-led? Can China really establish a solid foundation in basic science — i.e., science for the sake of science — when commercializing pressures drive its science, technology and research?
The biggest issue might be China’s understanding of ownership, given that it displays no guilt about its “theft” of intellectual property. A socialist approach to ownership (“no one owns anything”), a political structure that makes it impossible to oppose party-mandated requisitioning, and a National Intelligence Law that enforces the transfer of private information may all conspire to condone “theft for the sake of the country.”
Yet this approach to ownership may run even deeper than ideology or the current existing political system, and reflect a more intrinsic aspect of Chinese society. As the titular character (a failed scholar) protests in the short story “Kong Yiji” by the Chinese novelist Lu Xun: “stealing books isn’t really stealing.”
China’s historical “victim mentality” may also justify the theft of foreign intellectual property: According to this mentality, given how much the great powers of the age of imperialism stole from China, now is the time to “steal” in return. Moreover, ownership rights remain a “gray area” in China. Nevertheless, “gray innovations” will only pick up speed in the future.
Grasping the dynamics and direction of this process will be critical. We must also avoid adopting biased ideological or political viewpoints on the developments.
China has achieved a “domain awareness” of the (English-speaking) world’s technological innovations. This (English-speaking) community, however, lacks a reciprocal domain awareness of China. The first step is to close this gap.
Yoichi Funabashi is chairman of the Asia Pacific Initiative and a former editor-in-chief of the Asahi Shimbun. This is a translation of his column in the monthly Bungei Shunju.